“Anecdotal evidence suggest that the majority of property buyers are domestic, UAE citizens and residents, many of whom are first home buyers taking advantage of the historic low prices,” said Haider Tuaima, head of real estate research at ValuStrat.
Tuaima noted that sales transactions started to go up in the third quarter of 2019, but it was only cut short by the pandemic and mobility restrictions. As precautionary measures eased, buyers started to return to the market.
“This trend is driven by affordability, as prices reached 10-year lows, record-low interest rates, LTV up to 85 percent,” Tuaima said.
The initiatives rolled out by the government to limit new housing supply and promote demand, coupled with the excellent management of the pandemic in the UAE is also encouraging more buyers, he said.
Where’s the money coming from?
The homes being purchased are being paid for in cash or through a bank financing. Within the secondary market, there is a notable trend of property buyers that are backed by mortgage lenders.
“Nearly 81 percent of the transactions year-to-date are mortgage transactions. We are seeing most of these buyers being end-users as residents are increasingly looking to climb the property ladder and after years of waiting on the sidelines, going ahead with their investment decision-making,” said Prathyusha Gurrapu, head of research and advisory at CORE.
“A host of reforms, including long-term and remote working visas, 100 percent ownership for foreign entities, fiscal incentives, the highest rate of vaccinations in the world, an increase in mortgage loan to value ratio sand a declining dollar have led to an uptick in market sentiment and price recovery,” she said.
In the prime and ultra-prime residential segment, the market is seeing an influx of foreign buyers – the affluent ones who can easily afford to splurge millions of dirhams on a luxury villa or penthouse.
From January to around May this year, 81 villas properties on The Palm Jumeirah alone, each costing upwards of 10 million dirhams ($2.7 million) were sold. Last April, a property on the island worth 111.25 million dirhams changed hands.
“With further relaxation in ownership and visa regulations along with a pro-business environment, many affluent buyers are investing in Dubai,” said Gurrapu.
Dubai has been one of the top destinations for global wealth. In 2019, approximately 1,300 high-net-worth individuals (HNWIs) migrated to the UAE, up by 2 percent from a year earlier, according to New World Wealth.
(Reporting by Cleofe Maceda; editing by Anoop Menon)
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