Dubai: For prospective end-users looking to acquire off-plan property in Dubai, the going remains tough. That they will be eligible for only 50 per cent loan-to-value means they will have to dig deep into their own resources to put up the necessary deposit.
Even that may not be enough. “The rise in the size of deposits this year has meant that many households determined to purchase have been forced to consider options at the lower end of the property spectrum, with off-plan properties in particular, being viewed as good value,” states a new report issued by Cluttons.
And off-plan is attracting investors with a longer holding perspective in mind. “Almost a year after the introduction of the Federal Mortgage Cap, the residential market appears to have finally succumbed to the stringent deposit requirements imposed on buyers,” the report added. “Last year’s extraordinary growth was clearly unsustainable and we are now entering an anticipated period of more measured and sustainable expansion.”
During the third quarter, rate of growth in residential values actually dipped a marginal 0.3 per cent, according to Cluttons, which also marked the first time it has happened within a three-month phase since the first quarter of 2011.
But some investors are also playing it smart. “We are seeing nearly four out of every five transactions being refinanced once buyers have met developer restrictions, if any, on the transfer of title deeds,” said Faisal Durrani, Cluttons’ International Research and Business Development Manager. “This suggests that the appetite to continue investing in the market remains strong, with investors keen to free up capital to move on to their next purchase.
“While the market continues to adjust to the changes in the financing landscape, we expect the gradual softening in values to persist over the next three to six months while the market adjusts to the evolving conditions.”
