Dubai: While the UAE Central Bank mulls tightening up mortgage financing norms, a senior industry official has now come out with a contrarian view.
Ziad Al Chaar, Damac Properties’ managing director, wants local banks to help finance local property transactions done by non-residents.
“I believe banks remain too timid - what we need is a practical and pragmatic non-resident mortgage,” said Al Chaar. “Dubai will then be able to attract more people genuinely interested in owning a property in Dubai - but they can only do that through a proper mortgage.
“Not everybody can come straight into the market with $1 million and buy a property with cash, in full. One of the most important factors which is still holding the market back and has not yet been recognized is the lack of mortgages.
“Today, most of the business is still being conducted on equity, not leverage. Cash buyers made up almost 75 per cent of the number of transactions in Dubai in the first six months.”
In markets such as Canada, the UK, Spain and Australia, non-residents are allowed access to mortgages, of course with the property as collateral. A down payment would be 25-30 per cent and the lender will also need to proof of employment with an established company. The process is simple enough. “Until we have this in place, mortgages will never be a big element of the real estate market of Dubai,” the Damac official added. “To be able to get a mortgage today you need to be a resident of the UAE and you also need to be able to demonstrate a portion of your income is coming from the UAE. So, if you are living overseas and you would like to buy a second property in the sun in Dubai, you can’t.”
