First-time homeowners form a major component of property buyers in Dubai these days due to the continuing travel restrictions many countries still have. There is a growing trend of tenants who are sure of their job situation and understand the opportunity of buying in today’s market.
In our experience, tenants who are shifting to being first-time home buyers are motivated by the attractive low prices, low interest rates, as well as the strong lending appetite from most local banks, which is at its highest points since the 2009 crash. Their confidence is driven by the following factors:
Their confidence is driven by the following factors:
* Value-for-money Dubai real estate offers.
* A fairly healthy level of transactions immediately after the quarantine period.
* The price resilience point we seem to have reached - because the biggest hesitation for many was certainty whether prices will continue to soften in Dubai or not.
Low rental prices vs. cost
Despite the attractive low rental rates available in Dubai, tenants understand that it is only a matter of time for flights to commence again and demand to pick up. Rental prices would start climbing again.
Hence, securing a property at today’s low prices and start paying towards their mortgages rather than towards landlord’s mortgages seems to be a wise option many tenants are opting for. Moreover, it is not only about saving on rent and paying towards the mortgage - it is also about aiming to profit from a decent capital appreciation as the market recovers.
End-users are very well positioned to continue to benefit from saving on rent and paying towards their mortgages until the market recovers. Once it does, that may be the time for some to cash out at a profit - something they may never be able to attain by saving out of their salaries.
We are witnessing relatively high demand in all villa communities such as on the Palm, District One, The Villa Project, Dubai Hills as well as in prime communities that offer spacious apartments, including those at Citywalk, the Palm, Dubai Marina and Bluewaters island.
As you can see, when comparing sales vs mortgage transactions between now and last year, with the exception of the lockdown period of March, April and May, the number of mortgage sales is higher than in 2019. August witnessed 1,714 mortgaged led transactions as compared to the same month in 2019, which had 1,432.
This despite 2020 getting off to a much slower start due to the COVID-19 pandemic.
- Firas Al Msaddi is CEO of fam properties.