Fouad Chemlati
The profile of the overseas property buyer in Dubai is changing ever so subtly. Sure, there are those who fly in and out after making an all-cash purchase. But a sizeable number are starting to take mortgages too... Image Credit: Anas Thacharpadikkal/Gulf News

Dubai: The archetypal image of an ‘overseas property investor’ in Dubai is of someone who settles the deal the all-cash way. And probably, paying all of it upfront too, whether it’s a Dh100 million plus Palm home or a Dh20 million penthouse elsewhere.

That image profile is actually what you do see more often than not when it comes to foreign investors here.

At the same time, there is a growing base of such investors who would like to fund the property buys through mortgages too. But they often find that taking out a mortgage is not as smooth as it would be for a resident buyer.

In an interview, Fouad Chemlati, General Manager for Mortgages at the Dubai proptech Huspy, says things however are changing on the ground. And that it signals a major win-win for these property investors.

Are you seeing more non-resident buyers take up mortgages to finance a property buy in UAE? Or are the majority still cash buyers?

Buying a property in the UAE has become a very appealing investment option for non-resident buyers. Just like domestic buyers, non-residents do come in with outright cash purchases.

However, these are usually for bulk deals or ultra-luxurious homes.

A large number, however, prefer to take mortgages. One of the reasons is the flexibility of local banks to lend and the competitive interest rates. Non-resident mortgage applicants do have to go through a few more criteria and can borrow up to 60 per cent of the property value.

With some banks introducing low document policies and competitive interest rates, it is now easier for non-residents to obtain financing with minimal documentation.

While Russian buyers were driving non-resident demand, we are now seeing that moderate with more Indian and UK buyers too exploring home ownership here.

Do you see international banks based in the UAE willing to extend coverage to these non-resident investors?

Overseas banks cannot lend from their own domicile as they need to have a UAE banking licence without which they cannot register mortgages with the Dubai Land Department.

The funding for non-resident mortgages is done locally by UAE banks as well as locally-licensed branches of international banks. This allows applicants to set up bank accounts, and allows for developers or (secondary market) sellers to receive payments here in the UAE.

For international banks licensed here, providing mortgages helps to grow their relationship with customers, in their home countries as well as here in the UAE. So it’s a win-win for all.

Are you seeing any changes in the way developers in Dubai are tapping non-resident investor purchases?

Developer financing programs have seen some interest from buyers in Dubai. Such programs come with shorter payment plans and require higher down payments. Developers are also offering non-residents support for their Golden Visa applications, thereby making the entire process easy for home buyers and simplifying their path to ownership.

Ultimately, the introduction of such services benefits customers who now have a choice to access financing from either banks or go to developers who offer attractive post-handover plans, which further facilitates cash purchases.

For non-resident buyers, are the mortgage rates and terms and conditions more rigorous? How would you suggest they structure a Dh2m home buy through bank lending?

Yes, they have to go through a more rigorous process as compared to resident buyers. But banks are also making it easier to streamline the process with low document mortgages available.

Non-residents might secure funding up to 60 per cent of the property value and at a slightly higher interest rate than residents. However, they will still benefit from a long tenor of up to 25 years.

On a Dh2 million property, we could assume a 50 per cent loan to value of Dh1 million. Over 25 years on a 5 year fixed mortgage at 5.14 per cent, this would cost Dh5,928 per month.

It is said that the current property buyer in Dubai or UAE is skewing towards new residents and those in the mid- to upper-mid income range. Are they having it easier in tapping local mortgage support?

Banks are making it easier to support new residents moving to the UAE. Those who are employed need to pass their probationary period, while those who are self-employed have to demonstrate a minimum 1 year business operations prior to being eligible for a mortgage.

Over the past 2-3 years, with more supply being made available, buyer demographics have evolved. This includes new residents who want to commit to the long-term. But it also includes long-term residents who now benefit from the introduction of the Golden Visas and other such schemes.

We also see home buyers wanting to get out of high rent increases and deploy that money to monthly mortgage payments, or those who are seeking an upgrade from their current homes, mostly from apartments to villas.

In terms of home financing, there hasn’t been a better time to secure a mortgage. With the Technology makes it faster to secure pre-approvals, thereby increasing the speed of the entire home buying transaction – from finding a home to financing it.

With an average mortgage size of Dh1.8 million as per our data, we see that customers are aspiring big and doubling down on ownership in Dubai.

Since launching over three years ago, we’ve processed over $3 billion of home financing together with our banking partners.