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5 Things To Consider Buying Dubai Home In 2020 Casa Nostra

HERE ARE THE FIVE REASONS TO BUY PROPERTY IN DUBAI IN 2020:

 1. Revaluation

It will come as no surprise to many market observers that average residential prices in Dubai are not far from the last decade’s historic lows. However, it is important to remember that Dubai is a collection of micro-markets so the headline numbers do not always tell the full story, which is that we are seeing the early stages of a recovery ensue.

Secondary areas and areas with an influx of supply are certainly still seeing considerable price declines, however, certain prime areas such as the Palm Jumeirah, Jumeirah Bay and District one have seen their respective average price per square foot increase in the first eight months of this year by up to 6 percent compared to the same period a year earlier.

2. Financing Costs

Interest rate cuts by the UAE Central Bank have led to a fall in the cost of borrowing. The UAE’s six-month EIBOR rate has to fall from highs of 3.14 percent in early 2020, to lows of 0.50 percent in mid-September 2020. Mortgage rates have followed suit, with the median post promotional mortgage rate falling to 3.7 percent in September 2020, down from 5.2 percent a year earlier. Both investors and occupiers will take advantage of these very favorable financing rates.

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3. Payment Plans

Lower financing costs are not the only way that affordability in the market has been improving. Given current market conditions, developers have begun to offer evermore favorable payment plans to entice demand. As of 2020, in Dubai, on average where payment plans are offered, 28.4 percent of the total payment is structured to be paid post-handover, up from 6.6 percent in 2016. Developers are now also demanding lower levels of payments during construction and on completion.

Where in 2016, 39.7 percent and 43.1 percent of the total payment was required on completion, and during construction, in 2020, payments required during these periods have decreased to 28.3 percent and 34.1 percent respectively. Alongside this, larger developers are also offering service charge exemptions and transaction fee waivers amongst other offers.

4. Loan-to-Value (LTV) ratios

As part of the UAE Central Bank’s economic stimulus package, LTV ratios have been increased for first-time buyers by five percent for all property purchases, including off-plan property mortgages. High LTV ratios have historically been cited as one of the most significant barriers for owner-occupation, particularly among expatriates, this easing of regulations is expected to encourage many to switch tenures.

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5. Visa regulations

Visa regulations have also been eased in recent times, this change was in addition to a range of regulatory changes announced in 2019, which included the announcement of 100% on-shore business ownership. New legislations include the introduction of a five-year retirement visa for those over 55 years old with an investment of AED2 million or more in the property market, income above AED20,000 per month, or those with more than AED1 million in the capital.

Other options include five-year visa terms for investors who purchase above the AED5 million threshold. In addition to these property-related visas, a range of business investment visas have also been approved. Capital investments over AED10 million in the enterprise can obtain a 10-year visa, where up to 40 percent of the investment can be related to property purchases.

Entrepreneurs in the UAE with previous business investments worth over AED500,000 or those with a business, which is accredited by a business incubator, will be able to obtain a five-year visa with the possibility of obtaining the aforementioned business investor visa, should they eventually meet the criteria. Finally, the approved legislation also allows for a 10-year visa for high-value talent in selected fields, as well as five-year visas for students who are studying in the UAE, and their families.

As many of these regulatory changes, such as the changes in visa regulations, are linked directly to property ownership, the long-term fundamentals underpinning demand for real estate in Dubai, and indeed the wider UAE remains steadfast.

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