Affordability key for property sector
Large downpayments on mortgages are the biggest obstacle to the Dubai property market reaching its potential.
That’s according to one of the leading figures in the city’s real estate market.
“We had a survey of 2,000 people and this was by some distance the main difficulty when it comes to getting finance,” said , David Godchaux, CEO of Core, which is a UAE associate of Savills.
Godchaux said that wouldbe buyers are expected to fork out deposits of between 24 and 32 per cent before being able to obtain finance to buy their own homes.
He predicted this will become more of a problem as the majority of new properties being built in Dubai will be aimed at the mainstream/affordable sector instead of the prime market – properties costing above Dhs1.4 million.
Godchaux was speaking to 7DAYS following the publication of Core’s report “Capitalising On A Bottoming Market: An Investment Guide”.
The report predicts that 81 per cent of the new builds in Dubai next year will be aimed at By Patrick Ryan the mainstream/affordable market, a figure that would previously have been unthinkable given how synonymous the city is with the luxury sector.
“We have never seen such a scenario,” said Godchaux.
“We are definitely witnessing a shift towards affordability but there are very hefty down payments required.
“Prime communities, like The Palm, don’t have much more stock that can be built there.
“That’s why we’re bullish about those areas maintaining their prices, there’s only so much stock that can be built in one area.
“Developers are used to people being able to afford to pay totally in cash.
‘That’s not going to be the case when you start going into the affordable sector.
“The banks will come under pressure from potential buyers as well as property developers keen to move their stock.”