Mortgage demand robust in Dubai
dubai — Mortgage demand in Dubai has remained robust, despite concerns after the Central Bank imposed curbs in 2014, a new report has revealed.
The ‘Dubai: A Bridge Over Mortgaged Waters’ report by Unitas Consultancy on Dubai’s mortgage activity revealed that while sales transactions have continued to decline, mortgage activity continued to grow.
Mortgage activity as a percentage of sales activity accounts for 55 per cent, doubling over the last seven years. This structural shift is mirroring mature markets such as US and UK, where the cash sales only account for 30-40 per cent of all transactions. The report notes that the shift has resulted in further cooling the market as time taken to conclude a transaction has lengthened.
A break-down of mortgage activity in the emirate by apartments and villas, reveals that the former has a much higher percentage of mortgage activity compared to the latter. In the villa space mortgages account for more than total sales, signaling that owners have started to refinance their houses to extract liquidity.
Mortgages in the office space have also climbed steadily, indicating not only a changing capital structure but also a steadily rising demand even as cash sales have decreased on account of the market cooling off. In the apartment space a dissection of mortgage activity be developer type, reveals that GSD (Government Sponsored Developer) accounted for 60 per cent of activity in 2013. However, this relationship has inverted in recent years, where private sector developments account for the majority. This inversion can be attributed towards banks becoming more comfortable to lend to private sector developments and homeowners becoming more comfortable in purchasing these products.
The report also noted that mortgage activity in mid income communities such as JVC and IMPZ have surpassed historically favoured developed communities such as JLT and Marina. This indicates a shift in buying preferences which has been fueled by access to bank finance and lower price points.
A break-down of mortgage activity by apartments and villas, reveals that the former has a much higher percentage of mortgage activity compared to the latter. In the villa space mortgages account for more than total sales, signaling that owners have started to refinance their houses to extract liquidity.
The report concludes that banks have become more comfortable in lending to private sector developments, and that homeowners have become more comfortable in purchasing private sector developments.