The end to forever renters

This article was originally published in Propertyfinder Trends 2017, Vol 3.

How changes in financing can drive new purchasing power

Dubai has been a property investor’s paradise ever since freehold ownership opened up for non-GCC nationals in 2006.

Many an investor has capitalized on the exponential growth of the Emirate. Whether they have the short-term speculative goal of buying off-plan and reselling for a premium prior to handover, or have a long-term plan of renting the property and benefitting from some of the strongest yields in the world, With the great vision of Sheikh Mohammed bin Rashid Al Maktoum and his father before him, Dubai has made its mark and truly become a global destination; one that offers tremendous opportunity for millions of expatriate residents that choose to call it home. But for most, that home is one that they rent rather than own, and largely not by choice.

While this is great news for the property investor, and continues to deliver favourable yields, it’s not so good for the average family, nor for the long-term growth and maturation of Dubai. For Dubai to continue to grow sustainably, the real estate market must evolve and drive purchasing by end-users. One of the easiest and most expedient ways to achieve this is to lower the financial barrier to entry for homeownership.

Under current regulations introduced by the UAE Central Bank in December 2013, whereby mortgage caps were imposed as a means to curb the rapid appreciation of the market and mitigate another bubble developing, expatriates are limited to obtaining mortgages no greater than 75 percent of the value of the property (for properties below AED 5 million).

This means that the would-be home buyer must have a down payment of at least 25 percent. For the typical family, saving up this sum while at the same time paying rent is an arduous task, and one that keeps homeownership perpetually out of reach.

As accumulating such a large down payment is the primary obstacle, perhaps it is time to revisit the mortgage cap and introduce changes that are geared towards first-time buyers and end-users. There are many precedents for this across the globe that serve as models that could be adopted as a framework of the same in Dubai.

For Dubai to continue to grow sustainably, the real estate market must evolve and drive purchasing by end-users.

One example: lowering the down payment requirement to 10 to 15 percent for qualified first-time buyers (those that currently do not own any property in the Emirate) and require them to reside in the property for a minimum period of three years. Should they rent the property or resell within the minimum period, penalties could be applied in the way of increased mortgage settlement fees, and/or DLD transfer fees.

Regulators could also incentivise end-user purchasing by reducing the initial DLD transfer fees paid by the buyer or other ongoing government fees such as the housing/ resident fee collected by DEWA. Initiatives such as these put a focus on incentivising end-user purchasing while not penalizing the investors from continuing to purchase in the Emirate.

Over the years, Dubai has evolved from a place people would come to for a couple of years to have an “experience” and earn tax-free income then return “home”. Now, it is a destination where people have a longer-term outlook, wish to settle with their families, reinvest in the local economy, and instead call this place “home”.

While a shift from a predominantly investor-led market to an end-user market will inevitably have an impact on yields, it will add greater stability to the market overall and help ensure that Dubai continues its tremendous journey.


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Zhann Jochinke

Chief Executive Officer, Keller Williams Real Estate Dubai



EDUCATION BScBiology,Genetics from Macquarie University, Sydney
HIS WORDS I’m focused long-term on Dubai from both a personal and business level, and for the Dubai real estate market to mature and have long-term stability, then a shift away from an investor-led market to an end-user
led market must occur. Financing regulations and incentive programs that can drive home ownership are the basic building blocks that the industry must look towards.
KEY INSIGHT Time is your most valuable asset, and to achieve a high level of success you must have laser focus on where you invest your time.

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