Gulf News, 18 December, 2018
It’s a great time to be a homebuyer in Dubai. Apart from competitive prices, developers themselves are being much more proactive in attracting new buyers with incentives such as 10-minute mortgage approval, zero loan processing and property valuation fees, zero Dubai Land Department registration fees and affordable instalment plans.
Many developers have upped the ante by offering home finance solutions in partnership with banks, which allows homebuyers to avail of even longer payment terms and subsequently lower monthly instalments.
“Large monthly instalments were holding back many aspirant customers from investing in property; now with the extremely low payment schedule, they can own a dream home in Dubai effortlessly and enjoy a superior lifestyle,” said Bader Hareb, CEO of Emaar Development in the statement.
According to Muhammad BinGhatti, CEO and head of architecture at Binghatti Holding, this is a strategic move by many developers who have maxed out their ability to offer in-house post-handover payment plans.
“Developers don’t do credit checks or background checks and don’t pre-qualify people that are buying with these post-handover payment plans,” said BinGhatti. “Therefore, essentially, they are taking the risks from the banks and onto themselves, and obviously that’s never good. The banks have their processes in place to make sure that people who are getting loans are eligible. Therefore, it is important that this kind of activity would be regulated properly; otherwise, developers risk a lot of people defaulting, and that can cause a major issue in the market.”
According to Emaar, homebuyers can opt for a payment plan where they will pay less than Dh1,000 per month for a property worth Dh1 million, or Dh2,500 monthly for a property worth Dh2.5 million. Emaar has collaborated with Dubai Islamic Bank to offer home finance solutions, which the developer said is designed to help investors achieve returns of up to 10 per cent. The residential units are available in developments such as Downtown Dubai, Dubai Creek Harbour, Dubai Hills Estate and Emaar South. Buyers will pay 50 per cent of the total price during the construction stage, while the rest can be paid in a 25-year instalment with zero financing cost for the first five years, according to the developer.
More money to invest
Emaar further stated that the monthly instalments amount to less than 40 per cent of the rent that many people currently pay for similar units.
GPD Ghreiwati Property Development has also tied up with banks to provide long-term financial facility as an alternative to the company’s post-handover payment schemes. CEO Adnan Al Hamly said the bank financing allows buyers to avail of payment terms of up to 25 years.
“We have Murano Residence 1, which is now ready and listed with banks,” said Al Hamly, adding that mortgage processing fees are also waived as part of a special package. “Bank financing will help the customer to invest in more properties rather than paying a big sum to the developer, so this money can be utilised in further investments.
“This route helps the buyer with a long-term payment facility, and enables the developer to receive the outstanding amount without waiting longer.”
Some developers have also created mortgage assistance services to better cater to this specific segment. Damac’s mortgage assist facility allows customers to lock in a mortgage through a short evaluation process. “Our specialists can provide a choice of options with impartial advice on various elements, including special payment plans and equity release,” said Niall McLoughlin, senior vice-president at Damac Properties.
Binghatti Developers runs a promotion with Mashreq Bank, where the bank offers mortgage approval within 10 minutes for those who do not have credit liabilities. “Most buyers in the market are end users,” said BinGhatti. “A lot of people don’t know how easy it is to qualify for a mortgage.”
As banks get comfortable extending mortgage in partnership with developers, end users will ultimately benefit, said Tariq Abdulla, head of home finance at ADIB. “In an increasingly competitive landscape, developers and banks are coming up with more creative solutions,” said Abdulla.
According to Girish Advani, head of assets, retail banking at Noor Bank, many developers also now liaise with banks on behalf of buyers. He also points out that the mortgage-to-sales ratio reflects the direction of the market. In a mature market, the ratio is around 85 per cent; in the UAE the ratio has doubled from 28 per cent in 2010 to around 60 per cent in 2017. “This has been the driving force behind the increasing partnerships between banks and developers to offer the best solutions to prospective customers,” said Advani.