According to independent experts, today the high potential of consumer demand in the real estate sector of Dubai megalopolis is limited by several factors. First of all, this includes relatively high price level of real estate and an insufficient set of mortgage programs for the purchase of real estate. However, the Dubai Government is taking active steps to resolve these issues. In particular, the programmes, aimed at sector development of affordable housing and minimizing bank loans rates, are currently implemented.
The recent survey of residents has showed that more than 70% of interviewed UAE residents are ready to invest their assets in the real estate of Dubai. Among the main constraints for the real estate acquisition, there are two main reasons: the first is the relatively high cost of real estate in Dubai, and the second is the requirement of credit institutions to make a mandatory initial payment (about 25% of the property value). This requirement is set forth in the circular of the Central Bank of the United Arab Emirates.
Expatriates in the UAE – opportunities and prospects
Along with the increase of consumer demand for real estate in Dubai, the experts note a steady increase in the number of expatriates residing in the United Arab Emirates. Today the representatives of all countries work and develop business in the UAE. Results of the statistical survey has shown that over the past five years, the average in-country period of foreigners employed in the Emirates has increased by several times. Against a backdrop of economic instability and slow growth of remuneration, the jurisdiction of the UAE remains very attractive for the foreign professionals.
The attractiveness of the United Arab Emirates for skilled foreign labour is undeniable. This situation stimulates the demand for real estate in the city. Today more and more Dubai residents understand that it is more profitable to buy a property than to use it on a lease basis. In addition, the lessee misses the opportunity to obtain further benefits such as the increase of the real estate price.
The UAE also represents an undeniable interest for business representatives – both as a place with favourable conditions for carrying on business and as an opportunity for real estate investments with getting an extremely attractive percentage of rental income – on average as of today 7% - 8% per annum.
Experts in real estate believe that the demand for property in Dubai will increase and the available mortgage programs will become the main stimulus for long-term investment projects. Today, some credit institutions and banks operating in the UAE are ready to offer a mortgage on favourable terms and with minimal interest rates (from 1.7% per annum).
