Ask the Expert: Your property questions answered here
Cash or mortgage, buy or rent - read what works for you in UAE real estate
If you plan is to remain in the UAE for the foreseeable future, have a secure job and the funds available, then the time is right for you to buy your first home in Dubai. Many first-time buyers who had been looking to rent are now enquiring about a mortgage. The pandemic has made people think about their future and has made them ask questions as we move into 2021.
Our real estate expert, Rakesh Mirchandani, CEO, RNR International Real Estate answers:
There is now an increase in LTV teamed with low interest rates – what does this mean for property buyers?
Higher loan-to-value ratio attracts buyers, especially end users. This means that a buyer’s down payment is reduced which makes buying and owning properties far easier than renting. This year we’ve observed an increase in end users purchasing properties and this could directly link to the low interest rates. Holistically, these lower interests attract and benefit both buyers and investors. I’ve come to notice in some situations, the end users may even come across the chance to be able to pay far less than what they would originally pay to rent the same property if they opt to buy it.
If I buy property today, will I look to reap the benefits over the next few years? Typically, developed communities are the ones that are highly sought after. Downtown Dubai, Palm Jumeirah, Dubai Marina and Jumeirah Lake Towers, for example, are a few areas that continue to spark interest in buyers due to the location being in the heart of Dubai. Also having metro stations located nearby is always an added benefit as it allows for great accessibility. However, in this market climate, Dubai Hills is a community that has seen an increase in demand to buy and rent.
Verified property ads vs. unverified property ads – how can we be sure?
Unfortunately, unverified adverts are misleading as they may not have been updated to their actual status or can also be non-existent. In order to verify an advertisement, there are specific pre-requisites required by one of the leading portals and it includes providing or showing the copy of the title deed, owners ID, marketing contract etc. and the owner also should not list it with more than three companies.
Is a mortgage a good option compared to cash when buying property?
Mortgage is a good option if it benefits your financial situation. If rental returns are much above the interest re-payments and if the borrower can qualify for the mortgage then we would suggest that they do consider it. Our company has completed a number of bulk transactions this year that were purchased by finance/mortgage buyers. We did analyse that in these transactions the returns were on and above the 7-8 per cent rental returns per annum. At present, since prices have further dropped due to the pandemic and the current economic climate, I personally feel that certain areas have bottomed down. We can observe an increasing demand this year for villas and townhouses due to which in communities such as Palm Jumeirah or even, Meadows, there has been an increase of at least 10-15 per cent.