Mortgage Lenders In The UAE Reduce Off-Plan Project Completion Criteria From 80% To 50%

Banks are now prepared to lend when a project is 50% or more complete, as opposed to the past when they would only do so after it had reached the 80% threshold.

This will open up opportunities for the UAE property market overall, which is already seeing an inflow of new investors among locals and foreign buyers. Many newcomers to the UAE, even among resident investors, would have needed more time to obtain a mortgage approval in the past.

Industry insiders claim that banks are aware of the necessity to maintain finance options, particularly as the Dubai real estate market becomes more dependent on off-plan launches to meet demand.

Even after 10 rounds of interest rate increases by the US Federal Reserve and the UAE's banking regulator, the requirement still exists.?

An?increasing number of new residents and first-time overseas?buyers in the UAE are more interested in sub-AED5 million homes, while the AED10 million property sales featuring offshore investors are often done in all-cash mode. And those who have mortgages to repay or some other sort of developer finance help would prefer it.

Additionally, asking prices in Dubai are up 30% from mid–late 2021 levels. Thus, potential purchasers will be required to put down a larger amount of their own money, which might put them in a difficult situation once the instalment schedules begin. Therefore, any mortgage finance that arrives by the time a project reaches 50% completion will be useful.

The majority of builders want to receive 50% of the home value throughout the building and handover phases. There are some developers that provide 1% monthly instalment plans, but considering all the other upfront payments that are still necessary, there isn't much that can be done through them.

In Dubai, the ratio of off-plan sales to ready properties?is currently?between 50-55%, with potential to go much higher.

If you would like to invest, or learn more about investing in luxury off-plan property in Dubai, please get in touch.

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