Dubai Tenants Turn into Home Owners
Dubai Tenants Turn into Home Owners; Mortgage Purchases up after COVID-19 lockdown
91% of new real estate purchases made by first-time buyers: Colliers report.
Dubai’s tenants are flocking into the real estate market and buying homes to take advantage of low interest rates and competitive prices.
In a survey conducted by Colliers during the second quarter of the year, 82 percent of real estate professionals agreed that mortgage purchases in the emirate are increasing. Most of the buyers (91 percent) are first-time homeowners or end users, while only nine percent are investors.
According to the real estate services firm, an increasing number of tenants are now looking to invest in property for themselves as the rent or mortgage payment gap narrows.
“Other contributing factors include current low interest rates, reduced loan-to-value, reduced fees and attractive property prices,” Colliers said in its report released on Sunday.
Property transactions in Dubai have been on the rise despite the overall economic slowdown caused by the coronavirus pandemic. Industry sources said that buying a home has become a more attractive proposition for both investors and buyers, as prices have gone down.
Bigger private space
The stay-at-home trend has also fueled demand for residential units with ample space, as well as those with swimming pools and gardens.
During the third quarter of the year, close to 9,000 property transactions worth 18.4 billion UAE dirhams ($5.01 billion) were recorded in Dubai, according to Data Finder, the real estate insights and data platform under the Property Finder Group. Transactions in September were 56.56 percent higher than August.
“There has been quite an array of interesting dynamics in the Dubai real estate market these past few months…Our broker clients are having all-time record-breaking months. Needless to say, pent-up demand, best-ever mortgage rates and lower down payments have been the perfect combination to stimulate the Dubai real estate market,” said Lynnette Abad, director of research and data at Property Finder.
Among the real estate professionals polled by Colliers, 44 percent said there has been an increase in demand for properties priced above 5 million UAE dirhams.
Trends in second quarter
“Since lockdown measures were eased, there had been an increased number of sales in higher-end communities. One of the findings from our research is that investors took advantage of the lower price points prior to the COVID-19 lockdown,” said Colliers.
“This created a domino effect releasing pent-up demand from prospective buyers that had been waiting for the right time to buy. After the lockdown measures eased, the market began to pick up momentum as waiting buyers had the opportunity to react.
The majority of the polled respondents also saw an uptake in clients moving from apartments to villas and townhouses.
Buyers that do want apartments tend to favour units that offer additional accommodation and larger terraces or balconies. Apartments that don’t have a balcony are, therefore, proving difficult to sell.
Third quarter trends
Colliers said there are still increased levels of activity from property end users and first-tome buyers during the third quarter of the year, with a large proportion of these looking for a mortgage.
There has also been an increase in transactions involving higher end properties, particular in premium locations like Palm Jumeirah, District One and Jumeirah Islands.
“Due to lockdown restrictions, changing work habits, the desire for larger space and potentially a higher percentage of homeowners less attracted to apartment living, is something that we have noticed continuing into this quarter,” said Colliers.
(Source: Zawya)
