How have real estate loans in the UAE changed after the pandemic?

Changes in the residential real estate market in the UAE

In recent years, the residential real estate market in the United Arab Emirates has undergone significant transformations. From 2012 to 2014, against the backdrop of the global financial crisis, housing prices began to rise steadily; however, by the end of 2014, this trend changed, and property values dropped significantly. Many experts expressed concerns that a new crisis triggered by the pandemic would worsen the situation. Nevertheless, we are currently witnessing a genuine boom in the UAE real estate market, which is remarkable for its activity.

Reasons for the growing interest

The main reasons for the increased interest in real estate are:

• Attractive prices.
• Comfortable conditions for mortgage lending.

For example, the cost of housing in Dubai today is36%lower than it was at its peak value in 2014. During the COVID-19 pandemic, the Central Bank of the UAE implemented a number of measures aimed at supporting the real estate sector. One of these steps was to reduce the minimum down payment to5%...which has significantly simplified the process of obtaining a mortgage: residents can now expect...80%funding from the cost of housing, while UAE citizens – on85%.

Changes in mortgage lending

In 2021, financial institutions continued to lower interest rates on mortgage products, which certainly attracted the attention of many buyers. The UAE government is actively working to attract new residents by offering an expanded range of visa programs, allowing foreigners to settle in the Emirates. Investors and highly skilled professionals can participate in such programs and gain access to what are known as"golden visas"In addition, digital nomads and foreign retirees can also expect to obtain residency. In February 2021, the UAE authorities took another step forward by announcing the possibility of obtaining citizenship for certain investors and professionals.

Increase in demand for housing

The intense influx of foreigners is only increasing the demand for housing and mortgage loans. According to reports from the consulting company Mortgage Finder, in the first half of 202140%All real estate transactions in Dubai were made using borrowed funds. Both local and international banks operate in the UAE, such as HSBC, Mashreq, Commercial Bank of Dubai (CBD), Emirates Islamic, and Noor Bank.

Rental rates and financing terms

As for rental rates, they are approximately6-10%from the market value of properties. Considering that for expats the average mortgage rates are lower than the market rates, investing in real estate becomes attractive even when taking interest payments into account. The mortgage application process for UAE citizens is significantly simplified, and loan amounts can reach85%of the value of the property.

Funding for non-residents

Foreigners with UAE resident status can expect to receive financing up to80%from the cost of the purchased property. The maximum loan amount depends on the type of residential real estate and the financial situation of the client. At the same time, non-residents can obtain loans up to a maximum of50%from the cost of an apartment or villa, however, in some cases this figure can increase to70%.

Conclusion

Thus, the real estate market in the UAE offers numerous opportunities for various categories of buyers, creating excellent conditions for anyone looking to invest.

Financing for foreigners when purchasing real estate

Evgeny Ratskevich, the CEO of Metropolitan Capital Real Estate, addresses a key issue regarding financing for foreign investors in real estate. For foreign nationals looking to purchase property in the United Arab Emirates, there are two main types of loans available: mortgage loans for residents and personal loans for non-residents.

Residents tend to seek bank financing for their purchases more actively, as their chances of getting credit applications approved are significantly higher. According to 2021 data, there were 15,000 transactions in Dubai using borrowed funds, with 75-80% being residents and only 2-5% being non-residents.

Recommendations for increasing the chances of loan approval

Ratskevich recommends foreign buyers looking to increase their chances of receiving favorable offers from banks to turn to mortgage brokers. First and foremost, working with a broker helps overcome language barriers.

Brokers also simplify the interaction with documents, which in turn makes the process of purchasing real estate easier. Moreover, these specialists help foreigners better understand the market nuances and choose the most suitable options, providing support at all stages of the transaction.

Requirements for borrowers

Additionally, an important aspect that affects the loan application process is the requirements that banks have for borrowers. According to UAE legislation, a person must be at least 21 years old at the time of signing the mortgage agreement. Mortgage loans are generally only granted to those who are younger than 65, which corresponds to the retirement age.

As the borrower approaches this age, the cost of the loan increases, while its term decreases.

Debt-to-income ratio

One of the key factors considered when processing applications is the debt-to-income ratio.Debt-to-Burden Ratio, DBRThis indicator reflects the financial stability of both individuals and corporate clients.

• For individual borrowers, the DBR ratio is defined as the relationship between their monthly income and total expenses, including payments on other obligations.
• For the corporate sector, the DBR calculation is based on the ratio of expenses and liabilities to the income received.

This coefficient helps to understand whether a borrower with their current income level can take on additional financial obligations for mortgage loans. It is important to remember that according to the regulations of the Central Bank of the UAE, the total amount of all current obligations of the borrower should not exceed 50% of their monthly income.

In addition, after accounting for debt obligations, each family member should be able to save at least3500 dirhams(approx.950 US dollars) monthly, which emphasizes the need for a careful approach to financial decisions when purchasing real estate outside of one's country.

Introduction

Evgeny Ratskevich, serving as the CEO of Metropolitan Capital Real Estate, points out that in the United Arab Emirates, banks do not impose special requirements on citizens of foreign countries. Like in most countries, financial institutions strive to conduct thorough checks on all potential borrowers.

Key conditions for obtaining a loan

A key aspect of this procedure is the need to verify the source of the funds that will be used for the down payment. It is also necessary to prove the existence of a stable income to ensure the ability to repay the loan. Additionally, banks will request confirmation of the client's permanent address.

If all these conditions are met, foreign citizens can expect a mortgage loan that will cover up to 50% of the cost of the property being purchased.

Requirements for the borrower

• The minimum salary threshold for a borrower should be between 10,000 and 20,000 UAE dirhams (which is approximately 2,700 to 5,500 US dollars) per month.
• Having a positive credit history is another important requirement for obtaining a mortgage.
• In the case of a poor credit reputation or lack of credit history, banks usually refuse to issue a loan.

If a potential borrower has no credit history, a sensible solution would be to open a credit card and regularly pay off the debts before applying for a mortgage loan.

Additional conditions

It should be noted that at the stage of obtaining a loan, banks may require you to open a special deposit account and deposit an amount equal to six monthly loan payments, which is a condition for completing the transaction.

Requirements for real estate

As for the requirements for acquired real estate, foreign investors can only invest in certain areas known as freehold areas. From 2006 to 2008, a number of regulations were adopted that outlined a list of such zones in various emirates, including Dubai, Umm Al-Quwain, Ras Al Khaimah, and Ajman.

In 2019, access to free zones was expanded, and now foreign citizens can invest in real estate in the capital — Abu Dhabi. Each financial organization has its own list of properties that can be subject to mortgage lending.

Property valuation procedure

When arranging a mortgage agreement, a mandatory step is the property appraisal. This procedure is carried out by accredited appraisers who hold special licenses. The cost of such an appraisal can range from 800 to 1500 dollars, and it is usually conducted using two main methods:

• Comparative market analysis
• Physical inspection of the object

After the completion of this work, within a few business days, the expert provides a formal report establishing the value of the specific property, which is a key step in obtaining a mortgage loan.

In recent years, purchasing real estate in the United Arab Emirates has become an increasingly common phenomenon. This is not only due to the country's appeal but also the necessity of understanding certain terms to avoid potential misunderstandings. It's important to pay attention to key words such as“free fold”,“Lizhold”,“musatakh”and“usufruct”that may be useful for those who are planning to invest in real estate in this region.

The variety of offerings in the real estate market

As of today, the real estate market in the UAE offers a variety of options. For example, in Dubai, you can purchase an apartment with an area of 102 square meters for €349,935. Additionally, the purchase allows you to obtain a residence visa, and importantly, the transaction can be conducted remotely. Payments are accepted in both rubles and cryptocurrency. Such a property is ideal for rental, making it an attractive choice for those looking for profitable investments.

My name is Alexander, and I am ready to help you with any questions regarding the real estate market in the UAE. Please feel free to ask for information about prices and current offers as of today!

Comfortable conditions for families

The UAE offers a multitude of projects that can meet any buyer's needs. For example, a new residential complex with a family leisure concept creates excellent conditions for comfortable living with loved ones, all without leaving the apartment. It includes all the necessary amenities for family life, allowing both adults and children to enjoy their time together. The construction is expected to be completed in the fourth quarter of 2026.

Interesting options in Abu Dhabi

Among other interesting offers, we can mention apartments in Abu Dhabi, priced at 325,247 euros, with an area of 75 square meters. This is a great option for those who prefer to live near the city's unique attractions, such as Ferrari World and the Formula 1 racetrack. The Yas Golf Collection complex stands out with its modern design and panoramic windows, as well as turnkey finishing, which adds elegance and style to every element.

Luxury apartments

There are also more spacious properties, such as luxurious apartments in Renad Tower, which will cost 490,767 euros. This apartment, with an area of 114 square meters, is located on Al Reem Island and combines comfort with a convenient location. The complex is planned to be completed by 2026, allowing new residents to enjoy the benefits of urban infrastructure within walking distance from the center of Abu Dhabi.

Elite offers in Dubai

The offers in Dubai are equally interesting, including elite apartments in Sobha Creek Vistas Heights, priced at €625,298. These living spaces, covering 117 square meters, are located in an exceptional area, making it easy to access all the key places in the city, such as Downtown Dubai and Burj Khalifa. Additionally, there is the possibility of obtaining a visa, which simplifies the process of purchasing real estate.

Modest options for accommodation

For more modest requests, there is an apartment in Kensington Waters, with an area of 77 square meters, available for purchase at 340,696 euros. The convenient location in the green area of Dubai allows residents to enjoy natural landscapes and all the delights of urban life. Proximity to educational and medical institutions, as well as cafes and restaurants, makes this offer particularly attractive for families.

Conclusion

Thus, the real estate market in the UAE offers rich opportunities for investors. Each property has its unique features, and with the right approach, you can choose the most suitable option according to your preferences and goals. If you have any questions, feel free to reach out for further clarification and information.

An amazing offer awaits you! We are excited to present you with exceptional housing options in Dubai, United Arab Emirates, starting from €212,417. You have the opportunity to own luxurious apartments with a total area of 60 square meters, which include one bedroom and a bathroom. The purchase conditions include the possibility of obtaining a residence visa when acquiring property, and the transaction process can be completed entirely remotely. Payment can be made using cryptocurrency. Take note of the stunning residential complex.Golf Gate 2located inDamac Hills, which will become your personal oasis of luxury and comfort.

Advantages of the complex's location

• It is located in the prestigious Damac Hills community, surrounded by green hills and well-maintained parks.
• A professional golf club and golf practice facilities are located in close proximity.
• Nearby, there is a Viva supermarket, bus stops, and a variety of restaurants, making this place extremely convenient for living.

Interesting housing options

It is also worth noting the attractive price of a studio costing 112,646 euros with an area of 45 square meters. You have the opportunity to conduct an online viewing and complete the transaction remotely with payment in rubles or cryptocurrency. The complexWeybridge Gardensbuilt by a renowned British developerLeosis located inDubailandIt offers modern apartments with spacious layouts and high-quality finishes. Prices for studios start at $122,500, while one-bedroom apartments start at $190,500. Buyers are offered interest-free installment plans from the developer with options of 70/30 or 50/50. Additionally, this complex is equipped with round-the-clock security and other amenities for comfortable living.

Ready-to-move-in studio

You can also consider a ready-to-move-in studio apartment with an area of 39 square meters, priced at 160,922 euros. This apartment is located in a residential complex.Westwoodfrom the developerImtiazand fully furnished, which allows for moving in as early as October this year. There is also an installment plan available for three years.

Spacious villas

If you are looking for a more spacious property, it is recommended to consider a villa with an area of 263 square meters, priced at 2,027,621 euros. This new area has been developed by a premium-class builder.Emaar.The Oasis by Emaar— this is a green community offering villas with 4-5 bedrooms and an artificial lagoon with crystal clear water. Investors choose Emaar for its impeccable reputation, adherence to construction deadlines, and high quality of work.

Studio in the Supreme Residence complex

For those in need of a move-in ready studio by the end of this year, a residential complex is being offered.Supreme ResidencefromUniestatewith a value of 144,370 euros.

Unique offer from Stage Properties Brokers LLC

Stage Properties Brokers LLC presents an unforgettable penthouse in Dubai, UAE, with a total area of 280 square meters, listed for sale at a price of5,542,164 €This property includes 4 bedrooms and 2 bathrooms, as well as 3 parking spaces. When purchasing this home, there is an option to obtain a residence visa. The transaction can be completed remotely, providing additional convenience for clients.

Orla by Omniyat complex

This penthouse is located in the prestigious Orla by Omniyat complex, situated on the magnificent Palm Jumeirah island. This new project is an exceptional offering from the renowned developer Omniyat and provides its residents with a luxurious and sophisticated lifestyle.

Residents of the complex can enjoy first-class amenities and services provided by the renowned Dorchester Collection hotel group.

Villas from Azco Real Estate

• Villa in Dubai- Area of 160 square meters, price €275,867. The villa includes 3 bedrooms, 2 bathrooms, and 3 parking spaces. Buyers have the option to obtain a visa and view the property online.
• A villa with an area of 210 square metersIt is offered for €432,191. It includes 5 bedrooms, 4 bathrooms, and 5 parking spaces. A residence permit can also be arranged.

Unique townhouses and infrastructure

The project features unique townhouses located in a gated residential complex with developed infrastructure. The sale of townhouses with 2, 3, and 4 bedrooms will begin soon. This offer looks particularly attractive for investors and those planning to move to Dubai, as it is just 20 minutes from the city’s business center and 5 minutes from popular tourist destinations like IMG Worlds of Adventure.

Apartments from Horizon Realty

• Luxurious 1-bedroom apartmentAn area of 72 square meters on Beach Isle in the Dubai Harbour area – priced at €492,662. It includes 1.5 kilometers of private beach, 2 public parks, and a playground.
• Luxurious one-bedroom apartmentfor €380,421, located in Sobha Creek Vistas Grande. The apartment has an area of 79 square meters, and the windows offer a picturesque view of the skyscrapers.

Additional suggestions

• An apartment with an area of 65 square metersFor €174,866 at Luma 21, located in Jumeirah Village Circle. This apartment offers its own parking spaces and a balcony, and the area is surrounded by excellent infrastructure.
• Spacious apartments from Damac HillsUnder the name Bellavista, with an area of 123.3 square meters, it may also attract potential buyers.

Conclusion

These unique offerings make Dubai an incredibly attractive place not only for living but also for real estate investment.

Variety of leisure activities

The territory of this residential complex offers a variety of active leisure options, including tennis courts, an 18-hole golf course from the international Trump Dubai Golf Club, modern fitness centers, an amusement park, and much more. Bellavista is located in close proximity.

Studio in Luma 22

Horizon Realty offers the purchase of a studio in Dubai for149,900 eurosThis studio, covering an area of 54 square meters, features one bedroom and a bathroom. We are pleased to present this studio in Luma 22, located in Jumeirah Village Circle — one of the most rapidly developing areas in Dubai.

Luma 22 creates a unique community that provides comfortable access to both workspaces and educational institutions, shopping centers, places for relaxation, and active sports activities. For those who travel frequently, convenient transportation connections are available.

Penthouse in Cavalli Tower

Horizon Realty also offers a penthouse in Dubai for sale.2,436,824 euroswith an area of 220 square meters, which includes three bedrooms, two bathrooms, and three balconies. Let me introduce you to the Cavalli Tower project — an architectural masterpiece that offers stunning views of Palma. This building is designed for true connoisseurs of elegance and inspires with its luxury and unique concept.

The 70-story tower is filled with unique moments and is designed for those who aspire to a luxurious lifestyle. Cavalli Tower was developed by the world-renowned architect Sean Killa, who has received numerous awards for his work.

Buying real estate during the construction phase

If you are planning to become the owner of a property that is under construction (off-plan), keep in mind that some banks are willing to finance up to50%from the cost of housing. Local developers often offer flexible payment terms, allowing the principal amount to be paid in installments (up to60%) after the completion of construction work. Thus, it is possible to obtain a loan that will help pay off the remaining debt on already completed projects.

Necessary documents for a mortgage

As for the documents required to obtain a mortgage, it's important to remember that each bank has its own list of requirements. Typically, the standard package includes:

• mortgage loan application;
• a photocopy of the passport;
• a copy of the resident visa (if available);
• a bank statement showing the current account balance and transaction history for the last six months;
• a certificate of income from the place of employment with information about the position and salary;
• founding documents of the company;
• results of the audit (if the client is an individual entrepreneur);
• confirmation of additional sources of income (for example, dividends or rental income).

Document translation

It should be noted that all submitted documents need to be translated into English or Arabic! The preliminary assessment of the borrower's compliance with the bank's minimum requirements usually takes aboutfive working daysAfter the application is approved, an email will be sent with a detailed description of the terms of cooperation. After that, the buyer is given a deadline untiltwo monthsfor finding suitable real estate.

Mortgage loans in the UAE

In the United Arab Emirates, mortgage loans are offered with various terms that depend on several factors. Key points are related to the currency of the loan, which is usually issued in UAE dirhams. Citizens of the country can obtain a loan of up to80%from the assessment of the value of the purchased property, while for foreigners this limit is50%.

The term for which a loan can be issued reaches25 yearsDepending on the terms of the specific contract. The borrower must be within the age limits of21 to 65 years oldto be able to apply for a mortgage.

Interest rates

Interest rates also have a wide range.

• For residents, the rates fluctuate from3.5% to 4.5%
• For non-residents, they are within the range of4.5% to 5.5%

The option for early repayment of the mortgage is also available, but it should be noted that a penalty may be charged for this.1-2%from the remaining amount of debt.

Types of mortgage loans

There are several types of mortgage loans in the UAE.

• Fixed-rate mortgageIt keeps it throughout the entire loan term, allowing borrowers to plan their expenses over the long term. This is very appealing to those who value financial stability.
• Mortgage with a decreasing interest rateIt implies a change in interest rates depending on the remaining debt. Initially, the interest rate may be higher, but as the principal amount of the debt is paid down, it will decrease, which can be beneficial and provide savings in the future.
• Mortgages with a floating interest rateThey propose changing the interest rates every six months based on the EIBOR index, which reflects the interbank lending rate of the Central Bank of the UAE. Under these conditions, if the EIBOR index decreases, the monthly payments for borrowers can significantly reduce as well.

Hybrid models and loan conditions

Banks often applyhybrid modelIn the first five years, fixed interest rates apply, after which a variable rate is activated. When choosing the best mortgage program, it is crucial to pay attention to the method of interest calculation and the possibility of early repayment without additional costs.

Islamic financing

As a rule, the maximum term for a mortgage loan for foreign clients does not exceed25 yearsIt is especially worth noting Islamic financing, which strictly adheres to the norms of Sharia and the teachings of the Quran. According to these principles, Muslims are not allowed to lend or borrow money with interest.

To address this issue, banks have developed a special mortgage lending model in which they effectively purchase the property and rent it out to the client. Thus, the rental payments serve not only to repay the principal amount of the debt but also to cover the interest, similar to traditional mortgage loans. This gives the Arab mortgage system a unique character and makes it ideal for devout Muslims.

In the field of lending, there is one important advantage: a borrower is only required to make payments on financing if they can actually use the property. For example, in 2008, a fire occurred in Jumeirah Lakes Towers, rendering the building unfit for use, but no one was harmed. Many apartment owners in this complex took out loans to purchase their homes. Borrowers who had Islamic loans were able to suspend their payments, as such conditions were stipulated in their agreements. At the same time, those using traditional mortgage schemes were forced to either go to court to stop their payments or continue making contributions despite being unable to use their homes.

The procedure for obtaining a mortgage

As for the mortgage application process, it includes several key stages.

1. Finding a lender

The first step is to choose a suitable financial institution. Local banks usually work willingly with foreigners and offer special programs for expats.It's important to carefully consider your choice of bank.to find the most suitable conditions and rates.

2. Pre-approval

At the next stage, the borrower must obtain preliminary approval. To do this, they will need to gather a set of necessary documents and submit them to the bank. At this stage, the lending organization conducts an initial check of the borrower to ensure they meet the minimum requirements. This process usually takes about three to four business days.

3. Mortgage approval

After receiving preliminary approval, the next step is to finalize the mortgage agreement. The borrower receives an email with the loan terms, including the amount and repayment schedule.

4. Loan arrangement

After that, the loan arrangement follows. Here, it is necessary to confirm the intended use of the funds received. This is done by providing documents that prove the payment of a deposit or the deposit amount.

5. Signing the deal

On the day of signing the sales contract, the bank transfers the funds to the seller, which marks the beginning of the mortgage agreement.

Additional expenses

It's also important to consider additional expenses when applying for a mortgage.

• The property appraisal can cost around 1000 dollars.
• Insurance of the loan object and the borrower's life varies from 0.5% to 1% of the total loan amount, depending on the credit risk.
• A bank fee for issuing the loan is also required, which usually amounts to 1% of the loan amount.
• The registration of a mortgage in the land department will cost 0.25% of the loan amount.
• It is also worth remembering that an early repayment of a loan may incur a penalty of 1-2% of the remaining debt.
• Don't forget to account for the realtor's commission as well as the registration fees, which amount to about 6% of the property's value.

If you are planning to purchase property in the United Arab Emirates with a loan, leave your application on our website. We can assist you in finding a property that meets all your preferences and provide consultations on loan processing.

Conclusion

In concluding my review of real estate lending in the UAE and the current market trends, I want to emphasize that the situation is more interesting and promising than ever. Since 2014, we have seen significant changes in residential property prices: after a short-term decline and the subsequent pandemic crisis, the market has begun to recover with renewed vigor. Many find it surprising how, after such difficulties, the market has managed to regain the interest of investors and residents in Emirati real estate, and I am equally pleased with this development.

The government's planned support measures, such as reducing the down payment and offering favorable mortgage conditions, have certainly contributed to making real estate purchases more accessible. I am convinced that this trend will only gain momentum, as attracting skilled professionals and foreign investors with "golden visas" opens up new opportunities for growth in this market.

The popularity of mortgage lending

As I mentioned, about 40% of transactions in Dubai in 2021 were made using borrowed funds. This indicates that mortgage lending is becoming increasingly popular among both residents and foreign buyers. I mean, every potential borrower should be prepared for the strict requirements of banks, and it is essential to consider one's financial capabilities before making a decision to purchase property in the UAE.

The role of mortgage brokers

It's important to remember that competent mortgage brokers can be a real asset for foreign buyers, helping them find the most advantageous and convenient financing options. They can assist you not only in overcoming the language barrier but also in professionally assessing your chances of loan approval.

The main advantages of mortgages in the UAE:

• Low initial deposits.
• Available interest rates.
• Diversity of visa programs for investors.
• Support from the government for market development.

In conclusion, I am confident that the real estate market in the UAE will continue to develop, opening new horizons for investors and buyers. The level of mortgage activation, supported by government initiatives and growing demand from immigrants and professionals, could create a unique situation for those considering investing in real estate in this regional hub. I hope that the information provided in this article will be useful for everyone interested in the prospects of investing in residential property in the UAE.