Question: I am looking to buy a ready property in Dubai soon. I am trying to sell a property in my home country and move the money to the UAE for the down payment.
Is this a good way to fund the down payment? If I am unable to do this, then I am also contemplating taking a personal loan. Is this too risky, as I am taking on excessive debt?
Should I take a personal loan before or after my mortgage pre-approval? My mortgage adviser has also asked me to reduce my credit card limit to be eligible for a higher loan amount. Would you advise the same?
I also fear that prices are quite elevated in today’s market. Should I wait for prices to fall a bit, or are they likely to continue rising? Why are property prices continuously rising in the UAE? HK, Dubai
Answer: What you are wishing to sell in your home country will define exactly what you can buy here in Dubai.
You didn’t mention whether the future purchase is for living purposes or investing?
If it is for investing, you may look at perhaps going for more than one unit in the off-plan market, where initially there is only the down payment to care about. Having said this, I do not advise you overstretch yourself, as the repayments of the plan will have to be met, so please budget accordingly.
The other option would be to just remortgage your property in your home country and this way you will be able to raise the desired deposit without the need of selling the property at all.
Taking on personal loans can be a bit tricky as the profit rate will be high, so I don’t believe this is the best way to raise the money for the down payment of a future investment.
Getting the best deal on a mortgage should be done by shopping around initially and doing your due diligence. It’s not just about the best interest rate, as there are other factors to consider too.
You will most definitely get a better deal if you were to reduce your outgoings, given that banks will not lend to you if your debt burden is too high.
When it comes to timing any market, I believe that the Dubai property market is currently driven by positive fundamentals and it is not yet within bubble bursting territory.
The main reason for this continual increase is down to positive population growth, the golden visa programme and that Dubai is constantly attracting new investors and residents alike, so if you are waiting for real estate prices to drop, unfortunately you will be waiting a while as these are not forecast to drop any time soon.
I suggest you go for it, assuming you are able to find the purchases as suggested before.
Q: I currently live in a rented apartment in Dubai and commute to Abu Dhabi for work several times a week.
I am contemplating buying property in one of these two cities. Is it true that property prices in the capital are higher than in Dubai?
I am not looking to purchase property in the city centre of either Dubai or Abu Dhabi. I am quite keen on areas like Dubai South. However, I am worried about capital appreciation and investment returns in these areas given they are quite far from the centre of city.
Will such communities become more popular over the years? Will there be more development in the suburbs of Dubai or Abu Dhabi? I am looking to gain a first mover advantage and benefit from capital appreciation. But have I missed out on it considering property prices in Dubai South have increased on news of the airport expansion plans? Please advise. RS, Dubai
A: In terms of real estate, both Dubai and Abu Dhabi are about the same when it comes to average per-square-foot prices, which stand at around Dh1,400 ($381). This is based on communities located outside of the city centre, so, no – I don’t believe that the capital is more expensive than Dubai.
The area of Dubai South is perfect for capital appreciation and in fact, as you have already alluded to, has increased in value a great deal since the announcement of the Al Maktoum airport expansion but I don’t believe you have missed the boat here, given that a long time will be needed to get the airport to the size of its proposal.
In the meantime, there will be a large migration of people there once all has been completed given the major labour opportunities the aviation industry will bring, so I believe that this area will continue to grow in the years to come.
As more people move to the UAE, the developers will have to carefully map out new master communities that will mean more expansion within the suburbs of these two cities.
The Jebel Ali area will undergo massive transformation with the development of Palm Jebel Ali now under way. This master community project will take decades to conclude, but in the meantime, the surrounding areas will benefit from these developments such as improved transport links using extended metro lines, better road infrastructure and, of course, the Etihad Rail, which will cut the commute time to Abu Dhabi drastically.
Mario Volpi is head of brokerage at Novvi Properties and has worked in the property sector for 40 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com
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Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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