If you are planning to buy a property in the UAE this year, then there is some good news for you. The US Federal Reserve's decision to retain its benchmark interest rate at near zero per cent until at least the end of 2023 to stimulate economic growth and counter weak inflation will lower the cost of borrowing for consumers, including for mortgages.
Low interest rates for a prolonged period of time will also result in a weaker US dollar. And with the dirham pegged to the greenback, this has obvious implications for residents in the Emirates. Not only is it expected to further reduce the cost of borrowing in the UAE, but it will also boost the property market and deepen investor interest in gold, cryptocurrencies and the equity market, according to experts.
At the beginning of the pandemic, the US dollar strengthened to an almost two-decade high as demand rose for a safe-haven currency. This resulted in non-dollar-denominated buyers having to pay a premium for UAE properties.
“Since the dollar’s peak in the latter part of March, we have seen demand for a safe-haven currency such as the US dollar dissipate and, as a result, the dollar has weakened by 4.9 per cent from its peak to mid-September,” says Taimur Khan, an associate partner at Knight Frank.
“Given current market valuations and outlook for the market, international buyers who can capture additional discounts via currency are very likely to take advantage of the UAE property market.”
Aside from lower financing costs, developers have also begun to offer favourable payment plans to attract demand. According to Knight Frank data, on average 28.4 per cent of the total payment for Dubai properties is structured to be paid post-handover, up from 6.6 per cent in 2016. Some developers are also throwing in service charge exemptions and transaction fee waivers, among other offers.
Developers are now also demanding lower levels of payments during construction and on completion, says Mr Khan. In 2016, 43.1 per cent of the total payment was required during construction and 39.7 per cent on completion. In contrast, these have decreased in 2020 to 34.1 per cent and 28.3 per cent respectively, according to Knight Frank data.
Interest rate cuts by the UAE Central Bank have led to a fall in the cost of borrowing. While the UAE’s six-month Emirates Interbank Offered Rate (Eibor) has fallen from highs of 3.14 per cent in early 2020 to lows of 0.5 per cent in mid-September, mortgage rates have also followed suit, Mr Khan adds.
According to Mortgage Finder, mortgage interest rates have fallen over the past 18 months, sitting at 2.69 per cent in 2020 from 3.75 per cent this time last year. Both investors and owner-occupiers are likely to take advantage of these favourable financing rates.
We would hope to see cheaper finance for new borrowers and better refinance [buyout] options for existing borrowers
"The best current mortgage rates are at 2.69 per cent fixed for three years and 2.99 per cent fixed for five years," Brendan Kennelly, senior mortgage consultant at Mortgage Finder, tells The National.
“We would hope to see the banks in the UAE pass the benefit of the recent Fed announcement on to customers, meaning cheaper finance for new borrowers and better refinance [buyout] options for existing borrowers.”
An increase in demand for refinance mortgages and buyouts is likely following the Fed’s decision. Mr Kennelly says Mortage Finder is “already seeing enquiries from existing mortgage holders looking at lowering their interest rates given the current offers available”.
“The expectation is that we are going to be in a low interest rate environment for at least the next five years,” Mr Kennelly adds.
Leading remittance providers in the UAE do not see a big impact of the dollar weakness. Customers who transfer funds to their families every month will continue doing so, they say. However, there is likely to be a small dip in the number of transfers from rate-sensitive customers who have fewer commitments in their home countries.
“A weaker USD would make remittances to other corridors such as the British pound, euro and Indian rupee more expensive as the exchange rate for all other currencies against the USD will appreciate,” says Rajiv Raipancholia, chief executive of Orient Exchange.
According to Adeeb Ahamed, managing director of Lulu Financial Holdings, the US dollar and the UAE dirham will continue to maintain their supremacy among Asian currencies.
“Blue-collar workers will serve their families and commitments back home, meaning remittances from the UAE shall continue at a stable level. The volumes, however, would be a little subdued as white-collar expats look to hold on to their reserves for better rates,” he says.
A weaker US dollar is expected to lead to higher prices for gold and cryptocurrency as a hedge against inflation.
“Increasing numbers of investors may diversify their portfolio to include digital assets such as Bitcoin and alt coins due to higher expected returns," says Arshad Khan, co-founder and chief executive of Arabian Bourse. "For the period from January 2019 to September 2020, Bitcoin’s annualised price volatility was 74 per cent, with year-to-date 2020 returns of 45 per cent.”
Mr Khan says several corporates and banks have already started diversifying their cash reserves and investment portfolios to include digital assets as well as gold and other alternative investments. This trend is expected to rise in the coming months of global uncertainty due to growth concerns, he says.
Economists expect the Fed’s extreme dovishness to play out more on foreign exchange and bond markets, where the US dollar could weaken further and bond yields remain low.
“The main benefit for the UAE will be the scope of governments to continue to tap international bond markets,” says Scott Livermore, chief economist, Oxford Economics Middle East.
“The tourism sector could get a boost because of a weaker dirham against European currencies, but this is unlikely to be significant until Covid-19 is under control.”
Although increased bank lending is critical for fuelling the recovery, Mr Livermore does not expect to see a significant pick-up, especially in lending to SMEs, until a sustained economic recovery is under way.
While the lower interest rates are welcome news for borrowers, they spell poor returns for savers.
“Interest rates on cash accounts will continue to be low given the [Fed's] comments, meaning that it is going to prove difficult to generate a return on cash assets,” says Chris Davies, a chartered financial planner at The Fry Group.
He adds that there is potential for further capital flows into equities, considering how low-risk assets such as government debt are yielding low returns. Equity markets are also assisted by governments' supportive actions in the form of massive amounts of fiscal and central bank stimulus, Mr Davies says.
“Fixed-income assets could remain a low-return asset class. Investors seeking a return from fixed-income assets will need to be careful of how they aim to achieve this, with potential downgrades and defaults on some high-yield debt investments,” Mr Davies adds.
The specs: 2018 Jaguar F-Type Convertible
Price, base / as tested: Dh283,080 / Dh318,465
Engine: 2.0-litre inline four-cylinder
Transmission: Eight-speed automatic
Power: 295hp @ 5,500rpm
Torque: 400Nm @ 1,500rpm
Fuel economy, combined: 7.2L / 100km
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Read more about the coronavirus
Rock in a Hard Place: Music and Mayhem in the Middle East
Orlando Crowcroft
Zed Books
Zayed Sustainability Prize
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Results
Stage 7:
1. Caleb Ewan (AUS) Lotto Soudal - 3:18:29
2. Sam Bennett (IRL) Deceuninck-QuickStep - same time
3. Phil Bauhaus (GER) Bahrain Victorious
4. Michael Morkov (DEN) Deceuninck-QuickStep
5. Cees Bol (NED) Team DSM
General Classification:
1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28
2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35
3. Joao Almeida (POR) Deceuninck-QuickStep - 0:01:02
4. Chris Harper (AUS) Jumbo-Visma - 0:01:42
5. Neilson Powless (USA) EF Education-Nippo - 0:01:45
MATCH INFO
Arsenal 1 (Aubameyang 12’) Liverpool 1 (Minamino 73’)
Arsenal win 5-4 on penalties
Man of the Match: Ainsley Maitland-Niles (Arsenal)
MORE ON TURKEY'S SYRIA OFFENCE
What is type-1 diabetes
Type 1 diabetes is a genetic and unavoidable condition, rather than the lifestyle-related type 2 diabetes.
It occurs mostly in people under 40 and a result of the pancreas failing to produce enough insulin to regulate blood sugars.
Too much or too little blood sugar can result in an attack where sufferers lose consciousness in serious cases.
Being overweight or obese increases the chances of developing the more common type 2 diabetes.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
List of alleged parties
- May 15 2020: Boris Johnson is said to have attended a Downing Street pizza party
- 27 Nov 2020: PM gives speech at leaving do for his staff
- Dec 10 2020: Staff party held by then-education secretary Gavin Williamson
- Dec 13 2020: Mr Johnson and his then-fiancee Carrie Symonds throw a flat party
- Dec 14 2020: Shaun Bailey holds staff party at Conservative Party headquarters
- Dec 15 2020: PM takes part in a staff quiz
- Dec 18 2020: Downing Street Christmas party
Results:
Men's 100m T34: 1. Walid Ktila (TUN) 15 sec; 2. Rheed McCracken (AUS) 15.40; 3. Mohammed Al Hammadi (UAE) 15.75. Men's 400m T34: 1. Walid Ktila (TUN) 50.56; 2. Mohammed Al Hammadi (UAE) 50.94; 3. Henry Manni (FIN) 52.24.
'Texas Chainsaw Massacre'
Rating: 1 out of 4
Running time: 81 minutes
Director: David Blue Garcia
Starring: Sarah Yarkin, Elsie Fisher, Mark Burnham
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Top tips
Create and maintain a strong bond between yourself and your child, through sensitivity, responsiveness, touch, talk and play. “The bond you have with your kids is the blueprint for the relationships they will have later on in life,” says Dr Sarah Rasmi, a psychologist.
Set a good example. Practise what you preach, so if you want to raise kind children, they need to see you being kind and hear you explaining to them what kindness is. So, “narrate your behaviour”.
Praise the positive rather than focusing on the negative. Catch them when they’re being good and acknowledge it.
Show empathy towards your child’s needs as well as your own. Take care of yourself so that you can be calm, loving and respectful, rather than angry and frustrated.
Be open to communication, goal-setting and problem-solving, says Dr Thoraiya Kanafani. “It is important to recognise that there is a fine line between positive parenting and becoming parents who overanalyse their children and provide more emotional context than what is in the child’s emotional development to understand.”
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more from Janine di Giovanni
World Cricket League Division 2
In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.
UAE fixtures
Thursday February 8, v Kenya; Friday February 9, v Canada; Sunday February 11, v Nepal; Monday February 12, v Oman; Wednesday February 14, v Namibia; Thursday February 15, final
RESULTS
2.15pm: Al Marwan Group Holding – Handicap (PA) Dh40,000 (Dirt) 1,200m
Winner: SS Jalmod, Antonio Fresu (jockey), Ibrahim Al Hadhrami (trainer)
2.45pm: Sharjah Equine Hospital – Maiden (PA) Dh40,000 (D) 1,000m
Winner: Ghallieah, Sebastien Martino, Jean-Claude Pecout
3.15pm: Al Marwan Group Holding – Handicap (PA) Dh40,000 (D) 1,700m
Winner: Inthar, Saif Al Balushi, Khalifa Al Neyadi
3.45pm: Al Ain Stud Emirates Breeders Trophy – Conditions (PA) Dh50,000 (D) 1,700m
Winner: MH Rahal, Richard Mullen, Elise Jeanne
4.25pm: Sheikh Mansour bin Zayed Al Nahyan Cup – Prestige Handicap (PA) Dh100,000 (D) 1,200m
Winner: JAP Aneed, Ray Dawson, Irfan Ellahi
4.45pm: Sharjah Equine Hospital – Handicap (TB) Dh40,000 (D) 1,200m
Winner: Edaraat, Antonio Fresu, Musabah Al Muhairi
Killing of Qassem Suleimani
