dubai’s private developers emerge tops in mortgages
Last Updated : GMT 11:59:16
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Egypt Today, egypt today
Last Updated : GMT 11:59:16
Egypt Today, egypt today

Dubai’s private developers emerge tops in mortgages

Egypt Today, egypt today

Egypt Today, egypt today Dubai’s private developers emerge tops in mortgages

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 Private developers in Dubai are finally getting the level of mortgage support for their projects, which provides them with a compelling case in their sales pitch to potential buyers. Last year, mortgages issued in favour of private sector developer projects trumped those from master-developers/government-owned entities in Dubai for the first time, according to data from Reidin-GCP.

If the trend holds, this could prove a wide safety net for private developers to continue with their off-plan launch programmes this year. The last thing they want at this stage, when the market has been showing signs of increased transactional activity, is to find that their buyers are not able to secure funds from mortgage lenders. For three years now, mortgage lending has been subject to strict lending norms related to loan-to-value; in the case of off-plan launches, banks can lend only up to 50 per cent of the property value.

Last year, government-owned developers introduced 8,936 units into the market, while privately owned names came out with 14,532 units. As for mortgage-backed transactions, the first quarter of 2016 and the fourth quarter of 2016 were the best quarters, accounting for 1,663 and 1,652 transactions, respectively. The second and third quarters netted a further 1,447 and 1,392, respectively. (There was a mortgage-driven transaction spike in 2012-13, but the beneficiaries of that were principally government-owned developers. At the time, there was limited off-plan launch activity from private players.)

“Banks have become more comfortable lending to private sector developments,” states the Reidin-GCP report. “Also, homeowners have become more comfortable in purchasing from private sector developers. These two variables have,,, led to mortgage activity in private sector developers increasing significantly, crossing that of government sponsored developers in 2016.

Active end users

There are other numbers that support the case for a mortgage market that is on the up and up, also attesting to the fact that end users are remaining active in the deals.

Mortgage activity as a percentage of the overall sales volumes now stands at 55 per cent, effectively doubling over the last seven years, the report adds. “This structural shift is mirroring markets such as US and UK, where the cash sales only account for 30-40 per cent of all transactions. We opine this shift has resulted in further cooling the market as the time taken to conclude a transaction has lengthened.

“In cash transactions, properties typically transfer between 15-30 days, whereas in mortgage-backed transactions, it can take between 30-60 days due to regulatory procedures.” (Interestingly, even within the office property market, mortgage activity is on the mend. This is notable given that hardly any strata selling — with multiple buyers getting into a freehold office project — has been taking place on offices.)

But with a typical off-plan residential development taking between two to four years to complete, are mortgage providers coming in later or at the launch phase itself? According to Sameer Lakhani, Managing Director of Global Capital Partners, “Historically, the closer the project is to completion, the greater the comfort factor ... and a greater incidence of mortgages. However, we are now witnessing a greater willingness on the part of banks to finance off-plan projects at inception. This is a trend that will increase.

“There is a general tendency among local banks towards asset-backed financing and away from trade-based activity.”

 

source : gulfnews

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dubai’s private developers emerge tops in mortgages dubai’s private developers emerge tops in mortgages



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