Cheaper mortgages, but cash still king in Dubai property market
Over 6,600 units valued at Dh8.4 billion paid for in cash during Q1 2012
Although mortgage providers in the UAE may have slashed interest rates or increased LTV (loan-to-value) ratios, cash still rules the Dubai property market.
Over 6,600 units valued at Dh8.4 billion were purchased in cash during the first quarter of 2012 with only 1,256 units, worth Dh1.99 billion, being mortgage deals, the Dubai Land Department said on Monday in its first- quarter report.
A total of 8,276 units (buildings and units) worth Dh10.77 billion were sold, according to the department.
Cash sales accounted for 68 per cent, or Dh15.23 billion, of the overall sales of Dh22.34 billion, while mortgages accounted for Dh6.09 billion or 27 per cent, of total property transactions.
In terms of land transactions, 1,006 were cash sales valued at Dh6.83 billion, while purchases through mortgages reached Dh4.09 billion (528 transactions).
Total land transactions stood at Dh11.57 billion (1,655) in the first quarter.
In 2011, DLD recorded 35,297 transactions worth Dh143 billion - a 20 per cent increase compared to 2010.
Mortgages formed 60 per cent of the total transactions, which the DLD said indicates the “recovery of the property financing and the return of healthy activities.”
Jones Lang LaSalle (JLL), in its 2012 Global Real Estate Transparency Index, said recently that Dubai remains the most transparent market within the Middle East and North Africa (Mena) region, while Abu Dhabi holds the second spot.
In terms of the global ranking, Dubai and Abu Dhabi hold the 47th and 52nd position, respectively, on the index.
In a report Bank of America Merrill Lynch also said that Dubai residential property market will benefit the most as the population is likely to more than double over the next decade and more jobs are being created.
“Diversified economy, continued population growth and superior infrastructure investment will have positive impact on Dubai’s retail, hospitality and residential market,” the bank said in its new medium-term outlook report ‘GCC 2020’.
Asteco, a Dubai-based real estate consultancy, earlier this month, said apartments in Downtown Dubai, Dubai Marina and Palm Jumeirah remained most popular among buyers and witnessed price increases of nine per cent, eight per cent and eight per cent, respectively, in the second quarter 2012.
Prices in Jumeirah Lakes Towers, Greens and Dubai International Financial Centre (DIFC) remained relatively stable, while Jumeirah Beach Residence jumped three per cent.
In the villa category, Arabian Ranches saw a price hike of 16 per cent, the Springs (14 per cent) and Jumeirah Islands (11 per cent).
Villas on Palm Jumeirah were the most expensive in Dubai at Dh17,200 per square metre, followed by Jumeirah Islands and the Meadows priced at Dh10,750 and Dh10,250, respectively.