The launch of affordable housing projects in Dubai is making UAE residents, with salaries of even Dh8,000 a month, consider the option of becoming home owners.
A new report by compareit4me.com, a finance comparison website, points to the “renter to owner” movement with home mortgage enquiries going up substantially in the first four months of 2016, particularly salary earners of between Dh8,000 and Dh19,999 per month showing a three-fold increase in March and April.
The increase registered is based on the average number of enquiries received in past 22 months. Similarly, those falling in the salary bracket of Dh12,000 to Dh14,999 a month saw a growth of 240 per cent in March and 260 per cent in April, while Dh15,000 to Dh19,999 bracket earners showed an increase of 96 per cent in March and 150 per cent in April.
Prices of off plan affordable projects for studio units range between Dh375,000 and Dh450,000 in Dubai Investment Park, Arjan and Dubailand. Though apartment sizes are small, low prices allows people with low salaries to buy an apartment.
compareit4me.com CEO Jon Richards says: “The UAE’s new mortgage cap rules, announced in October 2015, teamed with the cascading effects of the drop in crude oil prices certainly had an impact on the general public’s attitude to real estate. Added to this, the strong US dollar – and therefore dirham – and the subsequent retraction of attention from foreign investors all culminated together to create falling housing prices, resulting in hesitancy in the market.”
He added: “The surge in availability of more affordable housing projects seems to have activated pockets of residents who were previously confined to renting. I believe this could explain the spikes we have seen in mortgage enquiries from mid-level salary earners as these new projects are opening the door to them being able to step onto the UAE’s property ladder.”
Jessica Horie, Senior Director at Prestige Real Estate, states, “There are more buyers in the market now than the beginning of the year, and I would say this is due to the general consensus that we are at the lowest level of pricing and that the market will soon recover and prices of property will start to increase again.”
“New developments targeting end user buyers and lower salary brackets are definitely drawing more buyers into the market. I foresee a trend towards more affordable housing projects and for people with salaries Dh10,000 and below a month to start to being interested in owning they’re own homes rather than paying rent.”
Michael Cullen, Director of Sales and Leasing at Sloanes Real Estate Brokers reveals they have also seen a rise in buyer enquires since March.
“Tenants are taking advantage of more relaxed mortgage products and extended payment plans by developers in order to soften the initial outlay and get their foot on the property ladder. Off plan has continued to do well with high quality, but affordable prices in developments. As we see the population continuing to increase in Dubai, more and more people are looking at areas other than Dubai Marina and Downtown.”
In February 2016, Dubai Land Department Director-General Sultan Butti Bin Mejren told Emirates 24|7 that they were expecting real estate transactions to reach Dh300 billion in 2016 compared to Dh267 billion in 2015.