Survey reveals UAE expats find buying a home too costly

by Ray Clancy on July 22, 2016

The majority of expats in the United Arab Emirates do not buy a home with many saying that prices are too high, new research has found.

Despite staying in the UAE for over five years, they believe that buying a home is not affordable, including the down payment needed before getting a mortgage.

Dubai-SkylineIndeed, just 30% of expat residents bought a property and 70% opted to rent instead, according to a new survey from Property Finder.

It says that this is in contrast to more developed and established parts of the world such as the United Kingdom, specifically England and Wales, where the figures are almost the exact opposite with 64% owning a property and 36% renting a home.

Some 69% of those questioned said that prices were too high and they could not afford to raise the deposit or were unable to qualify for the mortgage amount required, despite property enquiries being the highest since 2014.

It points out that in the UAE mortgage cap regulations mean that a minimum of a 25% deposit is needed for properties under Dh5 million and 35% for properties priced above Dh5 million. This is the single biggest obstacle for those hoping to get into the market.

For example, to buy a ready unit of Dh1 million, a resident will have to find Dh40,000 to the Dubai Land Department for title deed registration, Dh4,000 to the registration trustee, Dh1,875 mortgage registration fee and a 2% agent commission of Dh20,000.

For anyone buying off-plan purchases the banks offers only 50% finance, which means the buyer will have to pay the 50% till handover and then apply for a home loan. Currently only a few banks offer home finance to residents with salaries as low as Dh10,000 per month.

‘It is clear that the want is there, but the high deposit requirements, fees, mortgage cap and stringent lending policies are stopping the market from maturing like its Western counterparts,’ said Lukman Hajje, Property Finder Group chief commercial officer.

‘I believe that if we can overcome these points there would be a bright future for the UAE property transaction market,’ he added.

Figures show that investment in the Dubai real estate market rose by a 92% in April and May combined, taking total investment in the sector to Dh48 billion in the first five months of 2016.

Statistics have not been released on the number of expat residents that have invested in the property market. But demand from expats is there with lack of mortgages cited by another survey suggesting if more finance options were available then the number buying would rise.

Finance comparison website compareit4me said that those earning between Dh8,000 and Dh19,999 per month were showing interest in owning properties in Dubai.

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