What the new mortgage caps in Dubai mean for property buyers

UAE residents might find it harder to get a mortgage these days with the Central Bank's introduction of tighter mortgage limits since October 2013.
Before these new regulations were in place, residents could get up to 85% mortgage allowing them a lot more options in buying property.

Expatriates buying a property for under Dh5 million must now produce a minimum deposit of 25 per cent, rising to 35 per cent for properties above Dh5 million. For second properties, the minimum deposit is 40 per cent.
Emiratis have it slightly easier. But they still need a 20 per cent deposit for homes under Dh5 million, rising to 30 per cent for homes over Dh5 million, and 30 per cent for any subsequent properties.

This does indeed make life a little harder for property buyers so how can first timers go about with this new rule?

Mr. Philliskirk, a mortgage expert says: if you have other properties either in the UAE or overseas, you could raise funds by releasing some equity from that although first time buyers won't be in this position.
Raising the deposit from family members is also an option. If all else fails, the buyer might have to consider cheaper options.

Property prices in the city have been forecasted to rise 15 - 20% this year hence making it even more difficult to come up with a deposit fast enough. It might be better to invest in a cheaper property today which will rise in value in line with the wider market making you a profit towards the deposit.

Article source: The National  (http://bit.ly/1fbwJX2)

Most active buyers of property in Dubai by nationality

According to a survey conducted by real estate consultancy Cluttons, Indians have topped the list of Dubai's most active real estate buyers. The close proximity of the two locations combined with the large Indian population in the region are the main drivers of this.

"Unsurprisingly, Indian nationals topped the list of the city's most active buyers, with Dubai often viewed in the same league as London by this group," Faisal Durrani, Associate residential and international research at Cluttons, said. "And now we're seeing the demand base broadening from individuals to institutional players. Britons and Pakistani nationals rounded off the top three nationalities that purchased property in Dubai last year," Durrani said.

The survey was conducted in nine locations across the Middle East and Asia-Pacific region. London ranked as the top investment destination while Dubai came in a close second up from seventh place last year.
This renewed demand from local as well as international buyers for Dubai property assets shows growing confidence in the improving Dubai real estate market.

Article source: http://bit.ly/1fzefQU

Negotiation still the name of the game

By,

Dean Darby

Project Director, FAM Properties

Negotiation as part and parcel of property deals Buyers invariably place initial offers below the asking price and, of course, when we act as buyers agents, it is our duty to negotiate on behalf of our investors and place offers below the asking price. 

The success rate of negotiations varies depending upon the speed and direction of the market. In bull markets, we face significant challenges negotiating on behalf of buyers. In fact, closing deals at the asking price can sometimes be difficult due to higher offers from third parties. 

The most defined change in this process is the change in market conditions. In a stagnant market, sellers are forced into being more agreeable to lower offers; and in a rapidly sinking market, low-ball offers are often accepted out of fear of the unknown. We’re now in a seller’s market so the power has shifted; if anything, the issue is prices not being increased even after listing as the market rises.

Most areas within UAE have equal room for negotiation It is very much a case of “a rising tide carries all boats” at the moment, and the sentiment of property owners and landlords is positive across all segments and areas of the market. However, having said that, certain projects in Abu Dhabi offer great opportunities right now with a small number of highly motivated sellers actively negotiating with buyers.

Time is the second most negotiated item Typically, the most common item open for negotiation in the current market is time to transfer. Sellers want to transfer tomorrow, and conversely, buyers often need time to arrange for funds. Buyers often want snagging or maintenance items covered as part of the conditions of sale, and both buyers and sellers often request assurances and compensation should either party back out of the deal.

There is no hard and fast rule when it comes to negotiating In more mature and slower moving markets, you often find negotiation “norms” that both the buyers and sellers are generally tolerant to. 

However, in the UAE market, we place offers on behalf of buyers on a case-by-case basis. We take into account many different factors that differ greatly from one deal to the next, and it is hard to generalize on a set figure. 

In some extreme cases, experienced buyers may instruct us to offer more than the asking price to avoid the seller courting other offers, and reduce time and opportunity cost overheads.

Look for key “tells” when negotiatin gLength of time on the market is the main variable here – if a seller has been actively marketing a property for three months or more, he is more likely to suffer from “seller’s fatigue” and enter into negotiations with a different mindset. With off-plan properties, knowing when the seller is due to pay the next instalment can be useful. It is for obvious reasons in the seller’s interest to close a deal before the next instalment is due.

Finances and paperwork should be in order before beginning negotiations Buyers need to have ready access to funds, and in the case of finance deals, deposit amounts plus pre-approval in place from mortgage providers make an offer much more solid and likely to be accepted. Sellers need to be able to evidence they own the property via title deeds, and have no outstanding liabilities such as unpaid service charges.

Apart from the formalities, I think both sides need to try to manage their own expectations accordingly and understand the process and mindset on the other side of the table. The ability to walk a mile in someone else’s shoes allows for a smoother buying and selling process

Value of having an experienced broker• He/she understands your needs and would be willing to go the extra mile to get you the best price – as a seller or buyer
• Knowing that beyond price, time is a major element in property deals, your broker will ensure you do not miss out on closing a profitable transaction
• A well-rounded agent would be armed with up-to-date market data, be experienced in sales and marketing, and have an established network of contacts that would go a long way in helping clinch you the best deal that satisfies your requirements