Affordability, whether because of personal circumstances or due to the macroeconomic picture, will always be at the forefront of a buyer’s mind
More and more people want to put down roots in the UAE says Pauline Leale, Managing Director at Sloanes Real Estate Brokers, but adds that buying property is still a big leap for many.
Making the right move
Over the last fifteen years working in the Dubai real estate market, my focus has always been on the upper end of the residential market. Whilst for a time there was a flurry of activity amongst investors and speculators, the AED 5 to 15 million segment has for the most part been filled with end users.
Different motivations amongst buyers
In my time, I have seen different motivations amongst buyers, different trends in nationality, and varying levels of demand. Right now, the common theme with the people I spend time advising is that they see a longer-term future for them and their families in the UAE. It is with this viewpoint and the desire to own their home rather than rent – as well as the better schooling in the emirate – that they are prepared to commit capital. They want to set down roots and create a greater sense of being at home in the country.
Looking at the changes in the market in 2017 and potential changes throughout 2018, this upper segment has seen a decline in activity mainly due to the sizeable deposits required for a mortgage more than AED 5 million – plus the drop in the sterling and euro to dirham exchange rate. There are considerations old and new for anyone seeking to invest in real estate in Dubai: length of stay in the UAE, confidence in job security, and business opportunities, are all aspects that impact a willingness to make a big financial commitment.
Oil prices
Affordability, whether because of personal circumstances or due to the macroeconomic picture, will always be at the forefront of a buyer’s mind when looking at the possibility of a property purchase. Not so long ago we saw significant falls in oil prices, and whilst these have picked up other considerations have come in to play. VAT has recently been introduced in the UAE, and although only at 5 per cent there are those that question the long-term effect on the cost of living and viability of property ownership.
Where we once saw many buyers able to purchase property using available capital, I have witnessed an increase in mortgage buyers. The mortgage cap for expatriates of 65 per cent when buying a property at more than AED 5 million demands a greater commitment of capital. This additional 10 per cent deposit in addition to agent fees and purchase costs is too great for many people – although with the low cost of borrowing, those that can afford the deposit have a great opportunity to upgrade from their current rental property and make a real home.
Market supply
My commentary wouldn’t be complete without making mention of supply. Back in 2003, when I first started working with buyers in Dubai there was limited choice across the market, particularly at the upper end. Wind the clock forward to 2018 and clients want to know how to select from such a wide selection and whether an oversupply will add further downward pressure on prices. The properties that are located well, that have been kept well, as well as the newly complete are much more desirable to current buyers.
Dealing with a purchaser looking to commit a considerable amount of capital in buying a home is so much more than a sale. Whilst we all have our opinions on the future of price movement, this is not something which we can control. Where our skill as brokers comes in to play is in listening to our clients’ circumstances and motivation, using our market knowledge and experience in helping them to make the right choice and secure the best deal.
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Pauline Leale | Managing Director at Sloanes Real Estate Brokers
