In Q1 2018, around 71 percent of Dubai Property Transactions were financed with mortgages.
In Dubai, an explicit and incessant rise in the value of mortgage activities over time, swiftly coinciding to levels seen in the US (from less than 30 percent in Q1 2010 to 71 percent in Q1 2018). This document to the maturity of the real estate business in Dubai, a trend that is expected to continue in the future as well.
The recent rise in mortgage pursuit can be imputed to the rise of the end-users and investors taking the edge of capital structure through leverage. Practically speaking, the higher levels of mortgage stipulate that there will be lower levels of "overturn" and therefore specify a more stable investor base; this change is healthy and expected to stimulate in the years ahead.
Mortgage bustle in the apartment space has observed a higher rate of increase compared to the villa space. The average rate of mortgage to sales in Q1 2010 of apartments was 15 percent, contrast to 68 percent in Q1 2018 (representing an increase of 3 times). Whereas in the villa space, it has doubled; shooting up from 56 percent to 116 percent in the same period.
Speaking of the villa section, mortgage transactions have outclass that of sales amount, indicating a certain percentage of refinancing is in progress. Overall, it is understandable that the amount of financing in the villa segment has been higher than the apartment category, confirming the conjecture that the mortgage incidence ratio is highest at the top end of the market.
The UAE financial sector has significant scope to enlarge its level of exposure to the real estate sector over the next few years, precisely as banks move towards asset-backed financing and away from the old school trading sector.
This elevation in mortgage-backed activity is anticipated to provide a huge boost to the sector over the next decade, signifying that prices should be holding firm even in the face of surging supply.