Allsopp & Allsopp have seen a rise in enquires from first-time buyers in recent months, however, many residents of Dubai can’t make the jump to buying because of the high down payment needed to purchase a property.
The recent introduction of the retirement visa and long-term visa by the UAE cabinet has had a huge positive effect on market confidence. As well as this the International Monetary Fund has recently commented that the UAE’s economy is projected to strengthen to 2.9% this year and 3.7% in 2019 and global companies are setting up a base here in the Emirate. Furthermore, the popular financial business district is set to double in size and infrastructure of the entire city is on the rise.
Lewis Allsopp, CEO of Allsopp & Allsopp says “Dubai is a very appealing city to live in. It has so much to offer people from all over the world of all ages. The opportunities to advance in a career or advance personally are endless. Many expats move with the intention of saving money, and sending it home, to make a better life for themselves and their families in years to come. However, we are increasingly seeing that mindsets are changing, and more people are investing both their lives and their money in Dubai.
Professionals including; doctors, scientists, lawyers, accountants and innovators, as well as high-end investors, technological entrepreneurs, and influencers can be eligible for the 10-year visa. This has changed previous mindsets that Dubai is temporary. The availability of a 10-year visa has encouraged said professionals to put down roots in Dubai and enquire into buying their first homes.
Likewise, retirees can now plan to stay in the city after they finish working so long as they own a property worth 2 million AED, have 1 million AED in savings or have an income of AED 20,000 each month. The retirement community who meet these conditions are eligible for a 5-year visa. Dubai has been home to many professionals for the majority of their working life and now they have the opportunity to enjoy the UAE after they retire. Again, this has sparked the interest in stepping onto the Dubai property market ladder, not only for retiree’s themselves but for young professionals who are looking to make Dubai their permanent home.
Allsopp says, “Stepping onto the Dubai property ladder has become exceedingly more attractive, however, it all comes down to affordability. Paying off monthly mortgage repayments which are often less than a rent cheque seems like the best option. A homeowner puts their money into an investment instead of paying off a landlord’s mortgage.”
A large majority of first-time buyers have the confidence to buy, nonetheless, they don’t have the affordability for a down payment. Expat First Time Buyers will need a 25% deposit for a property under the value of AED 5 million. For properties valued over AED 5 million a 35% deposit is needed. On top of this down payment, there are approximately 7% fees which include the 4% transfer fee, the 2% agents fee and 1% affiliated fees. The affiliated fees are often overlooked but should be taken into consideration as they include; mortgage arrangements, moving costs, sales progression, transfer appointment fee, and the transfer admin fee.
As a result of these high down payments, many people are struggling to enter the Dubai property market and put their roots down in the city thus affecting the whole property cycle. Many real estate participants and professionals have urged central bank to relax the loan-to-value (LTV) ratios across the board or even solely to first-time buyers.
Lewis Allsopp explains the importance of the reduction in LTV’s “The reduction of the LTV is needed as there is buyer sentiment. We conducted a poll over our social media channels to ask whether they would prefer to buy over rent if they had the affordability for a down payment on a property. 74% of people said they would prefer to buy. The reduction in the LTV will provide buyers the financial freedom to invest in their future in Dubai.”
Dubai’s population has increased by around 160,000 over the last 10months proving that the opportunities and lifestyle provided by the Emirate is attracting more and more people. Laws are changing to encourage the influx of professionals. Those professionals who have already resided in Dubai for several years are elated with the introduction of the long-term visa and retirement visa, however, many people are longing for the news of a more relaxed and affordable way to buy their first property.
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About Allsopp & Allsopp
British-owned Allsopp & Allsopp operates to international service standards, having won 23 international property awards. Its growing team offers deep local knowledge with four offices across Dubai; Palm Jumeirah, Jumeirah Golf Estates, Springs Souk Mall and Business Bay. By basing their agents in key communities, they will be able to meet clients face-to-face to discuss their needs.
Allsopp & Allsopp is a family-founded real estate business with operations in the UAE and the UK. Set up in 2008 by CEO Lewis Allsopp and Managing Director Carl Allsopp, the UAE arm focuses on residential sales and lettings in Dubai. The award-winning company also offers property management, conveyancing, and mortgage services.
Allsopp & Allsopp prides itself on delivering levels of customer care well above industry benchmarks, while strictly adhering to the regulatory framework governing the Dubai property market. Employees follow business methods, which demand exceptional honesty, a stringent code of conduct and total transparency to the client.
Allsopp & Allsopp’s headquarters is in the prestigious Vision Tower in Business Bay and employs a team of over 200.