From the latest Federal Reserve meeting, we have learned that interest rates are not set to rise until at least 2024 and as the dollar is pegged to the Dirham, this will have an impact on lending here in the UAE. We know that interest rates are based on what happens in the economy, and the US will have milestones they want to hit in many areas, including employment and inflation. Once we see positive changes in these factors we’ll likely see a gradual rise in rates.
Whilst interest rates remain low, we predict we will continue to see increased spending in the real estate sector along with a rise in commercial lending for businesses looking to expand and capitalise on the new opportunities arising from the Covid-19 pandemic. As a result, we predict to see an increase in investors looking to build their property portfolio as rates should come down to around 3.5-4% rather than above 5-6% as seen previously. We could also see more businesses taking advantage of these interest rates and using the opportunity to buy their own offices and increase their asset size rather than renting.
In my opinion, rates will remain low for the next three to five years and this is a time to take advantage of these low margins. As well as the commercial market, the residential secondary resale market for ready properties will continue to rise as people take advantage of these rates and get mortgages paid down while the rates remain low. It has never been a better time to borrow money against a property in the UAE.
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