Khaleej
Times, Wednesday, Nov 23, 2022 | Rabi Al Thani 28, 1444
Dubai: No impact of interest rate hike on property market, say industry executives
The increase in mortgage rates has not dented demand for properties in Dubai as
only one-quarter of investors are opting for mortgages.
Local real estate industry executives noted that mortgage rates are still lower
compared to many emerging and advanced economies.
Afzaal Hussain, chief operating officer, Azizi Developments, said there is not
much impact of recent interest rate hikes on the market, but there might be on
the secondary market.
“In the past four months, there has been no impact from rising interest rates.
Compared to Europe and Asia, mortgage rates are lower in the UAE,” he said
during a panel discussion at the Cityscape Dubai 2022.
The UAE Central Bank has increased interest rates in the past few quarters in
line with the Federal Reserve rates due to the dirham’s pegging to the dollar.
The interest rates have been hiked in order to rein in inflation.
Real estate consultancy CBRE said in its latest quarterly report that despite
mortgage rates increasing, particularly post-promotional rates which have
reached 6.2 per cent on average in September 2022, up from 3.9 per cent a year
earlier, there has not been a marked increase in post-handover payment plan
offerings as yet.
Augostino Sfeir, chief investment and strategy officer, Imkan Properties, said
the majority are cash buyers and only 25 per cent of transactions are backed by
a mortgage. “Buyers are cautious because of the high increase in villa prices,
but we can see the apartment market also catching up,” he said.
Afzaal Hussain said new project launches are on the rise to cope with the demand
as Dubai is benefiting from geopolitical events taking place around the world.
“We’re seeing demand from Europeans, Russian and GCC investors. This is the best
time for Dubai developers to launch as many projects as they can and this is
what developers are doing.”
He added that Golden Visa is a major attraction for investors as many people now
feel like UAE becoming their first home.
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