If you’re looking for an apartment, now is the timeOctober 6, 2015 6:07
The winter of investors’ discontent
Property investors in Dubai continue to scramble for financing, but to no avail
January 13, 2009 1:07 by Dana El Baltaji
Mortgage advisors in Dubai are fending off investors desperate for home financing. Kipp spoke to advisors at Mashreq Bank, Barclays and Standard Chartered, who help investors secure mortgages worth between 60-70 percent approved developments in the emirate who have hinted that the banks have turned away countless applicants.
Investors are unable to secure financing with the banks because, as one Mashreq Bank employee, who wishes to remain anonymous, explained to Kipp “no one has been approved for months.” Many of the properties sold in 2008 are part of projects that have not been approved by banks in the UAE. Couple that with the fact that banks are tightening their credit, and the possibility of obtaining home financing is next to impossible for those who bought properties last year.
The advisor went on to say that investors should have ensured that they can finance properties before paying down payments or the installments.
But here’s the problem: the buying frenzy in Dubai meant that many investors who bought units in the emirate had no intention of keeping them, and many failed to check if the developers had been approved by banks in the UAE. However, due to the market crash, investors have been forced to keep their properties and are now struggling to find financing for their properties. Investors have been questioning whether they should abandon their investments and consider this an expensive lesson, or wait to see if banks will change their minds.
But according to the Real Estate and Regulatory Authority (Rera), investors shouldn’t expect much from banks: “Banks have not approved new developments for months, and they won’t be approving anything for some time,” said a Rera advisor to Kipp.
It’s a sentiment echoed by banks. When asked whether Mashreq Bank, Barclays and Standard Chartered are likely to approve developers over the next months, all the mortgage advisors said that it wasn’t likely. When asked for advice on where to go for financing, neither of the employees could provide us with any.
According to Rera, the only option many investors who cannot secure financing have is to cut their contracts short and claim 70 percent of their investment: “It’s better than nothing,” he said.