According to Jones Lang LaSalle, the UAE’s plan to impose a 50% cap on mortgages offered to expatriates might curb house price increases in 2013 to below those seen in 2012.
UAE citizens can get as much 70% of the value of a first house and 60% for a second, according to guidelines issued by the Central Bank. Foreigners can get mortgages of as much as 40% of the value of a second property, according to the same source.
The recent Central Bank announcement about caps on mortgage loan-to-value ratios shows that government authorities are concerned about market stability and want to avoid any rapid increase in real estate prices, as per Jones Lang LaSalle.
In its fourth quarter report on Dubai, Jones Lang LaSalle indicated that the Sheikhdom could witness a broader based real estate recovery in 2013. Yet, issues such as oversupply and the mortgages proposal might set back the sector. While there has been a recovery in rents and prices in the residential, retail and hotel sectors during 2012, this improvement remains focused on a relatively small number of projects.
The Jones Lang LaSalle report said that Dubai's overall residential market recorded a positive year in 2012, with the villa market continuing to outperform the apartment sector. Prime projects in well-established locations continued to report an improved performance. As to the secondary locations, they were still suffering from rental and pricing declines as tenants seek high quality projects.
The report added that Dubai's real estate investment market had remained quiet over the fourth quarter of 2012 with no major open market commercial transaction recorded. Despite the lack of transactions, investment sentiment in Dubai is improving. Improving sentiment and stronger economic fundamentals have resulted in a series of new large-scale projects being announced.
The most significant of these is Mohammed Bin Rashid City to be developed jointly by Emaar and Dubai Properties. The new city will include the world's biggest shopping mall (Mall of the World), a Universal Studios franchise, hotel facilities and a large public park.
MWM – Bank Audi Research