Demand in the UAE’s mortgage market is being driven by “Fomo [fear of missing out] buyers” as many prospective home owners are rushing to enter the property market before the purchase becomes out of reach, industry experts say.
“With the dual impact of accelerated home price appreciation and rising interest rates, mortgage payments have gone up close to 50 per cent in some cases,” said Mohamad Kaswani, managing director of Mortgage Finder.
“However, it’s still premature to measure the real impact of rising interest rates on the local market as most transactions that took place in the second quarter were likely negotiated and decided in March prior to the rate hike.”
The central banks of the UAE, Saudi Arabia, Bahrain, Kuwait and Qatar raised their benchmark borrowing rates last month after the US Federal Reserve doubled down and aggressively raised its key interest rate to tame surging inflation.
The Fed increased the policy rate by 75 basis points (bps) on July 27 after a larger-than-expected three-quarters percentage point increase in June. This is the Fed’s fourth interest rate increase in four months and the biggest since 1994.
Most central banks in the GCC follow policy rate moves by the Fed due to the peg of their currencies to the US dollar.
The Central Bank of the UAE raised its benchmark base rate for its overnight deposit facility by three quarters of a percentage point. It maintained the rate applicable to borrowing short-term liquidity from the regulator through all standing credit facilities at 50 bps above the base rate.
Higher interest rates mean a range of personal finance products, including mortgages, will cost more.
Recent rises in interest rates will likely moderate demand for UAE properties as mortgage rates move higher. However, it is worth remembering that the market as a whole is still below the peak price level of 2014, said Sameer Lakhani, managing director of commercial lender Global Capital Partners.
“Concerns on the interest rate trajectory and inflation will undoubtedly play a factor in decision-making for end-users, though this will be less of a factor at the top end of the market [this segment has moderated worldwide in recent months, but continues to dominate headlines based on the gargantuan ticket sizes for deals that occur periodically],” Mr Lakhani added.
Mortgage transactions in Dubai in the second quarter of this year were relatively flat over the same period last year. There were 4,823 mortgage deals recorded between April and June, compared with 4,742 transactions for the corresponding time frame in 2021, Mortgage Finder reported.
The overwhelming majority of mortgage transactions are by first-time home buyers, the consultancy found.
The most important advice for a first-time buyer in this market is to work with an excellent mortgage broker who understands your budget and repayments and keeps you informed of any changes in “a very fast-moving mortgage market”, said Richard Waind, group managing director of real estate broker Better Homes.
“The majority of mortgages we originated in the second quarter were fixed-term products, though it’s becoming more challenging as most local lenders have been pulling back on offering attractive fixed-term mortgages, which is typical in local markets during periods of interest rate volatility,” Mr Kaswani said.
However, there has been increased demand for mortgage refinancing as many home owners are looking to maintain stability in their monthly payments and mitigate against the risk of further rate rises, he adds.
“In the long term, as interest rates continue to rise, the mortgage industry will be under pressure to innovate and introduce more value to prospective borrowers,” Mr Kaswani said.
The UAE property market has been extremely resilient in the face of rising interest rates, said Mr Waind from Better Homes.
“What we are seeing is a normalisation of interest rates, although it may impact the budget of some buyers,” he said.
Dubai apartment prices - in pictures
While it had been a buyers’ market in Dubai for the past six to seven years, with rising demand, sales prices and transaction volumes, it is increasingly becoming a sellers’ market, said Edward Macura, partner at property consultancy Core.
However, it is important to note that higher interest rates and inflation are affecting the purchasing power of buyers, Mr Macura said.
Indians ranked first in Better Homes’ list of top five buyers of Dubai real estate by nationality, followed by people from UK, Italy, Russia and France.
The war in Ukraine, domestic tax concerns and an increasingly mobile workforce are some of the reasons behind the increased migration of Europeans to the UAE, Mr Waind said
“We have also seen many global expats relocate to Dubai from the Asia Pacific due to continuing Covid-19 restrictions. Chinese buyers continued to drop in our rankings in the face of continued lockdowns,” he added.
Meanwhile, the secondary market in Dubai continues to be in higher demand with a higher share of transactions than the off-plan market, the consultancy Core said.
However, both off-plan and secondary market transactions in Dubai are witnessing a similar level of increase in demand. Off-plan transaction volumes in the second quarter of 2022 are up by 47 per cent annually, while secondary market transactions increased by 42 per cent year on year, the consultancy said.
“Catering to improved market sentiment and demand conditions, developers are continuing to launch projects, which are witnessing strong absorption,” Mr Macura said.
“There has been a 215 per cent increase in the number of new projects launched in the first half of 2022, compared with the same period last year.”
Nearly 60 per cent of all year-to-date transactions in Dubai so far are below the Dh2 million ($544.6m) mark, Core’s data shows.
“We are seeing more buyers identifying themselves as investors,” Mr Waind said.
“Average gross rental yields are more than 6 per cent, which are very high internationally, and we expect modest capital growth over the short and medium term.”
While price increases are being witnessed across all districts, the luxury villa segment in Dubai recorded a sharp increase in sales prices, with demand outstripping supply in areas such as Palm Jumeirah, Jumeirah Park and Arabian Ranches, Core’s Mr Macura said.
In the apartment segment, districts such as Downtown Dubai, Palm Jumeirah, City Walk, Business Bay and Jumeirah Lakes Towers have seen the highest rise in sales prices, he added.
With the dual impact of accelerated home price appreciation and rising interest rates, mortgage payments have gone up close to 50% in some cases
Mohamad Kaswani,
managing director of Mortgage Finder
“The market narrative of oversupply has been in place for a few years now and for the most part, it has been wrong,” Mr Lakhani said.
“At the luxury end of the market, the resurgence in prices has shown that if anything, the market was under-supplied. In the mid-market segment, there has been a steady increase in demand as well, particularly in locations such as Jumeirah Village Circle.”
The prime and ultra-prime segment of the Dubai market is currently under-supplied as demand has outstripped supply, Mr Macura said.
However, the outer areas and the cheaper and mid-market segment is balanced in terms of supply/inventory levels and demand, he said.
The bio
Favourite food: Japanese
Favourite car: Lamborghini
Favourite hobby: Football
Favourite quote: If your dreams don’t scare you, they are not big enough
Favourite country: UAE
More from Janine di Giovanni
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
German plea
Ukrainian President Volodymyr Zelenskyy told the German parliament that. Russia had erected a new wall across Europe.
"It's not a Berlin Wall -- it is a Wall in central Europe between freedom and bondage and this Wall is growing bigger with every bomb" dropped on Ukraine, Zelenskyy told MPs.
Mr Zelenskyy was applauded by MPs in the Bundestag as he addressed Chancellor Olaf Scholz directly.
"Dear Mr Scholz, tear down this Wall," he said, evoking US President Ronald Reagan's 1987 appeal to Soviet leader Mikhail Gorbachev at Berlin's Brandenburg Gate.
'THE WORST THING YOU CAN EAT'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
Results
1. Lewis Hamilton (Mercedes) 1hr 32mins 03.897sec
2. Max Verstappen (Red Bull-Honda) at 0.745s
3. Valtteri Bottas (Mercedes) 37.383s
4. Lando Norris (McLaren) 46.466s
5.Sergio Perez (Red Bull-Honda) 52.047s
6. Charles Leclerc (Ferrari) 59.090s
7. Daniel Ricciardo (McLaren) 1:06.004
8. Carlos Sainz Jr (Ferrari) 1:07.100
9. Yuki Tsunoda (AlphaTauri-Honda) 1:25.692
10. Lance Stroll (Aston Martin-Mercedes) 1:26.713,
HAJJAN
%3Cp%3EDirector%3A%20Abu%20Bakr%20Shawky%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3EStarring%3A%20Omar%20Alatawi%2C%20Tulin%20Essam%2C%20Ibrahim%20Al-Hasawi%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3ERating%3A%204%2F5%3C%2Fp%3E%0A
Illegal%20shipments%20intercepted%20in%20Gulf%20region
%3Cp%3EThe%20Royal%20Navy%20raid%20is%20the%20latest%20in%20a%20series%20of%20successful%20interceptions%20of%20drugs%20and%20arms%20in%20the%20Gulf%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EMay%2011%3A%20%3C%2Fstrong%3EUS%20coastguard%20recovers%20%2480%20million%20heroin%20haul%20from%20fishing%20vessel%20in%20Gulf%20of%20Oman%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EMay%208%3A%3C%2Fstrong%3E%20US%20coastguard%20vessel%20USCGC%20Glen%20Harris%20seizes%20heroin%20and%20meth%20worth%20more%20than%20%2430%20million%20from%20a%20fishing%20boat%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EMarch%202%3A%3C%2Fstrong%3E%20Anti-tank%20guided%20missiles%20and%20missile%20components%20seized%20by%20HMS%20Lancaster%20from%20a%20small%20boat%20travelling%20from%20Iran%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EOctober%209%2C%202022%3A%20%3C%2Fstrong%3ERoyal%20Navy%20frigate%20HMS%20Montrose%20recovers%20drugs%20worth%20%2417.8%20million%20from%20a%20dhow%20in%20Arabian%20Sea%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESeptember%2027%2C%202022%3A%3C%2Fstrong%3E%20US%20Naval%20Forces%20Central%20Command%20reports%20a%20find%20of%202.4%20tonnes%20of%20heroin%20on%20board%20fishing%20boat%20in%20Gulf%20of%20Oman%C2%A0%3C%2Fp%3E%0A
How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
PREMIER LEAGUE STATS
Romelu Lukaku's goalscoring statistics in the Premier League
Season/club/appearances (substitute)/goals
2011/12 Chelsea: 8(7) - 0
2012/13 West Brom (loan): 35(15) - 17
2013/14 Chelsea: 2(2) - 0
2013/14 Everton (loan): 31(2) - 15
2014/15 Everton: 36(4) - 10
2015/16 Everton: 37(1) - 18
2016/17 Everton: 37(1) - 25
'Midnights'
%3Cp%3E%3Cstrong%3EArtist%3A%3C%2Fstrong%3E%20Taylor%20Swift%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ELabel%3A%3C%2Fstrong%3E%20Republic%20Records%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Five films to watch
Castle in the Sky (1986)
Grave of the Fireflies (1988)
Only Yesterday (1991)
Pom Poki (1994)
The Tale of Princess Kaguya (2013)
THE TWIN BIO
Their favourite city: Dubai
Their favourite food: Khaleeji
Their favourite past-time : walking on the beach
Their favorite quote: ‘we rise by lifting others’ by Robert Ingersoll
Results
Final: Iran beat Spain 6-3.
Play-off 3rd: UAE beat Russia 2-1 (in extra time).
Play-off 5th: Japan beat Egypt 7-2.
Play-off 7th: Italy beat Mexico 3-2.
Long Shot
Director: Jonathan Levine
Starring: Charlize Theron, Seth Rogan
Four stars
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
WHAT%20IS%20THE%20LICENSING%20PROCESS%20FOR%20VARA%3F
%3Cp%3EVara%20will%20cater%20to%20three%20categories%20of%20companies%20in%20Dubai%20(except%20the%20DIFC)%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECategory%20A%3A%3C%2Fstrong%3E%20Minimum%20viable%20product%20(MVP)%20applicants%20that%20are%20currently%20in%20the%20process%20of%20securing%20an%20MVP%20licence%3A%20This%20is%20a%20three-stage%20process%20starting%20with%20%5B1%5D%20a%20provisional%20permit%2C%20graduating%20to%20%5B2%5D%20preparatory%20licence%20and%20concluding%20with%20%5B3%5D%20operational%20licence.%20Applicants%20that%20are%20already%20in%20the%20MVP%20process%20will%20be%20advised%20by%20Vara%20to%20either%20continue%20within%20the%20MVP%20framework%20or%20be%20transitioned%20to%20the%20full%20market%20product%20licensing%20process.%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECategory%20B%3A%3C%2Fstrong%3E%20Existing%20legacy%20virtual%20asset%20service%20providers%20prior%20to%20February%207%2C%202023%2C%20which%20are%20required%20to%20come%20under%20Vara%20supervision.%20All%20operating%20service%20proviers%20in%20Dubai%20(excluding%20the%20DIFC)%20fall%20under%20Vara%E2%80%99s%20supervision.%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECategory%20C%3A%3C%2Fstrong%3E%20New%20applicants%20seeking%20a%20Vara%20licence%20or%20existing%20applicants%20adding%20new%20activities.%20All%20applicants%20that%20do%20not%20fall%20under%20Category%20A%20or%20B%20can%20begin%20the%20application%20process%20through%20their%20current%20or%20prospective%20commercial%20licensor%20%E2%80%94%20the%20DET%20or%20Free%20Zone%20Authority%20%E2%80%94%20or%20directly%20through%20Vara%20in%20the%20instance%20that%20they%20have%20yet%20to%20determine%20the%20commercial%20operating%20zone%20in%20Dubai.%C2%A0%3C%2Fp%3E%0A
Empire of Enchantment: The Story of Indian Magic
John Zubrzycki, Hurst Publishers
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
List of UAE medal winners
Gold
Faisal Al Ketbi (Open weight and 94kg)
Talib Al Kirbi (69kg)
Omar Al Fadhli (56kg)
Silver
Zayed Al Kaabi (94kg)
Khalfan Belhol (85kg)
Zayed Al Mansoori (62kg)
Mouza Al Shamsi (49kg women)
Bronze
Yahia Mansour Al Hammadi (Open and 94kg)
Saood Al Hammadi (77kg)
Said Al Mazroui (62kg)
Obaid Al Nuaimi (56kg)
Bashayer Al Matrooshi (62kg women)
Reem Abdulkareem (45kg women)
WHY%20AAYAN%20IS%20'PERFECT%20EXAMPLE'
%3Cp%3EDavid%20White%20might%20be%20new%20to%20the%20country%2C%20but%20he%20has%20clearly%20already%20built%20up%20an%20affinity%20with%20the%20place.%3Cbr%3E%3Cbr%3EAfter%20the%20UAE%20shocked%20Pakistan%20in%20the%20semi-final%20of%20the%20Under%2019%20Asia%20Cup%20last%20month%2C%20White%20was%20hugged%20on%20the%20field%20by%20Aayan%20Khan%2C%20the%20team%E2%80%99s%20captain.%3Cbr%3E%3Cbr%3EWhite%20suggests%20that%20was%20more%20a%20sign%20of%20Aayan%E2%80%99s%20amiability%20than%20anything%20else.%20But%20he%20believes%20the%20young%20all-rounder%2C%20who%20was%20part%20of%20the%20winning%20Gulf%20Giants%20team%20last%20year%2C%20is%20just%20the%20sort%20of%20player%20the%20country%20should%20be%20seeking%20to%20produce%20via%20the%20ILT20.%3Cbr%3E%3Cbr%3E%E2%80%9CHe%20is%20a%20delightful%20young%20man%2C%E2%80%9D%20White%20said.%20%E2%80%9CHe%20played%20in%20the%20competition%20last%20year%20at%2017%2C%20and%20look%20at%20his%20development%20from%20there%20till%20now%2C%20and%20where%20he%20is%20representing%20the%20UAE.%3Cbr%3E%3Cbr%3E%E2%80%9CHe%20was%20influential%20in%20the%20U19%20team%20which%20beat%20Pakistan.%20He%20is%20the%20perfect%20example%20of%20what%20we%20are%20all%20trying%20to%20achieve%20here.%3Cbr%3E%3Cbr%3E%E2%80%9CIt%20is%20about%20the%20development%20of%20players%20who%20are%20going%20to%20represent%20the%20UAE%20and%20go%20on%20to%20help%20make%20UAE%20a%20force%20in%20world%20cricket.%E2%80%9D%C2%A0%3C%2Fp%3E%0A
Company%20profile
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EPurpl%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECo-founders%3A%20%3C%2Fstrong%3EKarl%20Naim%2C%20Wissam%20Ghorra%2C%20Jean-Marie%20Khoueir%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EHub71%20in%20Abu%20Dhabi%20and%20Beirut%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2021%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ENumber%20of%20employees%3A%20%3C%2Fstrong%3E12%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunding%3A%20%3C%2Fstrong%3E%242%20million%26nbsp%3B%3C%2Fp%3E%0A
