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Dubai government has introduced new mortgage law for the exposure of Dubai real estate market and to promote real estate and foreign investments.

 

Overview of New Mortgage Law

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  • There will be alternative flexible financing methods under the responsibility of Dubai Land Department, this is exclusive than what the existing banks are offering.

 

  • Investors with small and medium portfolios will be able diversify their investment options.

 

  • There will be more “real estate investment trusts” (Reits) incorporated as soon as the designated regulatory gives approval for Dh3 billion Reits. There will be a mix of DI-owned properties owned by third parties, Dubai Financial Market listing and the assets will grow up to Dh10 billion.

 

  • The real estate investment trusts is going to relieve the pressure on developers for off plan launches. The Reits have previously contributed to commercial sector, education and healthcare and now Reits targeting residential space will bring in more.

 

  • The implementation of the new mortgage law will about a perfect harmony between real estate organizations, increase prospects and develop a new stream of investments.

 

  • The main objective of the new law is to entice public listed entities and foreign investors.

 

  • The new mortgage law does change the existing loan to value (LTV). At present buyers pay up to 50% as equity for an off plan and 30% for a completed property.

 

  • When the news about new mortgage broke, people came up with speculations that the banks will start offering loan at a higher percentage. The banks are going to offer same LTV as a collaborative approach toward avoiding speculative buying.

 

  • The new mortgage plan aims to achieve higher foreign property investments portfolios and also the end users, strengthen partnership between public and private sector to come up with new mortgage finance systems. Overall the new mortgage law plans to ensure Dubai property market sustainability.

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