4 November 2016

Dubai – The Times They are a Changing

Over the last four years there has been a paradigm shift in the structure of transaction activity in the Dubai real estate market. Historically the majority of transactions would be on a cash basis, with mortgages accounting for only 25% of overall sales. However, in recent years this relationship has inverted, where now mortgage transactions account for the bulk of the activity. This shift can be attributed towards an increase in homeownership, existing owners extracting liquidity, and investors optimizing on capital structures.

Mortgage to Sales Transactions: ApartmentsThe increase in homeownership in certain communities can be witnessed through the buying patterns. Typically home-owners tend to buy larger size units compared to studios and one bedrooms. An analysis of transactional activity by unit size in Greens and Downtown reveals that in the last 6 years, the former has experienced an increase in larger size units compared to the latter.

Whilst there are multiple motives for refinancing, the overall hypothesis of the housing market moving towards a mortgage paradigm is very much in line with international developed markets.

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