Dubai banks still offering mortgages for affordable homes – DPG CEO

Banks in Dubai are continuing to offer mortgages to investors eyeing affordable housing units in the emirate despite the current economic challenges, according to a senior official.

Dubai has seen a surge in the affordable housing market because of the changing needs of property buyers, Dubai Properties Group chief executive officer Abdullatif AlMulla said in an exclusive interview with Gulf Business.

“Their [affordable housing investors’] needs are different. They don’t want huge mansions or huge villas – they want small properties which are extremely efficient and don’t require any additional work to be done. So they don’t have to pay for things like extra service charges,” he explained.

“Also, they want to see the return on investment within 10-15 years and they want to afford to pay for it easily – based on installments.”

According to him, despite a tightening in lending due to the tough market conditions, banks in Dubai are willing to lend to this segment.

“Even in the current economic situation, banks never say ‘no’ as long as you have the right credentials. Banks are always ready to lend but they obviously have to adhere to the rules of the UAE Central Bank regarding mortgage caps,” AlMulla said.

“We tie up with different banks for different projects, we engage with many banks and they are willing to do more.”

The company recently unveiled a mega 8.2 million square feet development called Serena, with a mixture of residential, retail and lifestyle features, and a focus on affordability.

“We have a mix of both – cash-based and mortgage investors for our projects. In Serena, it is more cash-based but in general we have several investors opting for mortgages,” he explained.

In a recent report, Cluttons found that demand for affordable housing continued to grow in the first quarter of 2016 despite a general slowdown in the property market.

However, the report also cautioned that a liquidity crunch across the banking system is affecting the market.

“The liquidity crunch is manifesting itself in tighter lending criteria. This is set against the backdrop of a market where many buyers are now taking a ‘wait-and-see’ approach, which has resulted in some of the weakest levels of mortgages extended in the market’s history, according to anecdotal evidence from our banking clients,” the report added.