Home sales to hit Dh40b in 5 years
UAE, 14 Aug 2005
DUBAI - With freehold ownership offering expatriates in the UAE an opportunity to own a slice of the country's prosperity, home sales is estimated to reach Dh40 billion in the next five years, according to Abdul Aziz Al Ghurair, Chief Executive Officer, Mashreqbank.
Although the Government of the UAE implemented new laws that allow foreigners to own homes, there is a great demand for house rentals even as rents go up further, said real estate market experts. They said the hike in rents would continue till the Federal Government issues its final decision about the freehold property rights.
While hundreds of complaints were made by the people against landlords for increasing the rents without taking into consideration their income, hundreds are searching for replacement homes in other places with cheaper rents.
In this backdrop, several expatriates are looking for mortgage loans to own property, the cost of which they can repay with the amount spent on rents over a period of 15 years.
A Gulf Talent spokesperson told Khaleej Times: "Rents in Dubai increased by 27 per cent, followed by Sharjah with 25 per cent." This means if a family pays Dh30, 000 per year, they will have to pay Dh38, 100.
Abdul Aziz Al Ghurair, was quoted in a magazine called Sada Al Mabane as saying that the new laws made by the UAE Government allowing freehold ownership rights to the expatriate community would boost the mortgage segment. Some banks give mortgage loans of up to Dh3 million for a period of 15 years or more with interest rates as low as 6.4 per cent.
Hitham Gameel, Chairman of Silver Eagle Real Estate Company, said: "Allowing foreigners to own homes in the UAE is a new phenomenon seen here. This phenomenon faced great success from the expats due to the changing prospective of the UAE in general and Dubai in particular, which is focusing on the real estate sector these years."
"Most of the people buying homes in Dubai and Sharjah come from countries like Iraq, Kuwait, and Iran. There are flats available in Sharjah at Al Nahda area with prices starting from Dh250, 000 to Dh450, 000, which can be leased on 10 to 15 years."
From his side, Mohammed Omar, Marketing Officer, assured that the huge growth in the real estate sector in Dubai which recorded Dh65 billion during the years of 1996 to 2002, have influenced the other emirates.
He added that it is expected that this number will increase from Dh65 billion to Dh85 billion during the next five years.
He said that the step taken from the UAE Government concerning freehold, will increase the number of construction companies operating in the UAE which are around 20,000, that have achieved projects in the country over the past five years with a total cost of Dh370 billion, while the new projects under construction is estimated by Dh95 billion.
To answer the question of whether the new construction projects are facing huge demand and success, Eisa Ahmed, owner of a real estate company, said: "In the beginning the construction companies were fearing the demand of the market for their projects due to the large amounts of money being invested in their projects, but soon these fears vanished after the UAE's government issued the new law which allows foreigners the rights of freehold."
"After the new law, the construction projects faced huge demand in the UAE in general and Dubai in particular, starting from owning homes for a period of 90 years ending to full ownership. This step taken from the government proves the real free market policy for which is calling and implementing through its economic organisations."
On the other hand, to prove that Dubai's economy is going towards success, Middle East Economic Digest (MEED), in a recent report stated that Dubai's real estate sector is featuring a steady growth and it is built on strong basis. The report stated that the demand on houses in Dubai is growing and the needed numbers of flats are 320,000 by year 2010, therefore, 54,000 flats should be built each year.