Dubai Real Estate Witnesses Highest Mortgage Activity

The month of May sees a 14-month mortgage high, as per a release by brokerage firm Allsopp & Allsopp

Dubai’s mortgage sector has been on the climb with May recording a 14-month high in mortgage activity according to the Dubai Land Department data. This marks the second-highest mortgage month on record.

One of the main drivers behind this surge is the low interest rates that have allowed borrowing to become more affordable for homebuyers. Additionally, Dubai’s population influx has further fueled demand. After welcoming over 30,000 new expats so far this year, the city is naturally seeing an overall increase in mortgages as more people look to buy homes.

According to Allsopp & Allsopp’s May Snapshot Report, there has been a heightened demand reaching a significant three-year high in mortgage activity. Finance buyers outpaced cash buyers by 55.8% in May, doubling figures from April. The most popular price brackets for finance buyers were properties ranging from AED 1-3 million, which made up over half of all transactions. The AED 3-5 million price bracket followed at 25%.

Top Areas With Highest Mortgage Activity

Downtown Dubai, Jumeirah Village Circle (JVC), Dubai Marina, Jumeirah Lake Towers (JLT), and Jumeirah Beach Residence (JBR) emerged as the most popular areas for apartments based on Allsopp & Allsopp’s May report. Mortgage buyers in these areas are typically younger individuals who prefer being around popular lifestyles and social hotspots.

Additionally, JVC for example, sees further mortgage activity from investors. As a popular residential community with sustained demand from residents looking for reasonably priced rentals, investors opt to buy units here in the hopes of consistent yields.

For villas, the top areas were The Springs, Arabian Ranches, Town Square, Al Furjan, and Reem. We are observing a notable trend of more buyers deciding to move into suburban areas that might not have been on top of their list a few years ago. These areas can be more affordable compared to properties in the city centre with a similar size.

It’s a great time for buyers to take advantage of the low rates. Even if some banks adjust their rates slightly, others will likely lower theirs, which means these favourable conditions should stick around for a while. We expect mortgage activity to keep growing in the coming months.

Connor Humble, Mortgage Services Manager at Allsopp & Allsopp

As the population matures and starts families, there is a marked shift to villas in suburban areas that offer a strong sense of community and amenities. The increase in mortgage activity in these areas indicates a growing demand for buyers looking for long-term investments, driven by favourable financing conditions and a desire to gain a foothold in a permanent address. “It’s a great time for buyers to take advantage of the low rates. Even if some banks adjust their rates slightly, others will likely lower theirs, which means these favourable conditions should stick around for a while. We expect mortgage activity to keep growing in the coming months,” said Connor Humble, Mortgage Services Manager at Allsopp & Allsopp.

We’re seeing a shift in the market towards better mortgage education, which is driving higher activity. More people are approaching independent mortgage advisors before going to their banks to understand their options fully.

Lewis Allsopp, Chairman of Allsopp & Allsopp

“We’re seeing a shift in the market towards better mortgage education, which is driving higher activity. More people are approaching independent mortgage advisors before going to their banks to understand their options fully. In the last couple of years, buyers have been more cautious of fluctuating interest rates. If buyers only speak to one bank, they are unlikely to get the best terms. This is where mortgage advisors come in - they go to all the banks and negotiate the best terms, from free valuations to better interest rates. We’ve seen firsthand how massively beneficial this is for buyers,” said Lewis Allsopp, Chairman of Allsopp & Allsopp.

“Beyond negotiating terms, mortgage advisors help buyers find the right communities that tick all their boxes. Clients often have a checklist of what they want but they are not always aware of all the communities that fit their needs, especially with the rapid rate of new units being handed over. After working with a mortgage advisor, buyers usually discover they have more options than they initially thought,” he concluded.