Dear All,

I have recently started to take interest in this whole "property" thing in Dubai, so now I have a couple of questions (which may be helpful to others as well)

- If somebody is advertising property with payment plan lets say 40% now, 30% in next couple of months and 30% on finish construction, can that property be payed with mortgage?? And does that mean that bank will approve 60% of finance or it can approve up to 90%???

- Current prices are all over the place as I see now. I was looking at JLT and it striked me that prices are very close to Dubai Marina Projects. And I don't mean Marina Diamond. Am I missing something. Not to say that Jebel Ali Downtown is climbing to 2500dhs/sqft and you can find a decent apartment in Dubai marina for 1500dhs/sqft

- Whats your opinion on off plan buying in Marina now, and is Marina good investment in a bit longer period (1-2years)

- If I take mortgage for one apartment - and buy it, how difficult is to get second one for (to buy another property and to rent it?)

Thank you very much
Regards

Dear Design Architect,

Good questions, but many answers to cover.

Yes you can get a mortgage to cover the payments, however it will depend on your financial stability and situation.

You need to get with someone that really knows the market and can expalin in clear terms the pricing structure and where perhaps to invest with a clear explanation why.

Like most places Marina will show capital growth over the coming 1-2 years. It will depaend on your longer term goals.

For the last question, revert back to answer for the first one....

regards
Stephen

Thanks Stephen,

As I'm at my beginning with investing, I would first buy something for myself - to live in (as I'm renting now). I'm thinking of Dubai Marina, as my thoughts are, that if Dubai property bubble would burst, Marina would still be Marina....I'm I right?

Currently - me and my wife are thinking of joining accounts - just to show to the banks that with our two salaries we can provide enough cash flow for the mortgage.

After that initial investment - we are looking at investing somewhere else - to try and make some money on resale, or to buy something in order to rent. But that's second step.

If we see that the price is right - maybe we would sell the apartment (where we would live) and try to use that money for new investments....hows that sounds.

Good thing is that I love Dubai Marina, and I see myself for couple more years in Dubai. So whatever happens - I will be here....

having a bit of a negative day but i have to say some of the buildings in the marina are terrible quality. the ones near the water are generally ok but a street back - especially near sz road are pathetically poor. was driving around there this morning. some already look 10 years old. there is one - azure' or something - it is painted blue. such a poor job the paint is running down the building and balconies after a tiny bit of rain. the good ones are a fortune. a bargain in the marina is a bargain for a reason.

JLT is odd - some buildings are low prices per sf - i imagine however this is not actually the price. some agents (most) simply do not update their details.

as with everything - pay cheap, get cheap.

if a bank will give 90% - it generally reflects confidence. check mashreq and ADCB - they have the developments on their web site for 90% - mostly sold out however.

Jordan,

thanks for good explenation! - I will definately try and find something in JLT and Marina.

regards

Dear Design Architect,

You are actually doing the right thing by asking the questions and seaching on the web and forums...its amazing how many people just buy and hope for the best...

I have always maintained the simple rule that if you plan to stay in Dubai for a minimum of 5 years, then buy.

As for the Marina, it would not be my own personal choice of place to live. But many factors then come into the equation and the end result is simply that you are happy with the property you purchase and live in. Please heed the reply earlier that some developments are of far superior build quility to others.

Having joint acounts will certainly help. Your best bet would be to get pre-approval. By doing this you will at least know you limits and if and when you do find the right property...you can act quick.I trust you have worked in Dubai over six months as you will requiring banking details to support this. The good news is mortgage rates have dropped and should drop further. For properties that are already completed you can also get an easy start mortgage where you pay only the profit portion of your monthly repayments for the first 4 years and then a marked up rate later. As more and more banks enter the mortage market we should see a wider range of products which is good news for us.

The buy-to-let (BLT) market is very good if you do your sums..I have made several excel calculators to compare yields, NOI and Cap rate etc. let me know when the time is right and I will send you the latest version.

Happy hunting...


f you like the marina then

The banks will give you a mortgage for off plan developments provided the developer (and the development) has been pre-approved with them. So each project you are interetsed in you should contact the developer and ask them if there are any banks offering finance for that development. Important, don't take what they say for granted - go to the bank and double check with them. Even then, that is not a guarantee. If mortgage is your only option, then DONT put down any deposit before you have got an agreement in principle or actual offer from the bank.

For foreigners, 70% LTV is the maximum finance possible.

In terms of buy to let mortgages for off-plans, most of the banks will base their lending criteria on your income and the financial commitment you have. So you will not be able to buy that many properties in that way. However, that's changing now. I spoke with Barclay's some weeks ago and they are now giving mortgages based on the rental potential of the property after the handover.

For most of the lenders, during the construction you will be paying interest only, and proper repayments will start after the handover.

With finished property, as long as you have first tenancy agreement most of the banks will give you mortgage, almost regardless of who is the developer.

If you are looking to buy and sell before completion, then mortgage is not the best solution. There are many reputable developers who have excellent payment terms - 20/80, 30/70. In that way only minimum cash is tied down, and you can easily wait till handover to sell.

Let me know if you need any more advice on this.

Hello kk1974

Should people alway be on the lookout for developers that offer 20/80, 30/70 as you say or is that standard practice
What about the high end of the market?

That kind of ratio maximises you profits with no need for mortgage.

For example, you bought a flat for 100k, paid in cash. In a year's time you sell it for 110k. You made 10% ROI, 10k.

If you buy the same flat for 100k but pay only 20% down, and then sell just before the handover for 110k (very reasonable because of end users), you still made 10k but that's now 50% ROI.

So instead of one flat you can buy five with 100k cash, and make 10k on each of them.

So your profit is 50k instead of 10k.

Another advantage is that you know that you dont have to worry about upcoming payments and you can be confident that you can sell the flat before the handover - that's the time when all the end users start buying provided you have priced it appropriately.

Im have't been tuned in with Dubai market over last few months, but considering that the prices have been driven by speculators rather than end-users, the correction (in best case scenario) of the market is inevitable, and you should be very careful with your money.

Personally, if I was to invest in Dubai today I would be exploring buy-to-let properties that already have rental history and where the rental income can cover your mortgage payments while still leaving you with some extra cash.

That is much safer investment in current economic climate, and unless something changed over last few months, local banks will readily give you mortgage on properties like that, much much easier than on off plans.

Re high end properties - hard to say. According to some stats on current supply that I have seen, there are much more high end properties in the pipeline than middle or lower end, and the risk of over supply is higher. I would very careful with that.

Hope this helps.

Thanks so much for your advice, much appreciated :-)

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