Buying Property in Dubai with Mortgage : Risky?

[banafinfodafuggiano]

I'm a Resident of Canada, looking to move to the UAE or similar low tax jurisdiction within a year or so.

I was looking at property prices in Dubai and they seem reasonable compared to Canada.

Obviously I don't want to throw $800K to a Villa in cash, so I was thinking about applying for a local UAE mortgage.

Is this even a possibility for fresh residents of the UAE or do I need to wait a few years and build credit history?

What risks do I face if I suddenly no longer am able to pay the Debt, can I list the house for sale and re-pay the mortgage that way
or do I go straight to Jail considering Arabs harsh laws on local debts?

 

[manukahoney]

You don't go to jail for debt anymore, but you can get a travel ban until you settle.
Mortgage is doable, you can list the house for sale, the buyer will have to issue a check to the bank first and the rest to you.
Be aware that the prices in Dubai are currently ATH and especially with villas there are a lot of areas with low liquidity and a pressure from new-builds.

 

[banafinfodafuggiano]

You don't go to jail for debt anymore, but you can get a travel ban until you settle.
Mortgage is doable, you can list the house for sale, the buyer will have to issue a check to the bank first and the rest to you.
Be aware that the prices in Dubai are currently ATH and especially with villas there are a lot of areas with low liquidity and a pressure from new-builds.

i guess that's because of Russian money?

Are there a lot of new villas being built to keep up with the demand?

 

[Dandyline]

i guess that's because of Russian money?

Are there a lot of new villas being built to keep up with the demand?

Yes, it's because the use of illicit funds that makes these buyers pay whatever it takes. Also, the brokers are artificially pushing up the prices.
In Dubai, the availability of vast desert land for construction means that the properties are not maintaining their value.

 

[banafinfodafuggiano]

Yes, it's because the use of illicit funds that makes these buyers pay whatever it takes. Also, the brokers are artificially pushing up the prices.
In Dubai, the availability of vast desert land for construction means that the properties are not maintaining their value.

Ok so it's just a temporary trend? It will go back down you reckon?


I will wait then. But I doubt prices will drop further than this.

 

[Dandyline]

Ok so it's just a temporary trend? It will go back down you reckon?


I will wait then. But I doubt prices will drop further than this.

Prices has gone up 100-200% during the last 1-2 years, so yes, it will go down. The prices in Dubai are not real, it’s not following trends like a normal market.

Airbnb-rates already started to go down this year, lots of vacant holiday homes.

 

[Amandograde]

I will wait then. But I doubt prices will drop further than this.

Dubai is highly volatile. Its a unique market.

 

[Cloudbanck]

Dubai is highly volatile. Its a unique market.

The main thing with Dubai is that it's less supply constrained than other major cities (except possibly Tokyo). You got the desert with space and not much hindrance to build on, and importantly you also have much less of crazy rules, strict zoning and all types of associations/gongos that can veto building. It's basically a much free-er market so supply and demand are more in sync. In western cities, because of insane bureaucracy and ever increasing rules and regulations, supply is artificially reduced.

You still have natural network effects that increases prices in central / sought after areas in Dubai, but you dont have the tailwind from politicians/bureaucrats making it ever more expensive and difficult to build. I kind of like that property values in Dubai are based more on free market prices, it feels more sound than having it depend on an accumulation of bureaucrats/politicians coming up with silly ideas.

In the 19th century and early 20th century Western cities were more like Dubai, and building was much freer. Great/beautiful buildings and houses were also built during this period. Then from like 1950/1960 onwards, the bureaucracy just got worse and worse every year.

 

[Konstanz]

I see that the prices of Airbnb for example in Dubai Marina is now at least 2x cheaper than it was in comparison 2 years ago.
I think there will be a big correction of real estate prices in Dubai. I would not recommend buying real estate in Dubai now.
The war in Ukraine will end and many people go back. UAE introduced taxes so is way less attractive now.
I would wait 2 years and you can get real estates I expect 2x 3x cheaper

 

[manukahoney]

The war in Ukraine will end and many people go back. UAE introduced taxes so is way less attractive now.

The war is not ending any soon imho. However the influence of Russian money has somewhat diminished (they are like 7th in term of buyers now) and I don't think they are gonna sale soon.
Corporate Taxes are a problem for freelancers and solopreneurs and they represent a tiny proportion of the buying power.
Dubai uniqueness is that it basically benefits from any major conflict in the world - they manage to make it a "safe heaven" for Chinese, Russians, British, Indian etc (what London use to be). So we'll see spikes of international buyers whenever s**t hits the fan somewhere, following the cooldown periods in line with global trends.

 

[Amandograde]

The war is not ending any soon imho. However the influence of Russian money has somewhat diminished (they are like 7th in term of buyers now) and I don't think they are gonna sale soon.
Corporate Taxes are a problem for freelancers and solopreneurs and they represent a tiny proportion of the buying power.
Dubai uniqueness is that it basically benefits from any major conflict in the world - they manage to make it a "safe heaven" for Chinese, Russians, British, Indian etc (what London use to be). So we'll see spikes of international buyers whenever s**t hits the fan somewhere, following the cooldown periods in line with global trends.

i dont get it well but isnt a war next door breaking out right now and expanding in the middle east?

 

[manukahoney]

i dont get it well but isnt a war next door breaking out right now and expanding in the middle east?

Exactly, there are many Iranians, Palestinians and other expats from "hot spots" in Dubai, and I specifically call them expats, not immigrants. They come with families and with capital, there is no welfare in UAE. So Taiwan triggers - expect 0.5-1 mil of new buyers coming in. Tensions in Europe - the same.

 

[Amandograde]

Exactly, there are many Iranians, Palestinians and other expats from "hot spots" in Dubai, and I specifically call them expats, not immigrants. They come with families and with capital, there is no welfare in UAE. So Taiwan triggers - expect 0.5-1 mil of new buyers coming in. Tensions in Europe - the same.

maybe it affects the place itself, seems like the ME is being pushed into some unpleasant waters. Whats the guarantee Dubai is the safe harbor and does not trigger a mass exodus?
Taiwan refugees can go elsewhere too, which is much closer.

 

[PinkCat]

Prices has gone up 100-200% during the last 1-2 years, so yes, it will go down. The prices in Dubai are not real, it’s not following trends like a normal market.

Airbnb-rates already started to go down this year, lots of vacant holiday homes.

Please link me one legit graph that shows 100-200% increase in last 2 years and I'll send you $100 in any stablecoin you prefer.

@banafinfodafuggiano don't just trust couple forum guys that tell you prices are over heated and decide not to buy because of that. Let me summary my short research on the topic from last weeks.

1. Most analysis agree that recent raise of about 30% is over now but expect continued but very moderate growth of about 5% per year.
2. Another factors is that rental income is still lucrative 6-9% for long term rent out, which means mature investors will continue to snatch good properties that are safe for long term investing, think hot areas and hiqh quality buildings.
3. Now there are rumors that Dubai might allow gambling (neighbouring emirate already made steps that way, so they might follow), that will introduce whole new flow of people
4. They have vision and want to make their piece of desert attractive, while western democracies fail to coordinate and do anything meaningful in any reasonable time

And still I don't know what will happen with the prices, this is just some points from my research, but please do your own and share your findings with us so we can have argumented discussion based on facts, not just opinions based on feelings and statements that just because it went up fast it must go down. That is often the case indeed but not always.

Since nobody knows what will happen with this dynamic market I plan to do what i do with my other volatile investments. DCA my way. Buy one property now in downtown in super high end building, if prices go lower buy more, DCAing your average price down.