Over the last four years, there has been a paradigm shift in the structure of transaction activity in the Dubai real estate market, says a report.
Historically, the majority of transactions would be on a cash basis, with mortgages accounting for only 25 per cent of overall sales. However, in recent years this situation has inverted, where now mortgage transactions account for the bulk of the activity, said the Reidin report.
This shift can be attributed to an increase in homeownership, existing owners extracting liquidity, and
investors optimising on capital structures, it said.
The increase in homeownership in certain communities can be witnessed through the buying patters. Typically home-owners tend to buy larger size units compared to studios and one bedrooms.
An analysis of transactional activity by unit size in Greens and Downtown communities reveals that in the last six years, the former has experienced an increase in larger size units compared to the latter.
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A similar analysis was conducted in JVC and Sports City. Although both communities had a higher percentage of studio and one bedrooms, JVC has begun to see a shift towards larger size units. This implies that homeownership has begun to take root within this community, whereas Sports City remains investor driven similar to Downtown.
According to Dubai Statistics Centre (DSC), 18 per cent of the Dubai’s working populating are earning above Dh10,000 per month, which is typically the minimum amount needed to qualify for a home loan, it said.
An analysis of workers by occupation from 2005 to 2015 reveals that there has been an increase in the categories of managers (87 per cent growth) and professionals (48 per cent increase). This shift signals the economy’s growth in sectors that hire a larger category of blue collared workers. Managers and professionals are also highest paid category in terms of salaries, and the most probable candidate for homeownership.
An analysis of the cash and deposits against total assets with the Central Bank of UAE since June 2003 has risen till date implying that the liquidity position of the UAE still remains strong. There is still a significant portion of cash that is ‘sitting on the side lines’, well in excess of the levels seen in the first boom cycle in real estate, implying that liquidity concerns remain exaggerated, and that there is a steady increase in asset ownership currently underway, the report said.
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