$70bn stimulus package 'to benefit UAE's real estate sector'

The recent announcements by the UAE Central Bank, introducing packages worth Dh256 billion ($70 billion) aimed at stimulating the economy and mitigating the economic impact of the Covid-19 outbreak will benefit the real estate sector significantly, said Abdulla bin Sulayem, CEO of Seven Tides, a property development company based in the UAE.

 

The central bank has also reduced the reserve requirements for demand deposits for UAE banks, by half, from 14% to just 7%, which will pump an additional Dh61 billion into the financial system, improving liquidity and underpinning the banks’ ability to extend their lending further still.

 

As previously announced, banks will also have access to a Dh50 billion fund, offering capital at zero interest to help them extend more finance to the market. 

 

This will also enable banks to offer relief to existing borrowers by deferring principal and interest payments, until December 31, 2020, remarked Bin Sulayem.

 

"The increased liquidity, will also enable banks to offer and compete for new loans and mortgages in the market, as well as supporting their existing customers. It is crucial for the real estate sector that developers and investors have continued access to funding,” said the top official.

 

Another positive step is the increase in the loan-to-value (LTV) ratio applicable to mortgages for first-time buyers. This has been increased by up to 5%, he added.

 

Bin Sulayem said with this, the first-time expat buyers can now increase their loan-to-value (LTV) ratio from 75% to 80% for properties below Dh5 million and from 65% to 70% for properties above Dh5 million. 

 

And for a first time Emirati buyer this would increase the ratio from 80% to 85% for properties below Dh5 million and from 70% to 75% for properties above Dh5 million.

 

For both first-time Emirati and expat buyers this would increase the maximum off-plan LTV from 50% to 55%. So, on an off-plan property valued at say two million dirhams, a first-time buyer, will only be required to raise a Dh900,000 deposit, which depending on the developer, in many cases can be paid in instalments, instead of one million dirhams previously, a reduction of Dh100,000. 

 

“This makes it easier for first-time buyers to get on to the property ladder,” stated bin Sulayem.

 

Furthermore, in terms of funding, banks will now be allowed to increase their exposure to the real estate sector from 20% to 30%, with banks being required to hold additional capital if they surpass the 20% exposure threshold. Again, this will provide additional liquidity for both real estate developers and investors. 

 

“Add to this attractive borrowing rates and other promotional discounts currently on offer, should help to reinvigorate the real estate sector over the short term,” stated Bin Sulayem.

 

To help investors during the Covid-19 lockdown, Seven Tides has created virtual walk-throughs of the studio and one-bedroom apartments as well as videos of its Seven Palm development on Palm Jumeirah, said the top official.

 

Seven Tides has also designed a state-of-the-art visual navigator tool which features 2D and 3D floor plans, specialised 3D tours, as well as relevant images, videos and diagrams. Investors can buy an apartment today with a comfortable post-completion payment plan, it added.-TradeArabia News Service

 

Source: http://www.tradearabia.com/news/CONS_367025.html

 

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