The economy of the United Arab Emirates has always been progressive, especially with the availability of a unique mixture of ingredients for growth in various sectors. This mixture was the rational and wise vision of the country's leadership, strong regulatory frameworks, an open economy, and a diverse demographics. All this contributed to creating a flexible and sustainable economy. The real estate sector has been a key pillar in the growth of the UAE economy, especially in the non-oil economy, which has prompted policy makers to take a proactive approach to enhance investments in this sector.

However, prices have fallen over the past two years, due to market conditions and the high supply of real estate, which provided investors and end users with an ideal opportunity to own housing units in the most sought-after real estate development projects in the world. The government also provided an additional boost to boost confidence among investors, by granting long-term visas to investors and professionals, and allowing 100% foreign ownership of companies, as well as the establishment of the Supreme Committee for Real Estate Planning.

In October 2019, the Central Bank announced a reduction in key interest rates in order to boost the economy by enabling borrowing at the lowest possible interest rate. It reduced the interest rates on certificates of deposits and the price of repurchasing short-term government bonds from commercial banks by 25 basis points.

Reducing interest rates will reduce the debt burden on borrowers, and encourage people to invest in real estate, which will lead to increased demand for real estate and allow the absorption of excess supply into the market, and stimulate other sectors of the economy. We can currently see the cumulative impact of market conditions and government initiatives, as the Dubai Land Department recorded more than 5,000 deals in November 2019, the highest in 11 years on a monthly basis.

In 2019, the central bank consulted with lenders in the country about setting a framework within which to find greater flexibility in lending policies. This includes stipulating the rate of return on risk when making lending decisions for banks, which will lend more than 20% of their deposits, and this wise approach by the UAE Central Bank has helped increase investor confidence in the real estate sector.

In 2019, the central bank reduced early settlement fees for mortgages by 3%, to equal 1% fees, or 10,000 dirhams, the borrower choosing whichever is better for him. The move makes it easier for homebuyers to move from one lender to another, providing lower exchange rates, and the move is part of initiatives to facilitate mortgages.

Also an important decision taken by the Central Bank is to cancel the age limit when paying the last installment of the mortgage, which was set for less than 70 years. It gave banks the right to set age requirements for loans based on their risk management policies.

There is no doubt that the central bank has taken prudent and prudent steps to boost investment in the real estate sector, but the imbalance between supply and demand remains one of the biggest challenges facing the market, and we hope that pro-investment initiatives by the government and regulatory agencies will contribute to the recovery of the real estate sector.

Vice President of Operations at «Damac Properties»