Not less than 80% for the private residence.. and 100% for the commercial one
Two bankers: There are no preliminary approvals for real estate financing without “construction completion”
Ahmed Arafat: “The financing procedures are specific and clear, and what is said about unregulated facilities is only one of the marketing mechanisms and customer attraction.”
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Two bankers said that the banks do not issue any initial approvals for real estate financing for units that have not been completed, or what is known as “off-plan real estate,” not even with the guarantee of the customer’s salary.
They added that the system in force is that the completion rate for a citizen's private home should be no less than 80%, and 100% for commercial real estate.
The expert in real estate finance, Ahmed Arafat, said that “the practices of some real estate brokerage companies that target real estate marketing, especially for citizens, need awareness that banks do not finance real estate, and do not issue initial approvals for financing for units that are incomplete or are never on the map, even if The salary of the citizen or the customer is allowed to pay the financing installment,” explaining that “the banks require, according to the applicable Central Bank system, that the completion rate be at least 80% for private housing, and 100% for commercial real estate,” noting that this is a prerequisite for registering the property in municipalities”, and then the possibility of mortgaging it to the bank in return for financing.
He stressed that “the saying (the real estate marketer can obtain initial approval for financing) is completely incorrect,” noting that “the procedures on the ground are specific and clear, and all that is said of unregulated facilities is one of the marketing mechanisms and attracts the customer only.”
Arafat added, "The client must pay attention to such practices, before he signs any papers, so that he does not find himself obliged to pay at least 5% of the property value every period, for a period of two years, until the construction is completed."
In turn, the banker, Mustafa Ahmed, said that “the real estate market has witnessed a remarkable boom since the beginning of this year, and a demand for investment and free ownership on the part of citizens and expatriates, and this has created great competition between real estate marketing companies and brokers,” explaining that “banks require financing, that The construction is ready, and not just (planned on paper), even if the land is available, and the foundation works are laid or a percentage of the completion,” stressing that “there are never initial approvals for financing a property, until after the construction is completed.”
He added that "real estate financing for private housing for citizens, it is required that the construction percentage be at least 80%, and 100% of the completion rate for commercial and investment housing, so that the units can be registered in the Municipal Department in the emirate in which the property is located," wondering: "How can the bank grant Financing without mortgaging the property?”, pointing out that “one of the conditions of the mortgage is the existence of a registration in the municipalities, and the latter does not register except for a completed building on the ground.”
He continued, "The client must understand the financing conditions and the laws of the Central Bank well, before entering into any contracts with real estate development companies or dealing with real estate brokers."
The client must pay attention to these practices, before he signs any papers, and so that he does not have to pay 5% of the value of the property every period, for a period of two years, until the construction is completed.
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