Out of the box

Finance..the lifeblood of the real estate sales market

Ismail Al Hammadi

November 16, 2021

At a time when the local real estate sector recorded a rise in the value of sales, offset by a similar rise in the value of mortgages, which reflects the extent to which the sales movement is linked to the movement of loans, and in the context of talking about this link, recent studies of the market indicate that more than 80% of those who They achieved their dream of buying real estate units, for the first time this year, through real estate financing.

This study confirms an intuitive rule in the real estate sector, according to which the higher the volume of real estate loans granted, the higher the performance of the sales market, which makes the relationship between the flexibility of financing and the increase in the purchase of real estate a direct and inseparable relationship.

In a realistic picture of the local finance and loans sector, during the last quarter of last year, the sector recorded the lowest levels of decline in interest rates on loans of all kinds, including real estate loans, in which the interest rate reached 1.99%, and personal loans, whose interest rates ranged between 2% and 3%, according to studies by financial institutions.

The decline in real estate prices during the past year played a role in supporting the growth of real estate sales market activity, but it is undeniable that the historical decline in interest rates on real estate loans also played a role, as it created an opportunity among the various classes of real estate market clients, led by residents. With limited incomes, to realize their dream and own a housing unit for the first time, it also had a role in motivating investors to double their real estate assets with the aim of expanding in the market.

The reductions in the interest rate on real estate finance came as part of an integrated package of economic stimuli that were injected to enhance the attractiveness of the business environment and encourage investment in various economic sectors, particularly the real estate sector, in addition to being one of the results of competition between banks and financial banks, which cast a shadow Positive for investors and customers of the market in general.

Even today, this competition continues, and this explains the emphasis on the client of the necessity of comparing the real estate loans offered to him before adopting one of them (in the field of real estate consultancy, the client is always advised to compare the mortgage offers available with banks before approval and approval).

As part of this competition, and in light of the decline in the level of risks that prevailed at banks in previous periods, supported by the appropriate economic climate that characterizes the state, and the availability of financial liquidity, there is a call for banks to adopt more reduction in a way that goes along with the rising curve of the real estate market recovery, and the conditions of openness The current state of the country has access to new markets and new visitors, thanks to the activities of Expo 2020 Dubai, where many customers are looking forward to the appropriate opportunity to obtain financing for the purchase of a real estate unit.

• «The decline in real estate prices during the past year had a role in supporting the growth of the activity of the sales market».

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