NEWS BRIEF 33 - Asteco Property Management Leading Real ... · PDF file Between 2017 and 2020...

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Transcript of NEWS BRIEF 33 - Asteco Property Management Leading Real ... · PDF file Between 2017 and 2020...

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

    © Asteco Property Management, 2017 asteco.com | astecoreports.com IN THE MIDDLE EAST FOR 30 YEARS

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    RESEARCH DEPARTMENT

    NEWS BRIEF 33

    SUNDAY, 13 AUGUST 2017

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

    © Asteco Property Management, 2017 asteco.com | astecoreports.com

    IN THE MIDDLE EAST FOR 30 YEARS

    Page 2

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    REAL ESTATE NEWS

    UAE / GCC

    WHAT A FED RATE HIKE MEANS TO UAE MORTGAGES

    SAUDI BILLIONAIRE TO INVEST $800M IN EGYPT TOURISM

    4 OF UAE'S BIGGEST PROJECTS THAT WILL BOOST CONSUMER SPENDING

    DSI TO RECEIVE DH100M LOAN FROM TABARAK INVESTMENT

    WHAT TO WATCH OUT WHILE REFINANCING YOUR MORTGAGE IN THE UAE

    ESHRAQ PROPERTIES SEES FIRST PROFIT IN TWO YEARS

    SAUDI ARABIA'S ECONOMY LIKELY TO DIP THIS YEAR, SAYS INSTITUTE OF

    INTERNATIONAL FINANCE

    MENA HOTEL SECTOR SOFTENS IN FIRST HALF OF 2017: EY

    THE WELLNESS OF BEING: UAE GETS ITS FIRST HOLISTIC HOTEL

    DUBAI

    CHOOSING A BUSINESS PREMISES: BUY OR LEASE?

    WHEN RENTING IN DUBAI

    HOTEL ROOM RATES ACROSS DUBAI FALL BY 11.5% IN JULY

    HALAL EXPO DUBAI ENTERS FDI AGREEMENT

    DUBAI REAL ESTATE RECORDS DH390B TRANSACTIONS IN 18 MONTHS

    FÄM PROPERTIES SURPASSES DH1.3 BILLION IN CITY WALK PROPERTY SALES

    ENBD REIT ACQUIRES FIRST EDUCATION ASSET IN DUBAI

    NAKHEEL AWARDS OVER DH430M CONTRACTS FOR DEIRA ISLANDS

    WHY LIVE IN A TOWN HOUSE?

    OFFICE TENANTS, LANDLORDS NAVIGATE A SLOW MARKET

    ARABTEC SWINGS TO DH40M PROFIT IN SECOND QUARTER 2017

    DUBAI NON-OIL ECONOMIC GROWTH INDEX SLIPS SLIGHTLY

    HOW CAN A DUBAI TENANT ENSURE HIS COMMERCIAL LANDLORD ACCEPTS HIS

    NOTICE OF TERMINATION?

    WHY INDIANS ARE INVESTING BIG IN DUBAI PROPERTY

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

    © Asteco Property Management, 2017 asteco.com | astecoreports.com

    DEFINING LANDSCAPES SINCE 1985

    Page 3

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    REAL ESTATE NEWS

    IDLE DUBAI HOMES MAKE AN ACTIVE COMEBACK

    SMALL HOMES FETCH BEST YIELDS IN DUBAI

    DUBAI CHAMBER HOSTS WORKSHOP ON VAT COMPLIANCE IN UAE RETAIL SECTOR

    FIVE STEPS AND AS LITTLE AS THREE DAYS TO GRAB A BUILDING PERMIT IN DUBAI

    AZIZI DEVELOPMENTS COMPLETES AND DELIVERS DH350M PROJECT ON PALM

    JUMEIRAH IN 22 MONTHS

    DUBAI REAL ESTATE PROJECTS WORTH DH21B LAUNCHED IN FIRST HALF

    EXPANSION OF DEWA'S JEBEL ALI PLANT ON TRACK

    ABU DHABI

    TENDERS WORTH DH10B PROCESSED IN ABU DHABI

    MADINAT ZAYED SHOPPING CENTRE TO BE REFURBISHED

    WRITING A WILL IN ABU DHABI

    MORE ABU DHABI TENANTS SWITCH TO AFFORDABLE HOMES

    TOP 5 CHEAPEST PLACES TO RENT IN ABU DHABI

    NORTHERN EMIRATES

    MUAIRIDH BEACH TO GET A FACELIFT

    INTERNATIONAL

    HONG KONG HOUSING BURDEN GROWS EVEN HEAVIER AS HOME PRICES SOAR

    THAT WHOOSH IT’S THE GREAT CHINESE PROPERTY PULLBACK

    AUSTRALIA SLAMS BRAKE ON PROPERTY INVESTORS AND PRICES COOL

    US HOUSING MARKET’S NEW DOMINANT FORCE: BABY BOOMERS WHO WON’T SELL

    ALIBABA, MARRIOTT TO TEAM UP TO TAP CHINESE TOURISM BOOM

    RICH PICKINGS IN GLOBAL REALTY

    WORLD’S MOST EXPENSIVE HOUSING MARKET JUST GOT EVEN PRICIER

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

    © Asteco Property Management, 2017 asteco.com | astecoreports.com

    DEFINING LANDSCAPES SINCE 1985

    Page 4

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    WHAT A FED RATE HIKE MEANS TO UAE

    MORTGAGES Wednesday, August 9, 2017

    While a marginal increase in mortgage rates is expected in the UAE, experts say there are many more factors that

    influence homebuyers’ decision to buy property. People who want to switch from renting to owning homes or

    upgrade to bigger homes, and investors who want to take advantage of the high yields in the real estate market

    will still find borrowing a viable option to cater their needs. Here is what financial experts say buyers should

    consider about mortgage.

    Fixed rate offers

    The last US rate hike was widely expected and priced into the market, so no significant impact was felt in the UAE

    and rates remained stable. Home Matters expects one or two further rate increases by the US Federal Reserve

    before year-end. There is a high correlation between US rates and the UAE Central Bank Emirates Interbank

    Offered Rate (EIBOR) rate, so we are likely to see a marginal increase in mortgage rates here. Variable rates

    offered in the form of EIBOR-linked or bank variable rates will rise with all banks in the UAE. However, many

    banks are already reducing margins to remain competitive and still offer attractive fixed rates for one to two

    years.

    We have already seen a shift in customer appetite with most now looking for fixed rates instead of variable

    products. Longer-term fixed rates are few and historically, the maximum fixed rate period seen in the UAE was for

    five years. Only a handful of banks would offer such options and these have been removed or seen significant

    increases to counter future rate movements. The increase in rates might make buying less attractive, but rents

    remain stable, and with more affordable housing projects being handed over, expats wishing to stay in the UAE

    for the long term are taking advantage of what is still very much a buyer’s market. Sellers are also becoming more

    motivated with the probability of increased borrowing costs.

    Global attractiveness

    The buyers have been expecting possible rate increases based on news reports since last year. An increase of 25

    base points (bps) last year led to banks repricing their rates in the first quarter of this year. The real estate market

    is driven by the need of a customer to buy or own property; the rate charged is a secondary decision, which takes

    effect while comparing the mortgage offers available in the market. Even after the increase, it is still cheaper to

    own property in the long term than renting. However, the increase will result in a small increase in the monthly

    instalment or the tenor of the loan for mortgage buyers.

    We have had two increases this year with the latest one being 25 bps. From the indications given by the US Fed, it

    is likely that there may be another increase by the end of the year or first quarter of next year, but it’s hard to

    predict the timing. However, the real estate market in the UAE is affected by many factors, including the

    geopolitical environment, the economic environment, the demand–supply situation, etc. Our rates are still lesser

    than the rates offered in most countries and, therefore, the return and yield expected on property investment is

    still healthy. But this equation is getting more difficult with every increase.

    A minor change

    Since the dirham is pegged to the US dollar, any change in the US rates has an effect on the UAE’s interest and

    profit rates as well. This will possibly result in an increase in interest or profit rates on a home finance in the UAE.

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

    © Asteco Property Management, 2017 asteco.com | astecoreports.com

    DEFINING LANDSCAPES SINCE 1985

    Page 5

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    Ultimately, any increase or decrease significantly depends on local market factors and the liquidity in the local

    market. If the liquidity is tight, the interbank rates will go up, and if the bank deposits are on the rise, the rates will

    tend to go down. Banks raise or lower financing rates based on its EIBOR.

    In the home finance/mortgage industry, an increase in rate is typically passed on from banks to customers who

    are seeking a home finance for the purchase of the property. Therefore, it is likely that existing home finance

    customers who are on a variable rate may see a rate rise on their finances. That being said, home finance

    customers will only need to adjust for a relatively small hike in rates. For example, if a customer had availed a

    home finance around one year ago of Dh1 million over a tenor of 25 years at 4 per cent per year, when the rate is

    revised to 4.25 per cent per year, the monthly instalment impact of the 25 bps rate hike will approximately be

    between Dh135 to Dh140 per month. While this is an inconvenience, it is a minor raise in the grand scheme of

    things, and customers should not panic.

    Competitive offers

    Interest rates are important but not the only deciding factor for homebuyers. People moving locations or

    upgrading to a bigger property will continue to avail finance options. With a relatively large pipeline in 2017-18

    and dev