The UAE is experiencing rapid infrastructural growth. The real estate sector in UAE grows by double digit and the country has the one of the highest construction rates in the world.
Nature of Real Estate Business in UAE
There is growing number of real estate properties for renting and apartments for sale in UAE. These have been driven by the growing demand from local and international residents, increase in population, and growth of multicultural society, good infrastructure, growth in tourism, friendly business environment and low taxes. The country is also a regional and international trade hub and therefore attracts numerous foreigners who purchase or rent properties.
Financing Options Available to the Local and International Investors
The UAE offers many financing options for local and international investors who purchase apartments in the country and also rent property for business purposes.
The first and easy method is paying cash for property. This is a common strategy for rich high income earners who can afford to pay huge sums of money for apartments and real estates.
Cooperates and individuals developing properties in the UAE also have access to loans from banks and financial institutions. Banks easily give loans to corporate institutions as compared to individuals. To access the loans, the corporate organization must proof their credit worthiness and provide security. Most corporations access these loans and in turn lend the money to individual who can’t access loans directly from the bank.
Private companies developing apartments in UAE also offer easy finance options to individuals and corporations who want to own these properties. To purchase the property, one pays a down payment and the other money is paid through a loan payable within three years. Due to the intense competition, most private developers offer relatively low rates as compared to banks.
Mortgages are another viable alternative to bank loans. In this form of arrangement, cooperates and individuals purchasing homes pay an initial down payment and the other payments are spread over a period of several years. Mortgages are expensive and require an extensive process to attain the property.
Islamic banking also offers loans to individuals purchasing property in the UAE. The ijara structure is used for both retail and corporate real estate financing.
How to Access and Use the Different Financing Options Available In UAE
Most financing options are obtained though banks, financing institutions as well as private development companies. Most financing options require security should the individual default to pay.
Benefits of using real estate financing as compared to cash payments
One of the main benefits of real estate financing is the ability to acquire highly valued property even when a company or an individual does not have the full amount. Gradual payment through loans and mortgages are very viable and affordable.
The real estate sector is rapidly developing in the UAE. Most of individual and companies investing in these properties use mortgages and loans to acquire these properties. Through these financing options, it is easy to acquire properties.
This article is posted by Mr. Chitrang Vyas
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