Dubai property - quite different finance terms

Bored in Dubai en-route to Nairobi

Interesting finance terms here 20% down, balance payable over 3 or 6 years!

1.3M AED = 467k AUD

 

Lame, I'm Asian and I will just pay cash.

 

@Blacky knows this space well i think.

 

This basis of finance used to apply in Australia in the 1920-1940s. Vendor finance terms were typically 5-7 years with interest rebated for those who repaid within say 2 years. Its common across India and subcontinent too.

I believe it reflects the lack of main stream lending in a developed nation and so vendor finance fills the void. But in Dubai it could be a Islam issue too. Someone more knowledgeable about islamic finance may offer infoamtion

 

Me? no...I dont know much about the DXB market. Or this type of arrangement.
Im in Russia, not DXB.

Devil, as always, will be in the detail.

A quick search will reveal that you could well end up paying 100% of the property, prior to its completion. The first 20% deposit is paid on signing, the remainder is paid in 6monthly installments. Wont take long to google and find people who were badly burned in the last DXB boom - where they had paid 100% of a property, but the developments were delayed by years.
An arrangement you will struggle to finance.

I note only one of their developments allows a 20% down payment, then 2x 10% installments with the remianing 60% payable on completion.

You would also want to be very familiar with DXB. Im not, but Im pretty sure these developments are not in the ideal location...

Buyer beware!

Blacky

Linky

 

Interestingly last month I was in Bali. At the airport a similar add said something along the lines of
"while you are visiting Bali - why not think about investing in Australian property"

Not a bad strategy I thought... it was a pretty rolling picture, which I presume was largely targeting the swaths of chinese tourists who flock through bali each year. Its only down side, IMO, was it was written all in English - with no chinese translation.

Blacky

 

My understanding is that the taking of an interest-based loan (i.e. The paying interest part) is forbidden under Islam, hence the many "pay in instalments" options.

 

Indeed - I remember coming across a few old early division sales in what is Adelaide's inner suburbs with similar terms.

 

I agree. These are not in the best location at all. Dubai is ALL about location and suffers a severe bout of postcode prejudice
(always has)- and the better postcodes will also likely have the highest growth in boom times and certainly hold values better during a downturn. Plus, places like duibai are quite diverse in socio-economic make up and you want to own places that you know are both professionally managed as well as having the right tenancy base. Its NOT like here, where there are established tried and tested fair rules. The risk there in RE is much higher than anything in Aus and thus the potential returns are also higher.
Another point to consider is that you dont actually own jack- like china ( i think), its a 99 year lease and the government has sole (and authoritarian) control. Many foreign investors got burnt badly during the GFC doing just that- reports of half built apartments and then abandoned were common (I saw quite a few myself!).
The good news is that its the most stable RE market in the gulf. Its rulers are also (probably?) the most sensible and fair amongst the lot, its laws are probably the most robust and fair amongst the entire region, etc....Ultimately, it comes down to how much risk you can stomach for the potential reward ( which could be considerable but have to do your own research obviously)
Key real estate issues in the UAE

 

Enjoy Nairobi and if you drink have a tusker ... great beer