I am looking for a residential investment; can you advise me, which are the best areas in Dubai, which can give high yield on ready and off plan projects?

The Dubai real estate market is currently undergoing a steadiness period, which is directly tied to tactical government guidelines, including amended registration fees and mortgage caps, which certainly, make now an optimum time to invest in Dubai.

Considering the current gross returns on investment in Dubai, it’s somewhere between 7–9 percent which is marked higher than any other developed nations. Yield performance is based on many conditions which include- location, contiguous, connectivity and maintenance, which influence the investment over the year. Based on your investment appetite you can ideally go for studio or one- bedroom apartment purchase, in areas such as Dubai Marina, Downtown Dubai, Business Bay, JBR, JLT, Sports City, and Motor City or even in Dubai Land as these prominent locations promises strong rental returns and have a good occupancy rate.

However, if investing in off-plan projects, which is like lower cash spending over the construction period is actually giving a better return on investment with the market growth. Buying an off-plan needs a little research, since the yield is predicted on future market efficacy so, look for reliable developer projects, study the community and surrounding, in conjunction with the competitive payment plan.

I am planning to repay my mortgage early what suggestions you can advise? What are points I should keep in mind to avoid any penalties?

Indeed, it’s a nice thought to phase down some portion of your debt by repaying the mortgage if you have an extra saving cash. But before, initiating this step, it’s important to understand if there is no early payment penalty mentioned in your mortgage agreement. If not, then you start adding principal to your monthly installment (EMI). This will reduce your principal outstanding, thus, the loan balance used for the calculation of interest charges will also be reduced and will empower you to pay off your mortgage earlier. You can even look for other options of refinancing your existing loan with a lower rate or a shorter term.

Since I am not aware of your current situation and financial status, I would recommend you, before starting this exercise, sit with your mortgage consultant and give the detailed review about your existing mortgage and your current financial standing, accordingly he/she can advise which possibility will best conform with your prerequisite and will help you to repay your mortgage early.

I am planning to buy a residential unit in Abu Dhabi, can you help me to understand what is happening in today’s real estate market, so I can plan my purchase accordingly.

Definitely, Abu Dhabi is currently providing a virtuous investment prospect. The steadiness in sales price in the emirate and increasing leasing prices make investing here more sensible, which offers more value for money. With the implementation of the new law No. 3 of 2015 on the regulation of the real estate sector in the emirates of Abu Dhabi, will have a greater impact during the market upsurge.

Considering the long-term perspective, the new law certainly improves city’s attraction to investors as it contributes to the solid legal framework and also likely to overpower supply growth.

Now coming back to the market performance, then indeed, investing in residential units gives the best ROI to investors. As if we consider yields in areas like Al Reef, Al Reem, and Al Ghadeer, then it’s somewhere around 8 per cent. However, investments in premium areas such as Saadiyat Island, Al Raha Beach, Yas Island or Khalifa City would also gain in long-term capital investment.

I bought an off-plan in sports city in 2007 and recently I got a handover letter from the developer. Can you advise me what are my options for a mortgage? And which documents are needed to start the process.

If I know which particular project you talking about, I might be in a better position to reply you, but anyhow in general, yes definitely you can be eligible for mortgage funding at the project handover stage. The bank will do their due diligence to analysis your eligibility by reviewing your property documents which include- Oqood Copy, Sale and Purchase agreement copy, statement of account, and handover letter copy, alongside with your personal and income documents which include- passport copy, personal bank statement, your identification copy, credit report and salary certificate copy, if employed.

Since, the project has been completed and at the handover stage, certainly, the bank can fund you up to 75 per cent loan to value, however, the amount would depend on the current market value of that property. But note this LTV is subject to bank approval, so you can consult with the respective banks to arrange a mortgage for your purchase.

I am a non-UAE resident and planning to buy property in Dubai with a mortgage. Can you explain what is the difference between conventional mortgage product and Islamic mortgage product? Which one I should go with.

Basically, if we take a broader look, there is barely any difference in the pricing of the product which includes interest or profit rates, bank charges or the initial approval process in both the products. However, the main benefit of Islamic finance is that this product offers a safe foundation of a fund that is certified as halal for Muslim buyers who follow to Islamic instruction and the Sharia, whereas for the non-Muslims buyer, Islamic mortgage product provides a real substitute for the conventional product.

In conventional mortgage procedure is quite straight forward, where the bank lends money to the buyer to purchase a home and charge interest on that lending amount for a set period of time. However, under Islamic product, bank eludes all interest-based transactions (known as riba), as it’s forbidden to earn income, from any form of interest. Therefore, the bank buys the property on behalf of the buyer and resell it on profit rate or lease it back to the customer for contracted rental payments during the course of the loan tenure.

In terms of growth rates certainly, the Islamic finance segment has been progressively coming to the fore, surpassing the conventional lending segment, so it’s all up to the personal preferences to choose which mortgage structure will suffice the requirement. Well, I would advise discussing your requirement with the mortgage expert can certainly benefit you. As based on the requirement, they can help you to do a proper study on both the funding policies and structure which will assist you to make a wise decision.

By Mr. Dhiren Gupta, Published in GN Property June 18 2016