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Arabian Business
06-05-2025
- Business
- Arabian Business
UAE banks fuel real estate demand surge with lower mortgage rates, extended financing facilities
Banks in the UAE are emerging as the new drivers of demand surge in the property market in the country, luring international and domestic investors with mortgage rates below the UAE Central Bank denominated rates, despite fading expectations of cuts in interest rates any time soon, market players said. Some of the banks are now offering mortgages at below 4 per cent as against the three-month Emirates Interbank Offered Rate (EIBOR) of 4.2 – 4.3 per cent, they said. This, along with the strengthening of currencies like the British pound and euro against the dirham in the wake of the weakening of the US dollar, is triggering a major demand spike for residential real estate, as properties in Dubai have effectively become more affordable for international buyers. by removing the AED 1 million or 50 per cent upfront payment requirement for property-linked golden visas. 'The macroeconomic shifts underway globally triggered by rising tariff and tax rates, and a weakening US dollar in 2025, are driving increased interest in the UAE real estate market, particularly from foreign nationals,' Sawan Karia, Director, Broker Channel at Huspy, a Dubai-based leading player in the mortgage market, told Arabian Business. 'The currency advantage, coupled with economic uncertainty in other global markets, is leading to a notable increase in mortgage activity – not just from ultra-high-net-worth individuals, but also from salaried professionals and non-resident investors who are now choosing to finance property purchases in the UAE,' he said. Karia said while Dubai has long appealed to non-resident buyers, that demand is accelerating now, fuelled by competitive lending rates, long-term residency options, and a high standard of living. Senior executives at some of the city-based investment and real estate consultancies also confirmed the latest mortgage and currency-linked demand surge in the real estate sector. UAE banks stepping up their mortgage play Sector experts said the softening mortgage rate-led demand in the UAE real estate market is evident from the fast-narrowing gap between total market volume and mortgage activity. Banks' willingness to step in with the final payments for off-plan properties bought under front-loaded developer payment plans is helping this, they said. Sankey Prasad, CMD, Colliers Middle East and India, said that with mortgage volumes in Dubai alone surging 24 per cent year-on-year in Q1 2025 as per Property Monitor, banks are clearly stepping in as demand catalysts. 'This will further fuel and stabilise demand for residential units across major micro markets in Dubai,' Prasad told Arabian Business. The Colliers Middle East and India chief executive said UAE banks are now playing a pivotal role in fuelling property market momentum by offering mortgage rates that undercut the central bank's benchmark rate. 'This is a strategic move to capture growing investor appetite amid a prolonged high-interest-rate cycle,' he said. Citing that the British pound gained nearly 4 per cent and the euro over 3 per cent against the UAE dirham since the start of the year, Prasad said: 'This FX-driven affordability, combined with flexible local financing, is intensifying global demand for residential assets in prime districts.' Karia said while the UAE's mortgage market accounted for $62 billion of the $240 billion in total real estate transactions last year, it's important to contextualise that figure. 'One emerging trend is the rise of front-loaded developer payment plans – structures like 70-30 or even 80-20, where the majority of payments are made during construction. 'In response, and in alignment with central bank regulations, several banks are now willing to step in and finance the final payment once buyers have paid at least 50 per cent of the property value,' he said. Industry players said that while such bank financings were earlier limited to Tier 1 developers, they are now seeing this financing model gradually extending to a broader base. As for rate cuts, they said at the beginning of the year, market expectations pointed to as many as five interest rate cuts. 'That outlook has since softened, with most now anticipating just two, or possibly three, cuts,' Karia said. Given that the UAE dirham is pegged to the US dollar, any decision by the US Federal Reserve to lower rates has a direct influence on borrowing costs and the Emirates Interbank Offered Rate (EIBOR). AI boosts mortgage efficiency Market experts said along with the lower mortgage rates, the latest AI-led initiatives in the mortgage sector are also playing a pivotal role in attracting investors to access bank finances in Dubai. Huspy was the first to be off the block in the region, announcing an AI-powered mortgage chatbot on WhatsApp late last month, significantly reducing the time taken to secure a home loan from weeks to just a day. Sector players said that while deeper integrations with banking partners are still under development, the AI-driven initiative is already helping to significantly reduce the time taken to prepare mortgage applications, which typically runs to multiple pages. Real-time checks by company brokers or experts identify missing pages or values outside expected ranges, significantly reducing back-and-forth communication. 'In a market where deals move quickly, there is often little time to unpack bank jargon before committing to a home purchase,' Mo Ghahroudi, VP – AI at Huspy, told Arabian Business. 'Huspy AI addresses this gap by offering real-time responses, based on the most up-to-date bank offers, around the clock,' he said. Sector experts said borrower expectations are evolving quickly on the technology front, with customers increasingly wanting a digital-first experience – one where documents can be submitted online, approvals are faster, and communication is seamless. While banks are working to modernise legacy systems, the industry now faces a pivotal moment – scale up human support to meet today's volume or invest in systems that can sustainably deliver efficiency tomorrow, they said, adding that in the meantime, platforms that bridge this gap are winning borrower trust by offering the speed and simplicity the market now demands.
Zawya
13-02-2025
- Business
- Zawya
Union Properties reduces legacy debt, targets another $40.8mln cut by Q1-25
Dubai: Union Properties has achieved a significant milestone in its recovery plan by reducing its legacy debt of AED 1.47 billion as of 2022 to AED 575 million as of the end of December 2024. The company also plans for an additional reduction of AED 150 million by the end of the first quarter (Q1) of 2025, according to a press release. Union Properties was able to reduce the margin on the 3M EIBOR from 3.25% to 2.75% in light of growing trust among banks. The company was also able to secure additional bank loans of AED 150 million to fund new investments it intends to make in the coming 18 months. These investments are expected to generate an annual recurring income of approximately AED 40 million. Furthermore, Union Properties has lowered its financing costs by AED 82 million throughout 2024 to hit AED 32 million at the end of the year from AED 114 million in 2023 by implementing its debt restructuring strategy, improving profitability and liquidity. In addition, as a part of its asset divestment strategy, the company has sold plots, generating AED 1.30 billion in funds for debt settlement agreements and fulfilling preliminary costs for new real estate projects. Union Properties plans to launch two new projects soon, further reinforcing its leading position in Dubai's urban development landscape. The projects will include mixed-use, residential, commercial developments that will meet the highest benchmarks of sustainability, innovation and functionality. CEO and Board Member of Union Properties, Amer Khansaheb, said: 'With the successful reduction of our legacy debt and acquisition of new funding to advance our strategic expansion, we at Union Properties pave the way in a new era of growth and possibilities.' Khansaheb added: 'Our growing trust among financial institutions and unwavering commitment to excellence will certainly lay the groundwork for continued success, while also allowing us to address the evolving needs of urban populations.' He concluded: 'The strength and potential of the Company's portfolio are also demonstrated in different format by the availability of 10 million square feet of GFA." Meanwhile, the two new projects are set to be launched soon and will be strategically located and built to the highest sustainability and quality standards. These projects demonstrate Union Properties' commitment to promoting sustainable growth and improving Dubai's Real Estate market by attempting to meet the changing needs. It is worth mentioning that the real estate firm sold above AED 1.30 billion worth of plots since the announcement of its five-year turnaround strategy in April 2023.
Mid East Info
07-02-2025
- Business
- Mid East Info
Union Properties reduces legacy debt and signs new funding agreement with a local bank to drive strategic growth
The Company announced retaining 10 Million sq. ft. of available GFA, unveiling plans to launch two new projects soon. February , 2025: Union Properties PJSC ('Union Properties' or the 'Company') (DFM symbol: UPP) achieves a significant milestone in its recovery plan as it reduced its legacy debt of AED 1.47 billion (FY2022) to AED 575 million as of end of December 2024, and further targets reducing it by end of Q1 2025 by another AED 150 million. On the back of this exceptional performance, Union Properties was able to reduce the margin on the 3M EIBOR from 3.25 per cent to 2.75 per cent, in light of growing trust among banks. Union Properties was also able to secure additional bank loans of AED 150 million to fund new investments it intends to make in the coming 18 months. These investments are expected to generate an annual recurring income of approximately AED 40 million. By successfully implementing its debt restructuring strategy, Union Properties has lowered its financing costs by AED 82 million during FY 2024 – from AED 114 million in FY 2023 to AED 32 million in FY 2024, improving profitability, and liquidity. In addition, as a part of its asset divestment strategy, the company has sold plots, generating AED 1.3 billion in funds for debt settlement agreements and fulfilling preliminary costs for new real estate projects. The Company has also announced earlier, that as part of its 5 years strategy, it will be retaining land of approximately 10 million sq. ft. of Gross Floor Area (GFA) from its current portfolio for development. This exceptional milestone is a testament to the Company's strong asset base and strategic commitment towards driving sustainable growth in the UAE's Real Estate sector. As part of its ambitious growth strategy, the Company also revealed plans to launch two new projects soon, further reinforcing its leading position in Dubai's urban development landscape. These projects will include mixed-use, residential, commercial developments that will meet the highest benchmarks of sustainability, innovation and functionality. Eng. Amer Khansaheb, Chief Executive Officer and Board Member, Union Properties, stated, 'With the successful reduction of our legacy debt and acquisition of new funding to advance our strategic expansion, we at Union Properties pave the way in a new era of growth and possibilities. Our growing trust among financial institutions and unwavering commitment to excellence will certainly lay the groundwork for continued success, while also allowing us to address the evolving needs of urban populations. The strength and potential of the Company's portfolio are also demonstrated in different format by the availability of 10 million sq. ft. of GFA.' Set to be launched soon, the two new projects will be strategically located and built to the highest sustainability and quality standards. These projects demonstrate Union Properties' commitment to promoting sustainable growth and improving Dubai's Real Estate market by attempting to meet the changing needs.
Arabian Business
06-02-2025
- Business
- Arabian Business
Dubai real estate: Union Properties reduces legacy debt and secures new funding
Union Properties' road to recovery reached a new milestone in Dubai when it announced that its legacy debt has reduced to AED575m ($156.5m) as of the end of December 2024, nearly 60 per cent down from AED1.47bn ($400m) in Financial Year 2022. The Dubai-based real estate company is targeting a further reduction to AED150m ($40.85m) by the end of first quarter of 2025. The growing trust among the banks has helped the company reduce the margin on the 3M EIBOR from 3.25 per cent to 2.75 per cent, and it was also able to secure additional bank loans of AED150m ($40.85m) to fund new investments. Dubai's Union Properties debt These investments, which Union Properties intends to make over the next 18 months, are expected to generate an annual recurring income of approximately AED40m ($10.9m). Union Properties had earlier announced that as part of its 5-year strategy, it will be retaining land of approximately 10 million sqf. of Gross Floor Area (GFA) from its current portfolio for development. Amer Khansaheb, Chief Executive Officer and Board Member, Union Properties, commented: 'With the successful reduction of our legacy debt and acquisition of new funding to advance our strategic expansion, Union Properties has paved the way for a new era of growth and possibilities. 'Our growing trust among financial institutions and unwavering commitment to excellence will lay the groundwork for continued success, while also allowing us to address the evolving needs of urban populations. The strength and potential of the company's portfolio are also demonstrated in different format by the availability of 10 million sqft of GFA.' With the successful implementation of its debt restructuring strategy, Union Properties has lowered its financing costs by AED82m ($22.2m) during FY2024, bringing it down to AED32m ($8.7m) in FY 2024 from AED114m ($31m) in FY 2023. This has led to improving profitability and liquidity. As part of its asset divestment strategy, the Dubai real estate company has sold plots and generated AED1.3bn ($350m) in funds for debt settlement agreements and fulfil preliminary costs for new real estate projects. Two new projects As part of its growth strategy, Union Properties revealed plans to launch two new Dubai projects soon. These will include mixed-use, residential, and commercial developments that will meet the highest benchmarks of sustainability, innovation, and functionality. Set to be launched soon, the two new projects will be strategically located. These projects demonstrate Union Properties' commitment to promoting sustainable growth and improving Dubai's real estate market by attempting to meet the changing needs.
