Expectations that the Central Bank will impose a mortgage cap this year are unlikely to dent a surge in the number of new home loans, according to property agents.
Estate agents in Dubai and Abu Dhabi are reporting an increase in the number of residents taking out mortgages, as the property market continues to recover despite expectations that the Central Bank is may limit borrowing.
According to the property valuer Cluttons, the number of mortgage valuations it has been asked to carry out over the past 12 months has increased by 40 per cent compared with the same period the previous year.
However, the agent added that the level still remains about 20 per cent lower than it was at the peak of the market.
The cap, rumoured to be announced this month, is expected to limit lending to foreign buyers at 80 per cent of purchase price, and at 75 per cent for Emiratis.
An original cap proposal, limiting loans to first-time foreign buyers to 50 per cent of the property's value and 70 per cent for locals, was announced in December, prompting an outcry from commercial banks and precipitating news of a temporary slowdown in the Dubai property market.
"We are carrying out a large amount of mortgage valuations at the moment for different banks all over Dubai and Abu Dhabi, and we are very aware that our counterparts are doing similar business," said Richard Paul, a director for UAE residential valuations in Cluttons' Dubai office. "This is a trend we expect to continue."
"Some of this is down to the market recovering and some of it is down to people looking to escape high rent increases," Mr Paul added. "The expected loan cap announcement could perhaps subdue the market a little, but this time around it won't be as much of a shock."
The figures confirm Dubai Land Department data published in July, which reported that buyers using mortgages bought 6,050 properties worth a total Dh51.3 billion - roughly double the number of purchases recorded last year and a two thirds increase in the total value.
According to the Dubai-based property agent Prestige Real Estate, the number of clients looking to buy rather than rent has increased 20 per cent during the past year, as residents return to the housing market as a way of avoiding soaring rents.
"We are seeing a lot of western expatriates coming to us because they have had enough of renting," said Mario Volpi, the managing director of Prestige. "It's not just that rents are rising quickly, it's also that they are sick of having to fight to renegotiate their rents with their landlords each year."
"This time we don't expect the same sort of effect on the market," Mr Volpi said.
"The lending levels are likely to be much more sensible and the market expects the move, so it will be less of a shock."
Thousands of buyers took out mortgages during the Dubai property boom of 2006 and 2007, when they were encouraged by easy credit rates and UAE banks' relaxed lending criteria.
Then prices plunged by more than 60 per cent during the property crash in 2008 and 2009, leaving thousands of mortgage holders in negative equity and forcing the UAE's two biggest mortgage providers, Amlak and Tamweel, to stop lending for almost two years as mortgage financing ground to a halt.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Killing of Qassem Suleimani
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'Unrivaled: Why America Will Remain the World’s Sole Superpower'
Michael Beckley, Cornell Press
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
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