Standard Chartered offers $5m mortgage

Bank to issue the loans for 'high net worth' buyers but before signing up, make sure you can afford the Dh162,000-a-month repayments.

The new US$5 million mortgage could put you in the lap of luxury in Dubai's Al Barari development.

DUBAI // For the millionaire who has almost everything, a little extra help is now available for the ultimate luxury purchase. Standard Chartered Bank has introduced a US$5m (Dh18.4m) mortgage - allowing, once the buyer has put up the required 40 per cent deposit, the purchase of a Dh30.6m home.

With an interest rate of seven per cent - although it can be as low as six, depending on the borrower - paying the loan off over the maximum 16 years would mean monthly repayments of Dh162,315. Robert McNamara, of Myhome International Property, said the $5m mortgage would put some amazing homes within a buyer's reach. "A mortgage like that would get you just about anything within reason in Dubai," he said.

"It would easily cover anybody's dream home, like a signature villa on the Palm Jumeirah with your own private beach, or a seven-bed villa in Emirates Hills with a pool overlooking the golf course. "But, of course, if you had the right criteria for a mortgage like that, you'd probably have a house similar to that already." More generally, the move could help to inject life back into the hard-hit property market.

Benjamin Smith, the chief executive of Smith and Ken, said: "It's great news to see a bank returning to the market with such a facility. "This will surely invoke an element of confidence and hopefully influence other banks to follow, bringing much-needed liquidity to the higher end of the market." Jesse Downs, head of research and advisory services for the property company Landmark Advisory, was more cautious about the likely impact.

"This is designed for high net-worth individuals," she said. "While there has been limited transactions of ultra-luxury units, this segment does not necessarily follow the trends in the more affordable segments." Mr Smith believed that it might even hurt buyers. "An increase in activity may influence sellers to hold firm on their asking prices," he said. Ms Downs agreed. "Owners of ultra-luxury units tend to have more holding power," she said. "So prices are not necessarily as sensitive to fluctuations in demand and sale volumes."

David Inglesfield, the regional head of Standard Chartered Private Bank, said it had several clients that would fit its criteria, which include a requirement for borrowers to have assets of at least $1m. "The thing we see quite often are clients who perhaps want to buy another property in the Palm Jumeirah or Emirates Hills because they think it is a good time to buy from an investment point of view," he said.

"Maybe a client lives outside the country and they are taking the opportunity to acquire one of those properties as a UAE home." He said the bank had had a number of inquires for such homes from Asia and the UK. "There are also a lot of clients who own that sort of property that may have no mortgage and may decide this would be a good opportunity to take some liquidity. "Perhaps they want to sell the property at some point but don't want to do so in the current market, or perhaps would like to take some cash out for whatever; business or personal purposes."

What would make more difference for less wealthy buyers, according to Ms Downs, would be affordable mortgages for middle and mid-high income residents. "Supply will have a greater impact," said Sarah Lord, a financial planner at Killik. "If there is a shortage in supply of high-end properties this will drive up prices far more than the introduction of a new high-end product. "However, it is evidence that we are starting to see the confidence of the banks in the long-term prospects of the UAE real estate market return. "The fall in valuations seen in the last two years - up to 50 per cent for some developments - has led to property now being reasonably priced, compared with the artificially high prices we had previously seen." [e-mail]