Dubai Forums Dubai Discussions Dubai General Chat

Than to waste all of my savings to nothing (and a bit inspired by rich locals), I'm thinking of taking a couple of hundred thousands Dhs loan from the bank (my current bank is NBD) and invest on properties (ex: small student flats) in my home town.

Is now a good time to take loan from the bank? Would there be a change in the interest rate? By few months when they say that Dubai property industry will be stagnant, will the interest rate go down? Also, as the property would not be in Dubai, would the loan be considered as personal loan (higher rate) or home loan (lower rate)?

Any suggestions would be appreciated.

xty wrote:Than to waste all of my savings to nothing (and a bit inspired by rich locals), I'm thinking of taking a couple of hundred thousands Dhs loan from the bank (my current bank is NBD) and invest on properties (ex: small student flats) in my home town.

Is now a good time to take loan from the bank? Would there be a change in the interest rate? By few months when they say that Dubai property industry will be stagnant, will the interest rate go down? Also, as the property would not be in Dubai, would the loan be considered as personal loan (higher rate) or home loan (lower rate)?

Any suggestions would be appreciated.

Though loan & mortgage business is not my specialist field, I would like to make the following statements:

1. No idea if flats will still increase in value. I see the least downward potential in detached villas and in low rise apartment buildings due to a lack of supply

2. Since AED is pegged to the USD and the underlying refinancing products (CD's) of the UAE central bank are pegged as well, a downtrend in Dubai real estate prices will have no impact whatsoever on the underlying interest rates. Only the US Central Bank/the US economy has for the time being. This might change in a couple of years time though.

3. However, a downtrend in property prices might have an impact on the actual interest margin of the loan provider... meaning the loan provider (bank) might increase its "mark up" in order to reflect the risen risk in providing mortgages.

4. Most probably it will be considered a home loan.

Hope it helps somehow. I highly recommend to consult a specialist though.

Globetrotter wrote:1. No idea if flats will still increase in value. I see the least downward potential in detached villas and in low rise apartment buildings due to a lack of supply

In my home country, Indonesia, especially in big cities such as Jakarta, I see an open market for low rise apts/flats just like in Dubai. There are not many, and land plots are getting more expensive. Different than in Middle East or other cities, mostly people live in houses (small or big). There are some high rise apartments in big cities which only rich people can afford.

At the moment, as the capital would not be very big, I would try to invest in mid-class (with cable TV, Internet) student flats first in the same complex where my parent lives (which lies between two big & expensive universities). Easy to look after (by my parent) even I live out of the country. For 200K-300K AED, I could buy a small-med house with 10 rooms. I'd pay some part of the installments from the rental fee.

I would need at least 10 times of that capital to have that kind of low rise apt. Hopefully in the future I could afford it.

Globetrotter wrote:2. Since AED is pegged to the USD and the underlying refinancing products (CD's) of the UAE central bank are pegged as well, a downtrend in Dubai real estate prices will have no impact whatsoever on the underlying interest rates. Only the US Central Bank/the US economy has for the time being. This might change in a couple of years time though.

For most of the countries where the economy rather flat, probably there's no impact on the interest rate. I just can "smile" when I see a monthly interest transaction in my NBD account balance
The thing is that I get used to the interest rate in Indonesia which lies between 2%-8% pa for savings, and 7%-14% pa for fixed deposit. Early last year it was 13.5% for fixed deposit, but now it goes down to 7.5%. That's one of the reason I start to think investing on properties, though the USD against IDR rate is rather flat at 9000-9300 IDR (1 USD). Am I taking a good decision?

Globetrotter wrote:3. However, a downtrend in property prices might have an impact on the actual interest margin of the loan provider... meaning the loan provider (bank) might increase its "mark up" in order to reflect the risen risk in providing mortgages.

I check NBD website, the charge 6.49% pa for home loan (for only properties in Dubai/UAE?). I can't find the personal loan rate though.
Does anyone remember how much the loan rates months earlier? I just need to know the trend if it's increasing or decreasing.