Dubai's Property Market: The Need Of Aligning LTV Ratios with Significant Price Appreciation

Dubai's real estate market continues to demonstrate strong growth and evolution. Recent data from 2024 highlights the significant price appreciation seen in comparison to 2019. This growth underscores the need to re-evaluate current Loan-to-Value (LTV) ratios to ensure they remain aligned with the market's dynamics and keep buying viable options as prices continue to increase.

Currently, Dubai's LTV regulations typically require a 20% down payment and allow for 80% financing for properties valued up to AED 5,000,000, plus commissions and 4% transfer fees which can no longer be financed. However, for properties exceeding this AED 5,000,000 threshold, the down payment increases to 30%. This shift significantly impacts buyers' purchasing power.

Comparing 2024 sold data to 2019 reveals a clear trend of increasing property values. For instance, data shows that a villa in Victory Heights sold for AED 4,000,000 AED in 2019. In 2024, similar villas in the same community are selling for AED 6,750,000. This significant increase pushes many properties well beyond the AED 5,000,000 threshold, requiring a 30% down payment.

Additional data points further illustrate this trend. An apartment in Al Majara in Dubai Marina sold for AED 1,500,000 in 2019. By 2024, comparable apartments in the same building are selling for AED 3,500,000. This over double of a price increase over five years highlights the rapid appreciation of property values.

Given the substantial price increases between 2019 and 2024, the AED 5,000,000 threshold for LTV ratios may no longer be effectively serving the Dubai property market. Revisiting and potentially increasing this threshold to better reflect current property values. Adjusting the LTV ratios could alleviate the financial burden on buyers, particularly those looking at mid-range to higher-end properties. This adjustment could stimulate market activity and ensure continued growth.

By updating LTV regulations to reflect the significant price appreciation seen between 2019 and 2024, Dubai can maintain its position as a leading global real estate hub and ensure

Written By Lewis Allsopp, Chairman at Allsopp & Allsopp

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