Dubai’s New Mortgage Law

Dubai’s real estate sector has always catered to the region’s need for versatile financial services to meet increasing demands. People from around the globe have been attracted to Dubai’s free and friendly economy, world-class infrastructure and unique legal and commercial framework which helps make it easy to carry out business and invest in real estate. This is invariably causing the demand for property to rise in the city.

In April 2018, the Dubai Land Department (DLD) introduced a new Mortgage and Finance Law aimed at boosting the property investments environment and streamlining financial mechanisms to make it transparent, safe and easier for all.

What are the objectives of the new Mortgage Law?

The main objectives of the new law are as follows:

  • Attract foreign investors and public joint stock companies listed on NASDAQ
  • Encourage alternate financing methods and welcome REITs
  • Integrate the Real Estate market with capital markets
  • Catalyze opportunities for partnerships and investments that finance the real estate sector
  • Improve financial liquidity
  • Accommodate investors with small/medium sized portfolios
  • Strengthen partnerships between the public and private sectors
  • Overall, boost the Real Estate economy and GDP

The government is envisioning greater and more strategic diversification of investments and alternative funding avenues for the city’s real estate sector by extending the Smart Dubai 2021 initiative into the financial sphere through the new mortgage law. This, in turn, will help stimulate economic growth.

Why is the new Mortgage Law beneficial?

The existing landscape of real estate funding makes it difficult for non-residents to buy property in the UAE because of reduced bank financing and complicated procedures.

Non-residents looking to buy property in the UAE want to get higher proportions of financing, but banks currently offer a loan-to-value ratio of only 60 to 65 percent on a ready property for non-resident investors. They are apprehensive to lend more due to the high levels of risk involved.

The new mortgage law is expected to improve financial liquidity, making it easy for small and mid-cap entities to make property investments, as well as helping homebuyers realize the dream of owning their dream-homes

The new law also intends to make it easier for specialized funds to come into the Dubai real estate market. Formation of ‘Real Estate Investment Trusts’ (REITs) – which currently accounts for 5% of Dubai’s listed real estate – will allow the integration of real estate with capital markets.

REITs and alternative financing avenues will support the expansion of funding channels available to developers, while also allowing higher exposure to foreign investment funds to Dubai’s real estate market and providing investors with liquid, diversified and smaller ticket size investment instruments.

The new law will help catalyze opportunities for partnerships and investments that finance the real estate sector, allowing local companies to exchange experiences with foreign ones. This will help extensively improve products and services and will modernize investment streams to strengthen the sustainability of investments in the market. Property developers can deliver projects faster, expand further, attract better foreign investment and provide investors with diversified, small ticket investment instruments.

In conclusion, regulation has always brought in better accountability in Dubai, and with this law, the real estate sector will only benefit positively. Since the mortgage industry is still in a formative stage, this law is a big leap forward in protecting the interests of buyers, providing greater regulation and better transparency.

What are Off Plan & On-Plan Properties? Which is a better option to invest?

In UAE, the real estate market offers a wide range of option for investors. They can choose between commercial and residential properties, upcoming or established locations, and off-plan or on-plan (ready-built) properties. While we recommend choosing an investment that is in sync with your financial goals and investment objectives, it is important to understand the options available to you so you can make an informed decision. Today, we are going to talk about off-plan and on-plan properties and look at the advantages and disadvantages offered by them.

What are Off-Plan and On Plan Properties?

An On-plan property is also known as a ready built property. As the name suggests, it is real estate property available for immediate occupancy. Such properties are fully built and comply with the requirements specified by governing authorities.

On the other hand, an off-plan properties are real estate properties which have not yet been completely built. These are usually pre-construction properties and are primarily marketed to real estate developers and early adopters.

Having understood the meaning of off-plan and on-plan properties, let’s take a quick look at the types of real estate property investors in the market.

  • Investors who purchase the property to live in it.
  • Investors who want to sell the property soon for a profit
  • Investors who purchase a property to subsequently lease it.

Apart from defining your investment objectives and financial goals, it is important to determine which type of real estate investor you are. For example, if you are investing in a property to reside in it, then it would be better to purchase an on-plan property. On the other hand, if you are investing in the property to sell or lease it, then an off-plan option could be better given that the purchase price can be lower and you pay the amount over an extended period of time.

Let’s look at the benefits of off-plan and on-plan properties alongside their disadvantages.

On-Plan Property


  • Complete control on your property from the time of purchase.
  • You can lease your property immediately and start earning rental income.
  • If you are living on rent and plan to reside within the property, then you can save on rent.
  • For any reason, if you want to sell the property, you can do so at any time.


  • Typically, the complete price needs to be paid at once since most of on-plan properties do not offer flexible payment plans.
  • On-plan properties are costlier than their off-plan counterparts since the property is fully built and ready to move into.
  • Since the property is built, there is a limited scope for major internal modifications to it.
  • Before selling the property, you have to spend money on remodeling in order to suit the needs to the buyer.

Off-Plan property


  • Since you don’t have to make the complete payment at once, there is a reduced burden on your finances as compared to on-plan properties.
  • The price of off-plan properties is usually lower than the on-plan ones.
  • Most developers offer multiple incentives to off-plan property buyers.
  • Banks and financial institutions also tend to offer attractive financing plans for off-plan property purchases.
  • It is simply a ‘buy now – pay later’ model.


  • You do not have control on the property till you receive it.
  • You also get no profits till the property is built and received by you.
  • Off-plan property projects can get delayed for various reasons.
  • You purchase the property based on the brochure and can only hope that you get what you saw.

Be sure to keep these pros and cons of off-plan and on-plan properties in mind before choosing.

Also Read: Challenges of buying property in Dubai

Some other factors to keep in mind

Time Value of Money (TVM)

Theoretically, money available to you today is worth more than the same amount of money available to you in the future. This is because money has a potential earning capacity. Hence, if you have 5,000 AED today and you invest it for 5 years, then at the end of the tenure you will have more than 5,000 AED with you. When it comes to real estate investments, an on-plan property demands you to make the complete payment at once, whereas an off plan property requires only part-payment to begin with. However, on-plan properties you can start earning return on your money right away if you lease it where in off-plan property you will continue to invest until the property is ready and only then generate returns. There are many other factors to consider which is better and depends a lot of the state of the market and how the property prices are appreciating. Generally speaking, long term view is better suited for on-plan properties and short term is better suited for off-plan properties.


While both off-plan and on-plan properties have certain risks associated with them, in a ready built property you have the tangible asset which can be checked to ensure that it is up to your expectations. However, in an off-plan purchase, you depend a lot on the developer, building the property as specified in the prospectus and within the timelines mentioned. This is also the reason behind off-plan properties offering price discounts.

Summing Up

There are many factors that must be considered before opting for an off-plan or an on-plan property. Off-plan and on-plan properties offer benefits for different types of investors. Therefore, it is important to understand your investment type before signing the dotted line. We also recommend that you talk to an investment advisor who specializes in real estate investments to help you make a decision that aligns with your financial goals.

Differences between REIT & Real Estate Crowdfunding

The investment market is full of options that include stocks, mutual funds, gold, real estate investments and more. In the Middle East, alternative real estate investments like REITs and Real Estate Crowdfunding are comparatively new.

A few years ago, the property market was the domain of rich investors. Smaller investors needed to look at different avenues of investment. However, with the rise of new investment options, real estate investments have opened up to smaller investors. Today, we will look at REITs and Real Estate Crowdfunding platforms and compare the differences.

Real Estate Investment Trust (REIT)

REIT is a trust which collects funds through an IPO and uses the money to buy, develop, manage, and sell real estate assets. This IPO is just like any other initial public offering that offers an option to buy a unit, which is a portion of a managed real-estate pool to the investors. The trust handles purchases, leases, finances and sells property to pass on returns to the unitholders. The REIT units can be purchased and sold on the stock exchange.

Investing in a REIT is similar to investing in a company. While some companies offer lucrative opportunities, some others might have higher risk and lower value. You must look at the performance of a REIT in terms of the NAV (Net Asset Value), dividend, growth, portfolio composition, performance to gain an understanding of the property market.

Real Estate Crowdfunding

Real Estate Crowdfunding platforms allow a group of investors to pool funds in order to finance real estate development projects. This allows investors to create a portfolio of real estate investments spread across different assets, locations, and in properties developed by different builders.

This way, if you want to invest in real estate, but don’t want to buy/develop a building, then you can become a shareholder in the property by means of a real estate Crowdfunding platform. This allows for any profits made by the real estate venture to be passed on to you. However, like with any other investment, Crowdfunding has its own share of risks. Investors are exposed to volatility in the market along with the risk of default from the developers. The absence of a secondary market can also restrict the liquidity of the investment.

REIT vs. Real estate Crowdfunding

There are many similarities between REITs and Real Estate Crowdfunding platforms. They allow investors to balance their portfolios by offering current income as well as long-term appreciation on the underlying real estate assets.

The primary difference between a REIT and a Real Estate Crowdfunding investment is that when you invest via a Crowdfunding platform, you can invest in multiple commercial real estate projects, while with a REIT, you invest in a trust which invests your funds into real estate. Further, when you invest in a REIT, the returns on investment can be in assets other than just in real estate. Real estate Crowdfunding platforms also offer a higher level of transparency and better selection of opportunities than a REIT since you can choose from a wide array of pre-verified investment opportunities.

Many investors find REITs to be expensive, especially considering heavy maintenance costs, difficulty in managing portfolios, etc. which eventually translate into lower returns. On the other hand, most Crowdfunding platforms require investors to be accredited before allowing them to invest.

Also Read: How can Real estate Crowdfunding help you take advantage of the current market?

Here are some important differences:


When you invest through a real estate Crowdfunding platform, you have a better opportunity to earn returns as compared to investing in a REIT.

Liquidity and Tradability

REITs are highly liquid and are traded every day across major financial markets. While investing in real estate, Crowdfunding platforms offers customization opportunities whereas REITs score high on the liquidity and tradability aspect.


The best way to invest in the real estate market is by investing in it directly or through a real estate Crowdfunding platform since the process is completely transparent. When you invest in a REIT, you basically buy into a trust which owns multiple properties. Hence, you are unaware of where exactlyyour funds are being invested.

Investment Spread

When you invest through a real estate Crowdfunding platform, you can spread your investments by investing small amounts across multiple investment options. However, investing in a REIT allows you to invest in a trust which usually owns thousands of properties spread across different types and geographical locations.

Market Expertise

When you are investing via a Crowdfunding platform, you don’t need to have the expertise or resources to invest in the real estate market. On the other hand, investing in a REIT, usually, comes coupled with an expert opinion to help you make investment decisions.


Investing in real estate is a great way to invest in the current market. You may choose between REITs and real estate Crowdfunding based on the requirements of your investment portfolio. Also, remember that while Crowdfunding platforms allow you to invest in individual projects, a REIT is similar to investing in the stock of a company. If you prefer investing in single projects, then Crowdfunding projects are your best bet. On the other hand, if you prefer to have a collection of large investment ventures, then you should probably choose a REIT.