Why it's difficult to get a bank loan
Why it is difficult for Japanese people to purchase real estate in Dubai with a bank loan
Dubai's real estate market is very attractive to foreign investors, but in reality it is almost impossible for Japanese people to purchase property using a bank loan.
This article will explain the reasons in detail.
1. How bank loans work in Dubai
As a rule, banks in Dubai only offer mortgages to UAE residents or foreigners with a source of income within the country.
Therefore, it is very difficult for Japanese people living in Japan to obtain a loan from a bank in Dubai.
Additionally, the following criteria are generally required for the loan:
Holding a UAE residence visa: Most banks require loan applicants to have a residence visa in the UAE.
Proof of income within the UAE: You must prove that you have a stable local income (salary or business profits).
Minimum annual income: Varies depending on the bank, but an annual income of 100,000 to 150,000 AED (approximately 4 million to 6 million yen) is often required.
2. Why Japanese people cannot get bank loans
The main reasons why it is difficult for Japanese people to obtain real estate loans in Dubai are as follows:
Loan restrictions for non-residents: If you live in Japan, Dubai banks generally will not offer you a mortgage.
Credit information issues: Dubai banks do not refer to Japanese credit information, and Japanese credit scores and transaction history cannot be used in evaluations.
Collateral issues: Dubai banks take the property they lend against as collateral, but restrict lending to foreigners to avoid risks to expatriates.
High down payments: Even if a loan is available, non-residents often require a minimum down payment of 50%, meaning there is virtually no benefit to taking out a loan.
3. Exceptional cases where a loan may be available
Some banks may only offer loans to non-residents if certain conditions are met.
Loans in partnership with specific developers: Large developers (such as Emaar, Nakheel, and Damac) may partner with certain banks to offer loan programs aimed at foreigners.
If you have income in the UAE: For example, if you run a company in the UAE or receive a salary from a UAE company, your chances of getting a loan are slightly improved.
When Japanese banks offer loans for overseas real estate: Some Japanese financial institutions (e.g., Sumitomo Mitsui Banking Corporation, Mitsubishi UFJ Bank, etc.) may offer loans for overseas real estate, but this is very limited.
4. Cash Purchase as an Alternative
For these reasons, when Japanese people purchase real estate in Dubai, cash purchases are the norm.
If you are buying a particularly expensive property, you need to have sufficient funds prepared in advance.
Additionally, the following payment options are available:
Lump sum payment: Full payment at the time of signing the contract.
Installment Plan: Pay in installments over several years using a payment plan offered by the developer.
5. Summary
Currently, it is practically difficult for Japanese people to purchase real estate in Dubai with a bank loan.
The main reasons are as follows:
You can't get a loan unless you're a UAE resident
Proof of income within the UAE is required
Japanese credit information is not taken into consideration
Requires a large down payment
Therefore, when Japanese people purchase real estate in Dubai, it is common for them to purchase in cash or use the developer's installment payment plan.
When considering investing or living in a property, it is important to understand these points and make plans accordingly.
