Off-plan mortgages arrive in Abu Dhabi: 75% financed from the start of construction

Abu Dhabi has introduced a financial product the off-plan market did not previously have: bank financing that accompanies a buyer from the beginning of construction through to the handover of keys.

How it works

• Up to 25% of the price is contributed by the buyer from their own funds during construction.
• Up to 75% is provided by the bank — and the loan can cover both the instalments during the build and the final tranche at handover.
• The programme is limited to projects by a specific developer, including villas in new communities.

Why this is a notable change

The classic problem with off-plan is a cash-flow gap. The buyer pays to a schedule out of their own money and receives the asset only at the end; mortgage financing has historically appeared, at best, at the final payment. That structure is what makes off-plan a capital-intensive purchase rather than a leveraged one, and it is the reason many buyers who could afford a completed property cannot afford a scheme under construction.

Closing that gap changes who can buy off-plan. It also changes the risk profile: the bank underwrites the developer as well as the borrower, which introduces a second party with an interest in the project completing.

The caveats

Limiting the programme to one developer's projects is the significant one. That is a commercial arrangement rather than a market-wide facility, and it means the financing is available where the bank has taken a view on the counterparty, not wherever you want to buy.

The second is that leverage during construction cuts both ways. You are servicing a loan on an asset producing no income for the length of the build, and a delay extends that period. Model it against the contract date plus a realistic slippage, not against the marketing date.