Leverage amplifies the winners and the losers in Dubai real estate with the same force. The market from 2022-2024 made leverage look like genius. The same leverage from 2014-2020 made it look like a slow bleed.
Leverage is using borrowed money — in property, the mortgage — to control an asset worth more than the cash you’ve put in. Putting down AED 400k on a AED 2M unit at 80% LTV gives you 5x leverage. If the unit appreciates 10%, your AED 200k gain is a 50% return on the AED 400k equity. If it depreciates 10%, the same math runs in reverse and your equity is down 50%.
The honest version everyone ignores: Dubai’s 2022-2024 run had 25-35% price moves in many clusters, and leveraged buyers made extraordinary returns. The 2014-2020 window had many of those same clusters flat or down, and leveraged buyers paid interest for six years while equity went sideways. Both markets existed. Neither is permanent.
A client last year was about to go 80% LTV on three off-plan units simultaneously. Combined leverage across the stack would have been AED 5.2M on AED 1.3M equity. We restructured to two units, one cash, one 75%. Smaller upside. Much smaller catastrophe scenario.
Leverage is a tool. It’s not a strategy on its own.
Related: LTV, Mortgage, ROE, Equity.
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