Is hard money lending a safe alternative to bank loans?

The year 2024 set a record for real estate transactions in Dubai, with 180,987 property sales - a 36.5% increase compared to the previous year, according to the region’s largest real estate marketplace, Property Finder. 

Experts predict that Dubai’s real estate sector will continue to grow steadily in 2025, driven by infrastructure development. Additionally, transparency in the industry is expected to improve for property owners, buyers, and investors following the Dubai Land Department’s (DLD) launch of the Smart Rental Index earlier this year. 

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Why Dubai’s property boom is built to last for a long time

 

According to World Bank forecasts, Dubai’s GDP is set to grow by another 4% in 2025. The region’s rapid development and economic stability continue to attract a steady flow of international investors. The number of foreign visitors to Dubai is also on the rise: in 2024, nearly 30 million tourists visited the emirate - a 15.5% increase from the previous year. By 2033, projections suggest this figure could reach 45.5 million.

Given Dubai’s investment appeal, it’s no surprise that many foreigners are interested in purchasing property. However, desire and financial resources alone are often not enough to close a deal. 

What is the problem?

Banks often deny mortgage applications for various reasons, even to residents - let alone tourists. Common grounds for rejection include a lack of credit history, insufficient or unstable official income, or the absence of a long-term residency visa. In some cases, applicants must provide bank statements covering the past six months, while self-employed individuals may need to submit audited financial reports for the previous year. Additionally, age restrictions apply: UAE nationals can obtain a mortgage until the age of 70, whereas expatriates face a cap at 65.

For those denied a mortgage, the only options are to postpone their property purchase or seek alternative financing - often an unrealistic solution given the large sums required. Moreover, turning to unregulated lenders or private individuals carries significant financial risks.

While legal alternatives to mortgages are limited in the UAE, other countries have long benefited from Hard Money Lending as a solution for buyers.

How hard money lending works in the U.S. 

Hard money lending emerged in the U.S. in the 1950s and has since grown into a $1.5 trillion industry. Analysts predict that by 2030, the market will expand to $4 trillion. Thousands of companies operate in this space, and the industry is regulated at the federal and state levels.

The method is particularly popular in major cities such as New York, Miami, Los Angeles, and San Francisco, where demand for real estate is highest.

Unlike traditional mortgages, Hard Money Loans can be approved within days and without credit history checks or income verification, significantly reducing bureaucracy. These loans are typically short-term (1–3 years) and come with interest rates that are 5–7 percentage points higher than bank rates. However, loan approval is based primarily on collateral - the property itself, which can be sold if the borrower defaults.

The buyer of an apartment, house, or commercial property makes an initial payment typically 30% of the property's value. The company then covers the remaining 70% and acquires the property as collateral. The purchase is registered under a special-purpose legal entity created specifically for the transaction, with the buyer becoming its owner. 

It is often possible to secure funding for projects that traditional banks refuse to finance—for example, properties requiring extensive renovations. As bank loans become increasingly difficult to obtain, more buyers are turning to alternative financing options. 

In many cases, individuals have sufficient funds to purchase a property outright but prefer not to tie up their capital in real estate. Instead, they may choose to invest in business ventures or other assets, yet they do not meet the strict mortgage criteria set by banks. 

"When I tried to get a mortgage in Florida, the bank rejected my application, even though I had more than enough money in my account. The bank prioritised stable, recurring income over existing savings. But I wasn’t planning to spend all my capital on a property—I wanted to invest across different projects and make my money work for me. That’s a logical approach, and many investors would agree. Still, the bank considered me a high-risk client. In such cases, Hard Money Lending proves to be a far more reasonable and suitable tool," says Maxim Lukyanov, founder of Hard Money Lending company NEMAX, which plans to enter the Dubai market in the first half of 2025.

Hard money lending in the Middle East 

At present, there is no viable and legally sound alternative to traditional mortgages in the Middle East. This is why a new financing tool for purchasing secondary real estate holds immense potential, believes Lukyanov.

"Around 40% of property buyers in the UAE are foreigners who pay in cash rather than taking out mortgages. Even for banks, strict regulatory constraints limit their ability to issue loans. This creates a hidden demand that NEMAX can fulfill—not by disrupting competition, but by opening new opportunities for the market," says Lukyanov.

The Nemax model differs slightly from the classic American approach. The platform acts as both an intermediary and guarantor of the transaction. The client gains ownership rights to the company holding the property only after repaying the full loan. However, even before that, they can rent out the property or live in it themselves, subject to mutual agreement.

The financial risks in this transaction are virtually eliminated. As is common in Hard Money Lending, the agreement is secured by collateral. Ensuring the legal integrity of the property is a top priority. Even if the client is unable to reimburse the company's expenses within the agreed timeframe, they still have the option to recover their funds after the sale of the collateralised property. This structure provides all parties involved with a strong guarantee of security.

There are no special requirements for buyers — their primary responsibility is covering the down payment, which can be made in any currency, including digital assets. The remaining amount is financed by NEMAX’s investor network. 

Beyond property ownership, buyers gain access to a high-yield investment. Dubai’s rental yield averages 4–7% per year, making real estate a lucrative asset. 

In 2024, the Middle Eastern real estate marketplace Bayut recorded unprecedented growth in secondary housing prices in Dubai’s most sought-after locations, including Palm Jumeirah and Dubai Hills Estate. Experts also forecast price increases in emerging districts with developing infrastructure, such as Dubai Creek Harbour and Dubai South. Over the past year, the price per square meter of secondary housing has risen by 12%. In 2025, analysts expect Dubai’s real estate prices to rise by 5-10%.

Hard money lending isn’t just for buyers struggling to meet bank requirements. It also offers short-term financing options for property owners looking to leverage their real estate assets.

This tool could become a second chance for asset buyers not only in Dubai but also in other locations across the Middle East, including cities in Saudi Arabia. In recent years, the kingdom has been working to boost tourism and adopt a more liberal approach. In January 2025, this once-closed country allowed foreigners to purchase real estate even in the holy cities of Mecca and Medina — meaning that property ownership is now open across the entire nation. This move signals Saudi Arabia’s ambitious plans to attract investment into the real estate sector. 

“The introduction of hard money lending to the Middle East will benefit everyone. On one hand, our platform will facilitate foreign investments in the Dubai market. On the other, it will ease the burden on the banking sector. Additionally, NEMAX’s technology will serve as a bridge connecting brokers, real estate agencies, and financial consultants. And considering that the global private lending market is already valued at $1.4 trillion and is expected to grow to $2.3 trillion within the next five years, we have the potential to bring substantial capital to the UAE market,” concluded Lukyanov.