Arab Today, arab today eu crisis likely to hit uae mortgage recovery in 2012
Last Updated : GMT 01:27:57
Arab Today, arab today
Arab Today, arab today

EU crisis likely to hit UAE mortgage recovery in 2012

Arab Today, arab today

Arab Today, arab today EU crisis likely to hit UAE mortgage recovery in 2012

Abu Dhabi - Arabstoday

The debt crises in Europe and the US will make mortgage financing more difficult in the UAE next year and could hinder signs of resurgence in the sector, analysts have warned. Official figures from the Dubai Land Department found the total value of the mortgage market in Dubai rose 45 percent to $13bn in the first eleven months of 2011, compared to the same period last year. The value of mortgages issued was down 60 percent since the boom era of 2008. But these signs of resurgence may come under threat next year as the impact of the eurozone debt crisis takes hold in the Middle East and liquidity tightens up again, experts said. “Mortgage finance will become more difficult as deposit levels appear to have come down again at the banks, and the European/US banks will be reducing their interbank lending which will affect the UAE banks,” Charles Neil, CEO of Dubai-based estate agency Landmark Properties said. Official data from the UAE Central Bank last month showed bank deposits in the country have dropped by $16bn, Bloomberg reported. The combined deposits at 51 lenders in the country fell five percent last quarter to AED1.067 trillion ($291bn), the first drop in at least six quarters, the data show. Banks are also paying more for funds, with the one-week borrowing rate on the interbank money market averaging 0.32 percent this quarter, up from 0.25 percent in the previous three months. “Global liquidity pressures could definitely have an impact on the UAE lending market,” said Jean-Luc Desbois, managing director of Homematters mortgages consultants. “If liquidity dries up in Europe and the US then obviously that will naturally affect the banks here, especially the international banks.” However, “it is not a certainty to happen next year”, he added. Desbois is optimistic the UAE mortgage sector could weather the storm. His confidence is based on the fact that customers are still showing strong demand. “We did our best month ever this month, which is ridiculous bearing mind it is the 22nd of the month. We are seeing big transactions with. We have had a number of mortgages significantly above AED10m coming through, which is really good,” he said. Dubai was one of the hardest hit real estate markets in the Middle East when the global financial crisis saw prices tumble nearly 60 percent and half of projects were put on hold or cancelled. Investment bank Citigroup reported last week the value of construction projects scrapped or on hold in the UAE soared to $958bn in the 12 months to October.

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Arab Today, arab today eu crisis likely to hit uae mortgage recovery in 2012 Arab Today, arab today eu crisis likely to hit uae mortgage recovery in 2012

 



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