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Government aid is urged for Tamweel and Amlak
Such lending has come to a virtual standstill as the UAE?s two largest mortgage lenders have yet to complete a tie-up announced last November. The completion of the merger involving Amlak Finance and Tamweel will help stimulate demand in the UAE?s housing market by increasing the availability of loans, he said yesterday.
Securing a mortgage from local lenders remains ?extremely difficult? despite an oversupply of property, this has forced prices down and made buying an alternative to renting, said Mr. Mattar.
?It is obvious we have a real estate crisis ? one way to support its recovery is to kick-start demand,? he said in Dubai yesterday.
?Unfortunately, the two biggest lenders have gone into this freeze. Once these two companies merge, the Federal Government needs to give them a banking license, so they can take deposits, and provide them with capital, so they can provide mortgages.?
Amlak and Tamweel were among the first companies to feel the impact of the slowdown when trading in their shares was halted last November, pending a government move to restructure the pair.
The two company?s suspended operations after the Government said they would be part of a four-way merger ? along with Emirates Real Estate Bank and Emirates Industrial Bank ? to create the Emirates Development Bank.
Also slowing activity is the fact that UAE mortgage rates remain comparatively high, despite a sharp decline in interbank borrowing rates this year, as UAE lenders seek to limit their exposure to property since prices started to fall about a year ago.
Housing prices have dropped by about 50 per cent from their peak last year and the market is expected to become increasingly oversupplied over the next 18 months, leading to a further 10 per cent decline in prices, Mr. Mattar said.
About 2,100 more units are expected to come on line in the Burj Dubai area alone this year, which would weigh down prices in the area, he added.
Source: www.thenational.ae
Business News
Oct. 12, 2009
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