Developer calls on UAE banks to resume lending

LENDING CALL: Schon Properties says it is vital that banks in the UAE resume lending soon to restore confidence in the real estate market. (ITP Images)

A high profile Dubai developer has called on banks in the UAE to resume lending as soon as possible in a bid to restore confidence to the struggling real estate market.

Danial Schon, vice president, Schon Properties which came under fire from investors last year after long delays to its flagship Dubai Lagoon development, said he hoped to see banks take action in the next six months.

Schon, who believes the correction in the Dubai property market will last until June or July, said: “People are losing jobs, visas are being cancelled, traffic has decreased. Banks have a major role to play in building confidence. My worry is that banks will act later rather than sooner.

"If they do this and come in 2010 instead of this year, this will be bad for the real estate industry.”

He added in an interview with Arabian Property: “The major thing I see happening over the next six months is banks will start to give mortgages again. Their job is to give end-user financing to residents. Mortgages are such an important function of the real estate cycle.

"Here, there are excessively high mortgages and they are very limited and there is a lack of mortgage flexibility – this market has been running on cash which can only last so long.”

Schon Properties’ Dubai Lagoon project has come in for criticism after the seven billion sq ft development, to consist of 49 buildings and around 4,000 apartments, saw completion dates slip from December 2007 to 2011.

Schon said one reason for the delay was the plan by the Roads and Transport Authority to build a six-lane highway in close proximity to the development.

After months of negotiation, Schon Properties eventually gave up 10 metres of land to the transport authority.
 
The Dubai Lagoon concept is about affordability and Schon added: “In Dubai, real demand from end-users was for affordable living. If you see the percentage of affordable property compared to high-end, luxury developments, it’s 10 percent affordable housing and 90 percent luxury and luxury developers are the ones taking the hit.”

However, Schon said he believes Dubai will recover quicker than other places.

“It’s a very dynamic place and now is the time you’ll find out who the true believers in our city are and those who only speculate,” he said.

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READERS' COMMENTS

SCHON GROUP
Posted by IRWIN on Sunday 1 March 2009 at 17:48 UAE time


i really agreed with all above comments and would like to add one thing that these type of all developers should be fined by goverment and their accounts should be audited bt indepedent auditors to enable to assess where all these money from customers has gone.(May be in personal accounts of directors).

Property Price adjustment
Posted by Rima, dubai, UAE on Sunday 1 March 2009 at 11:42 UAE time


Blaming one party for the crisis which the property market is facing now will only aggregate the problem. It takes two to tango: Banks need to be a bit more flexible, and developers on the other hand need to stop acting like ostriches and digging their heads in the sand, assuming that someone else(banks, governments,etc..) should solve the property market problems. There is an immediate need for price adjustment by developers - they can not simply expect investors to pay for units which are priced more than double their actual value...and still delay projects forever...get real... the confidence in developers is on the ground..do something about it

Schon .. stop talking
Posted by Hossam, Dubai, UAE on Saturday 28 February 2009 at 14:25 UAE time

Waht did developers did and doing now ? And what did Banks did and doing now :

Banks :

1- Was lending money up to 95%
2- Is Lending money now up to 80%
3- Saving our money from bankruptcy

While Developers :

1- Was increasing price every week ( Sky is the limit )
2- Never started the work
3- DELAYS , DELAYS , DELAYS

My precious advice to you from a well experienced IT business man " Deal with the market with the way it is and not the way you wish to be "

my 2 cents

When foolish men have a bumper crop
Posted by YAL, Dubai, UAE on Saturday 28 February 2009 at 11:55 UAE time


When foolish men have a bumper crop, they borrow against next year's presumed bumper crop and build bigger barns and buy more acres. They envision owning the whole county! With weather just a little less favorable, they lose their whole farm, for they cannot afford to service the debt.
Please !! it didnt rain money from the sky in the banks ! It is us depositors hard earned money you want to further risk in the real estate bubble

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