Property chief sees Amlak, Tamweel merger 'going ahead'

The chairman of Damac Properties has said he is confident the merger of the two biggest mortgage lenders in the UAE will go ahead.

Amid recent uncertainty over the deal , Hussain Sajwani, who founded developer Damac in 2002, predicted the government-brokered deal to merge troubled lenders Amlak and Tamweel would happen, after shares in the two companies were suspended last November.

“It’s happening, it’s a matter of time. I hear they are going ahead,” Sajwani said in an exclusive interview with Arabian Business.

His comments come amid doubts surrounding the $1.6bn merger after Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said in February that the deal was not "definite".

A UAE government committee has completed its review into the merger and is due to outline its recommendations in its final report.

Any tie-up between the two lending giants would help kickstart the UAE mortgage market and would be the biggest since Emirates NBD was formed last year in an $11.3bn merger between Emirates Bank International and National Bank of Dubai.

Sajwani also expressed surprise over the severity of the property downturn in Dubai.

He said he had expected a ‘soft landing’ and a correction, rather than a "harsh landing" that has led to mass cancellation of projects, plummeting prices, and a severe liquidity crunch putting a squeeze on financing.

A month ago, property adviser Jones Lang LaSalle said over 50 percent of projects due for completion between 2009 and 2012 are either on hold and have been cancelled, but Sajwani said Damac had not cancelled any of its projects and was not planning to.

“We were expecting a correction in the market in 2009, we were ready for it. Because of the international crisis and what happened in America, the landing was harsh. Prices have dropped, the confidence in the market has been shaken,” he said.

One of the most respected voices on property in the Middle East, Sajwani said speculators had piled into market, artificially inflating the price of property in the emirate.

“In 2008, the market went up, prices went too fast, too quick and too high, and all the speculators jumped in and fed the market higher and higher.”

Prices and rents had come down on average by 20 to 30 percent depending on the project, he said, but the market was "close to the bottom" and values would remain flat in 2010 before rising again in 2011.

Sajwani said he was still interested in taking Damac public and listing in Dubai, although stressed this was dependant on market conditions.

He confirmed Damac had shed just under 300 jobs globally since November and that the group does not plan to make any more culls.

The company announced it had cut 200 positions in November and a further 50 in February.

ALSO READ OUR OTHER EXCLUSIVES:

Regulator refutes Etisalat claim on iPhone prices

Airline expands economy class, cuts 1st class services

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM