UAE property rebound spurred by rise in lending

Dubai's mortgage market has eased “significantly” in an encouraging sign for homeowners in the emirate, according to real estate consultancy Colliers.

“We’ve seen a significant change with a number of banks re-entering the market, the loan-to-value ratios softening, and interest rates coming down on mortgages,” Ian Albert, regional director at Colliers, told Arabian Business on Tuesday.

“It’s very encouraging and many banks are taking a view that it’s time to step back into the marketplace.”

According to the real estate consultancy’s latest Dubai House Price Index, real estate prices in the emirate rose 7 percent in the third quarter from the previous quarter.

This was attributed to increased availability of mortgage financing and a perceived increase in job security among expat workers.

“We’re certainly not at the levels of exposure to the banks that we were twelve months ago, but looking forward the issue of how the banks address themselves into the next year is a very important one,” Albert continued.

“The issue of sustainability is that you need at least two quarters to establish any underlying growth profile. I’m optimistic, but I’m cautious.”

Although prices were 47 percent lower than in the same period a year ago, the volume of transactions grew by 64 percent when compared to the second quarter 2009.

Albert did warn that the volume of new units expected to come onto the market in 2010 and 2011 will dampen prices.

“With 34,000 new units coming on in the next two years, there will be an impact on prices,” he said, adding that “tier one” developments will be less affected than others.

“Well planned mature developments in good locations, supported by facilities and community infrastructure will receive relatively higher demand,” he said.

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM