Noor Islamic Bank CEO says “pre-crisis levels” seen in some areas of mortgage lending activity
Dubai is not heading into another real estate bubble following the market’s crash in 2008-2009, according to one bank boss in the emirate, despite rising property prices and mortgage lending.
Data published by property research firm Reidin.com showed that residential mortgage lending hit US$323m in the third quarter, up 25 percent from US$258m a year ago. In the same period, sales transaction value in Dubai was US$886.m, up from US$704.9m twelve months previously.
Despite these increases, the CEO of Islamic lender Noor Islamic Bank said he did not believe that Dubai is on the brink of a property bubble similar to that seen in 2008, whose eventual crash led to housing prices plummeting by as much as 60 percent.
“I don’t think so. We are watching the speculative activity,” Hussain Al Qemzi told Arabian Business in an interview.
“In real estate we’ve seen improvements in the mortgage market... in some areas we’ve seen pre-crisis levels... There are a lot of positive trends happening, but it’s just getting to 2013, so I think many banks are still looking with caution,” he said.
Al Qemzi added that his and other banks in the UAE were eager “not to repeat the mistakes of the past and they want to make sure the storm has passed”.
Official figures showed that Dubai’s economy grew by 4.1 percent in the first half of 2012, bolstered by strong growth in tourism, retail and re-exports.
The emirate has approximately US$50bn in debt maturing between 2014 and 2016, much of it tied to the real estate crash of 2008 and 2009. Nevertheless Dubai has in recent weeks announced a raft of huge new tourism and hospitality projects, including Mohammed Bin Rashid City, which will feature more than 100 hotels, the world’s biggest shopping complex and a Universal Studios theme park.
Asked if this indicated that Dubai had fully recovered from the crisis of four years ago, Al Qemzi said: “I think yes, but I have to reserve a word of caution because the world around us is still suffering. There are problems in Europe, the US – there are issues around us. I don’t know how this will impact [Dubai] if things get worse.”