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.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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