There has been a fundamental shift in the UAE’s mortgage market, and it is one to be welcomed.
The figures tell the story: In 2008, Dubai banks lent $31bn, a year-on-year increase of nearly 100 percent. In 2009, the landscape is completely different.
Figures from the Dubai Land Department reveal that in January 2009 the value of mortgages fell by 64 percent when compared to the same period last year, declining from $1bn to $379m.
While the overall value of the mortgage market has slumped, a closer look at the figures show that people are still looking for mortgages and lenders are still giving them.
The difference is that speculators looking to borrow millions and billions have disappeared from the market and have been replaced by everyday workers looking to buy a permanent residence.
In 2009, this is most evident by the fact that the majority of mortgages granted have been in residentially focused developments such as Al Warqa Third, Emirates Hills Third and Arabian Ranches. The highest mortgage so far this year, as of February 15th, was granted along Sheikh Zayed Road and was for $35m.
What this all means is that at long last, people taking out mortgages are largely people who want to buy a home to live in. They are people committed to the culture, environment and economy of the UAE.
They are people who want the UAE to succeed, and are playing their part in this process. The short term cash hungry buyers have been forced out of the market.
Yes, there has been a major correction in property prices – precisely what was needed to make properties more available. Nobody can predict when this current crisis will end, but the change in lending patterns means that the UAE banking and property markets will both emerge from it stronger than ever.
Anil Bhoyrul is the editorial director of ITP Executive Publishing.
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