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Wed 24 Sep 2008 04:40 PM

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Standard Chartered, Aldar in mortgage deal

Bank to provide home financing for firm's properties, to be more selective of clients.

Standard Chartered said on Wednesday it would enter the mortgage sector in Abu Dhabi with Aldar Properties, the emirate's largest developer, and expected the global liquidity squeeze to ease.

Jeremy Parish, chief executive of Standard Chartered Abu Dhabi told newswire Reuters that the bank would mitigate risks by being selective in a country where many properties are bought off-plan.

"We do not expect the extreme liquidity crunch to last forever. This is part of our medium to long-term planning for the mortgages business," Parish said in a telephone interview.

In stark contrast to the United States and Europe, where the subprime mortgage crisis has hit the property sector, Gulf Arab real estate markets are booming on the back of high oil prices.

The property market in the United Arab Emirates, the world's fifth-largest oil exporter, has been growing rapidly, pushing up property and rental prices and raising fears that the sector is overheating.

Standard Chartered said it was looking at expanding its mortgage business in Abu Dhabi, the capital of the UAE, but would be cautious.

"We looked through the immediate crisis, did due diligence and we are going to be competitive but will be appropriately selective of clients," he said.

"This is a primary market and we are looking at more developers."

Like other real estate firms in the UAE, Aldar's shares have fallen in recent weeks, dogged by a spreading anti-corruption drive in Dubai and fears over the global liquidity crunch. (Reuters)