The regional chief of Morgan Stanley has predicted that the battered UAE real estate market will show signs of picking up by the end of the year with the return of international investors eyeing distressed assets.
Investors will start snapping up distressed property-backed assets in the UAE by the end of 2009, according to Georges Makhoul, who heads the Middle Eastern and North African operations of Morgan Stanley.
“Once you see distressed funds coming to the market and picking up whole portfolios from developers and banks then you know we are on the mend,” he said in comments published by UAE daily The National on Sunday.
“That is the way bubbles clear themselves. I am waiting to see that.”
The purchase of distressed loans and other assets backed by property would unlock capital that could be deployed on infrastructure projects and help banks boost lending, he told the paper.
Property prices have fallen sharply in the UAE this year, with the biggest declines in Dubai where prices have fallen about 50 percent from their peak with some analysts predicting up to another 20 percent drop this year.
Assets targeted by international investors could include loans backed by property, property-associated debt and mortgages, Makhoul told the paper.
“Once you can establish a price where someone is willing to take over assets, you create a market and people trade that stuff. There will be good opportunities for people to make returns on that and to clear the remnants of the burst.”
Makhoul said he expected the first round of distressed asset-buying in about six months.
In recent months, some banks have relaxed some of the more stringent rules they applied to home financing with Noor Islamic Bank saying last week its mortgage business was 40-50 percent up on the start of the year, although declined to give further details on actual numbers.
And Hussain Sajwani, chairman of Damac Properties, said last week that developers needed to do more to help investors, saying they must "again facilitate the flow of funds, to re-activate those investors who have lost confidence".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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