Damac Boss: UAE Banks “Too Timid”, Not Lending Enough

UAE banks should provide non-resident mortgages to attract international buyers and support the resurgence in the real estate market, the head of a Dubai-based luxury private developer has said.

“One of the most important factors which is still holding the market back and has not yet been recognised is the lack of mortgages,” said Ziad El Chaar, Damac Property managing director.

“Today, most of the business is still being conducted on equity, not leverage. Cash buyers made up almost 75 per cent of the number of transactions in Dubai in the first six months of 2013.”

Damac’s boss said that by boosting lending measures, local banks could help increase investment from international buyers in real estate.

“I believe the banks remain too timid. What we need is a practical and pragmatic non-resident mortgage,” he said.

“Dubai will then be able to attract more people genuinely interested in owning a property here – but they can only do that through a proper mortgage.”

El Chaar said that the concept of a non-resident mortgage is not new and has been practiced in other property markets like Canada, the UK, Spain and Australia. He also said that such mortgages have helped drive those markets forward and attract new investment streams.

“Not everybody can come straight into the market with $1 million and buy a property with cash, in full,” said El Chaar.

“If a fully regulated system is implemented, which has the appropriate checks and balances in place, we will see a strong surge in long-term, sustainable investment.”

The Damac boss said that mortgages would not impact Dubai’s property market until such measures are introduced.

“The regulation in the Dubai real estate market is providing the required reassurance and legal recourse for investors, now the banks need to step up to support the growth and attract a wider international investor base.”