Abu Dhabi moves to revive housing market

Source : Business Times - 27 Nov 2008

Abu Dhabi deepened efforts to stave off economic damage from the credit crisis yesterday, launching a government- backed lender to revive the housing market as major Dubai developers were reported to halt sales.

The lender, called Abu Dhabi Finance, would back mortgages to the emirate’s top three developers as a first step, and would extend its reach countrywide into the United Arab Emirates (UAE), the new company said in a statement.

The UAE suffered a direct hit from the credit crisis after lending to its booming real estate sector dried up and property prices plunged, forcing the government to create a rescue vehicle called Emirates Development Bank that would serve to consolidate and absorb finance firms under pressure.

Leading banks have cut off consumer lending to some customers and the country’s biggest lender, Amlak, has stopped underwriting new mortgages due to the credit crisis.

The new company would be a joint venture between Mubadala - the government development agency - Abu Dhabi Commercial Bank, Aldar Properties, Sorouh Real Estate and the Tourism Development and Investment Company.

‘The company aims to play a major role in helping Abu Dhabi meet its long term goals of sustainable economic growth by financing the growing demand for real estate,’ the company said.

Mubadala Development is an investment vehicle owned by Abu Dhabi, the dominant emirate within the seven-member UAE and holder of most of its oil reserves.

Separately, newspaper Emirates Business reported that two Dubai developers, state-owned Nakheel and Limitless, which is controlled by government- owned Dubai World, would halt property sales until Dubai’s real estate market improves.

Earlier this week, Dubai announced that it will pull back on its building spree in light of the financial crisis, according to Mohamed Alabbar, a Dubai government official and chairman of Emaar.

The paper also said that Dubai-based developer Emaar had moved to ease the impact of the credit crisis by loosening restrictions on the resale of properties, allowing investors to sell before paying Emaar 30 per cent of the property value, a newspaper reported yesterday.

Previously, properties purchased off-plan - or before they are built - could only be resold once 30 per cent of the agreed price had been paid.