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UAE home finance sector is prospering in the wake of the ongoing property boom |
The UAE home finance sector is prospering in the wake of the ongoing property boom in Dubai, Abu Dhabi and Northern Emirates. According to the Central Bank, the mortgage lending in the UAE has almost doubled year-on-year mainly due to growing housing demand and construction boom. The quarterly reports prepared by Central Bank stated that total home loans at the end of December 2007 were worth Dh58.86 billion compared with Dh31.02 billion a year earlier. Currently, the home finance in the UAE stands at Dh20 billion and would touch Dh64 billion in the next 3 years.
Dubai alone has experienced tremendous growth in its home finance sector in the past 3 years, reaching Dh37.3 billion at the end of the first quarter of 2008, a growth of more than 13% from a year earlier. This growth will continue for it to touch Dh46.1 billion by the end of this year.
According to Global Investment House, Kuwaiti investment firm, the UAE mortgage sector is expected to double during the next 4 years to reach around Dh80 billion by 2012. Currently, the market is worth between Dh35-40 billion, equivalent to 5% of the UAE's GDP.
An increasing number of property investors are becoming more reliant on mortgages to purchase property in the UAE. Almost 71% of UAE investors now require a mortgage to finance their property purchase, according to a recent property survey. Mortgage lending in the UAE jumped 55% as total home loans reached Dh64.95 billion by first quarter of 2008 compared with Dh41.8 billion a year ago.
With the UAE mortgage market projected to grow 220% in the next 3 years, we can safely conclude that the future of real estate sector is bright with no signs of recession. While the boom in the UAE real estate market will continue, it will accelerate the growth in the housing finance sector.
