The 50 percent cap on UAE expatriate mortgages, unveiled by the central bank earlier this week, will curb rising prices and chances of a new Dubai property bubble, but will hamper efforts to stimulate a recovery in the market, experts said
An Abu Dhabi-based analyst said: "If implemented, this will impact on the real estate sector. After the property market improved, some banks had started lending up to 85 percent on some projects."
The analyst added: "It's positive when we look at the financial and lending perspective, but the question is whether this lending cap is practical."
The UAE central bank has previously sought to regulate the lending of commercial banks to reduce risk, only to back off after the banks protested.
Gaurav Shivpuri, head of capital markets at consultancy Jones Lang LaSalle Mena, said about 30 to 40 per cent of home and commercial property sales in the UAE were through mortgages. Bankers estimate about 60 to 70 per cent of mortgage customers in the country are expatriates.
Abu Dhabi's state tourism development company, TDIC, signed a deal with Abu Dhabi Islamic Bank earlier in December to start offering investors 100 percent mortgages of up to AED30m (US$8.2m) for purchases of luxury homes on the emirate's Saadiyat Island, local media reports said.
It is not clear whether the new mortgage rules will be strictly imposed; the central bank has previously tried to regulate the lending of commercial banks, only to back off after the banks protested.
The news has already had a negative impact on the industry, with shares in Dubai’s Emaar Properties, the developer of the Burj Khalifa, dropping 1.1 percent, with declines also seen in property companies Drake & Scull International (DSI) and Deyaar Development.
Yo creo que en UAE se compra bastante en efectivo, este tipo de medida estimulara el alquiler en vez de la compra.