Freehold developers urged to be more transparent

Abdul Aziz Al Ghurair, CEO of Mashreqbank, says that Dubai's freehold property developers need to share more information to avoid oversupply in the market.

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By  David Ingham Published  December 21, 2003

Abdul Aziz Al Ghurair, CEO of the UAE's Mashreqbank, is confident that Dubai's freehold market holds vast potential, but is warning against over-development. If anything could derail the growth of a promising market, he says, it would be an oversupply situation that could drive down prices.

"The price [of real estate] will only come down if there is way oversupply and hopefully the developers would see that and stop building new developments because it harms everybody," says Al Ghurair.

He says that buyers, lenders and developers need more information on what is being built and when.

"If there's one way to move, it's to create a bureau that will publish information about what's being thought about, is under design or in the approval stage and it's available to any potential developer. People should know. There should be numbers available," he says.

Mashreqbank recently became the first commercial bank in the UAE to offer financing on freehold properties. Mashreq took the decision to enter the market, rather than waiting for the passing of legislation that will make foreign of ownership of property in Dubai legal.

"It's the Mashreqbank philosophy that we should cater for the entire needs of the customer. Mortgages are going to be a critical need for our customer and we can't say wait, your need is at the end of our priority list until everything is sorted out, after which we will launch our product," explains Al Ghurair.

He says he has absolute faith that legislation regulating the freehold property market will be forthcoming. "Our view is that we trust the government that they will do the right thing; yes, it's not yet finalised (legislation), but it has been announced and a lot of people went ahead and put their money in an investment expecting that this will be done," says Al Ghurair. "We are moving forward, along with the promise we have and the trust we have in the government."

The bank offers mortgages on Emaar, Nakheel and Estithmaar's developments, at an interest rate of 6.49% until the end of 2004 and over a period of up to 15 years. After 2004, Mashreqbank will set its interest rate at LIBOR (London inter-bank offered rate) plus 4.99%.

To qualify, individuals have to have lived in the UAE for one year and have a steady income. The bank asks for a down payment of 20 to 30%. In the case of default on a mortgage, Al Ghurair says the bank will be accommodating if there is a genuine reason.

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