Real estate financing to hit US $15b by end of decade

This fairly new segment was boosted by the birth of freehold sales to foreigners

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By  Eudore Chand Published  November 6, 2004

Banking sector analysts are predicting that real estate financing levels will hit US $15 billion by the year 2010. They say that this level of growth has been fairly recent and is, in the main, boosted by the freehold property sector, which is also fuelling a large part of the on-going construction activity in the region. The UAE freehold property sector has grown tremendously in the last few years and shows no sign of abating. The real estate buying frenzy has prompted the growth of the home financing industry. Banks and other financial institutions have, of course, been quick to take advantages of the opportunities, especially when industry analysts estimate that real estate financing could reach up to US $15 billion at the end of this decade. As a result, leading banks and financial institutions have come up with a number of offers for first-time property buyers, or those seeking to re-extend on an existing home loan, as well as people who have made real estate a part of their investment portfolio. Some features include low down payment rates, or hassle-free balance transfer, longer financing periods and others. The market is showing no sign of abating and each announcement of a new off-plan development, where purchasers can put down a deposit to secure a property before it is built, is snapped up. It not just UAE residents who are buying, but an increasing number of non-residents are purchasing a holiday home or buy-to-let investment. Many analysts see the market as deliberately under-priced in order to ensure stable growth, making off-plan purchases a lucrative investment. One of the leading home financing providers is Mashreqbank, which claims to be the first commercial bank to offer a comprehensive mortgage product with the launch of Home Loan late last year. The loan facility, developed in cooperation with prominent real estate developers such as Nakheel, Jumeirah Beach Residence and Emaar, is available to both residents and non-residents. “We envision Mashreqbank to be the leader in real estate financing in the UAE. We are coming up with better features to our Home Loan package to make it more competitive than it already is,” said Steven Pinto, bank’s head of retail banking group. “Mashreqbank has also aggressively financed real estate projects, adding new properties in its portfolio. We are also into retail financing for developers such as Global Real Estate, Giga and ETA star.”

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