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UAE annual mortgage lending jumps 86% in Q1

(DUBAI) United Arab Emirates mortgage lending increased an annual 86 per cent in the first quarter as foreigners bought property in the Gulf state.

Outstanding loans to buy homes rose to 42 billion dirhams (S$17.4 billion), the central bank said in its quarterly statistical bulletin published yesterday on its website.

Bank lending for mortgages has increased rapidly since 2002, when foreigners were allowed for the first time to buy property in Dubai, the UAE’s second-largest sheikhdom.

The number of housing units in Dubai will double to 530,000 between 2006 and 2010, according to EFGHermes Holding, Egypt’s largest investment bank.

The increase in lending ‘is more than expected because mortgage deployment has been on the high side in the UAE’, Mihir Marfatia, a financial analyst at Global Investment House in Kuwait, said in a telephone interview. ‘The demand for housing units is likely to remain strong.’

Growth in loans, advances and overdrafts to the private sector slowed to an annual 9.3 per cent in March from 31 per cent in December, the central bank said yesterday.

Slower non-mortgage lending is a result of both a maturing market and banks being more selective, Mr Marfatia said. ‘You will see some sort of moderation in terms of credit growth,’ he added.

The central bank said yesterday that its foreign assets increased 26 per cent in the first quarter to 129 billion dirhams. Annual M3 money supply growth, a measure of future inflation, accelerated to 25 per cent in March from 22 per cent in December.

 

Source: Bloomberg (Business Times 23 Aug 07)

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