Property | General

Nakheel chairman says mortgage law to regulate real estate

Cap won’t affect buyers seeking high-priced luxury properties

  • ZAWYA DOW JONES
  • Published: 18:17 January 2, 2013
  • Gulf News

Dubai: A new cap on mortgage lending in the UAE will help regulate the real estate market better, but could be restrictive for a middle class aspiring to buy their own homes, the top executive at Dubai-based developer Nakheel said Wednesday.

The UAE central bank issued new regulations this week that limit the amount that expatriates and nationals can borrow to buy properties, a move seen by many analysts as largely designed to curb speculation as real estate prices recover.

“I believe it is a good thing to introduce such a regulation by the central bank, as there has been no rules to regulate the market in the past where the cap would reach as much as 90 per cent,” Ali Rashid Lootah, Nakheel’s chairman, told Zawya Dow Jones in a telephone interview.

But he noted that “the new mortgage cap won’t affect those buying high-priced luxury properties as they will be financially capable of placing a higher down payment, but it will impact the middle class people... it could be restrictive.”

Signs of recovery

After crashing in the wake of the global financial crisis in 2008, the UAE property market is seeing signs of recovery, especially in Dubai — as the emirate benefits from improving economic fundamentals and its reputation as a relative safe haven in the Middle East.

Lootah supported the central bank’s move to better regulate mortgage lending, but said that the banking watchdog should have taken into consideration different view points — including those of banks and developers, when taking such a decision.

“I support a well-studied regulation that takes all sides’ view points. The central bank should help find a solution to the inventory in the [real estate] market via regulations,” he said.

The UAE central bank issued a circular on December 30 that set maximum loan-to-value ratios for non-nationals at 50 per cent for their first homes, according to a copy of the document seen by Zawya Dow Jones. UAE nationals can borrow up to 70 per cent of the value of their first homes, the circular says.

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