Opinion | Editorials

Tamweel gives investors cause for optimism

By lending to home buyers again, the company will boost confidence in the UAE

  • Gulf News
  • Published: 00:00 November 2, 2010
  • Gulf News

In a significant boost for the local real-estate market, Islamic home finance company Tamweel PJSC has announced that it will resume lending to those wanting to purchase property. Tamweel has said that it will start offering up to 80 per cent financing of the current value of finished residential properties in Dubai and Abu Dhabi.

"Tamweel is back in business," said Varun Sood, Chief Executive Officer, Home Finance Division. Given the large percentage of the local home-finance market held by Tamweel and its controlling shareholder, Dubai Islamic Bank, the same can perhaps be said for part of the local property market.

One of the biggest drags on the local market has been that banks — needing to strengthen their balance sheets to cover bad debts caused by the international financial crisis and wary of the sharp correction in property prices — have not been granting home loans. Without buyers, those who had put their money in property found their funds trapped in real-estate investments that were often losing value.

The property market is important to consumer and investment confidence across the world. As long as people feel the value of their homes is increasing, they are willing to buy, sell and invest. When the property market corrected, spending in the country contracted, hindering the economy. By beginning to lend again, Tamweel will inject liquidity and confidence not only into the property market but into the whole economy.

Tamweel is only offering financing for finished residential properties. This is important as it ensures that there is a real asset with a market value linked to the loan. This makes the loan more secure and will prevent the financing from being used for property speculation.

The number of residential properties expected to be completed in the coming months will weigh on prices, but the return of a major lender is a cause for cautious optimism about the health of the property market.

Gulf News
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