A bank that believes in real estate

Dubai: There is talk across town of an incipient flow of mortgage-related funding into the real estate market. What is available still represents a trickle and is quite selective when it comes to both the investor and the properties they buy.

Ensuring the tap remains open for home financing is one of the immediate requirements for any gradual improvement in property transactional activity.

More so as property values seem to have stabilised in the premium freehold residential clusters.

This is the prompt that many prospective investors — of course the well-heeled among them — needed to make a return to the market.

But do the lending banks share such views? Or do they need to see more stability in property values to get in deeper?

To find out, Gulf News spoke to Syed Hamad Haider, head of retail banking and head of national sales at Standard Chartered UAE.

Gulf News: There aren't that many ready properties available for buying in the secondary market now and the ones that are being built would take another year or so. Has Standard Chartered freed up lending to include projects that are still in the build phase?

Syed Hamad Haider: Each bank lends according to its own internal risk appetite which is orchestrated around their impression or outlook of customer profiles based on income, place or type of work, and vintage in the country.

While we currently do not offer under construction finance, our policies will continue to be somewhat fluid in order to keep up competitive as well as responsive to market conditions.

Even earlier, mortgage lenders used to do due diligence on developers before aligning with their projects. Now, what do banks do more in terms of identifying these developer credentials?

The bank's obligation was always to run a stable and sustainable business.

Our long-term belief in this market — and global expertise — ensured that we established a robust set of criteria to evaluate developer credentials which would hold in any market environment when we first launched mortgages in January of 2007.

We plan to continue to expand our empanelled developer list in 2011 with no change in our strategy of credential evaluations.

There is a serious concern in the market that year-end banking sector results, if overtly negative, could have consequences for the lending environment, and mortgages in particular. Your thoughts on the same?

We believe in this market, in the economy, and in the government of the UAE, and our credit policies are a reflection of this belief.

Our message is simple: we are open for business.

While some of our peers have a history of scaling back, or have exited the market, we are flush with liquidity and are looking to invest in our local markets.

We are confident that this market will bounce back — the fundamentals of this country have still not changed.

Strategically, we are at the cross-roads for business commerce between Asia, Europe and beyond.

The UAE is still the residence of choice for professionals and self-employed businessmen from countries within a four-hour flight radius.

These are three of the many reasons why our belief in this market is strong and we will continue to support it.

Lending these days, as it is, is pretty selective. How do you see the current lending environment? In other words, how selective is it?

Standard Chartered Bank is in the business of helping people realise their financial dreams, be it a home, an investment property, balance transfer, or top-up on their existing loan.

Our financing offers cater to all consumer segments. However, we have an obligation to run a stable and sustainable business.

This means that we will adjust and modify policies and programmes to keep our current sound financial condition.

Local mortgage lenders have in the past insisted that lending rates cannot be straight ‘Libor+' rates. What is your assessment on fixing rates? There's also favourable talk in regard to variable lending rates.

Standard Chartered Bank lends on a SCBLR + margin basis. SCBLR (Standard Chartered base lending rate) is our internal cost of funds which we find to be more beneficial to the customer by lending on this platform.

Historically, due to our excess liquidity, our rates have been lower than Eibor. This rate is re-priced every 12 months allowing the customer to take advantage of lower short term rates.

Any chance that the bank would consider longer tenors on home lending?

Our tenors go up to 25 years, as this is mostly an expat market it makes sense not to extend the repayment age limit beyond 70 years of age.

There's still some doubts over the foreclosure ruling in regard to home financing. Could we have your thoughts?

The UAE property market has developed in leaps and bounds since the freehold concept was announced in 2002. The periodic timely announcement of new laws has helped build confidence in the market.

We have especially seen this in Dubai, where the establishment of a Land Department has resulted in title deeds being issued from the government. We welcome laws and regulations as they create more transparency which will benefit the market in the long term.

Like any maturing market, policies go through teething problems when they are in the nascent stage.

However as time goes on, we are confident that the legal system will be able judge foreclosures as well as, if not better than, more established markets.

 Are you lending against Abu Dhabi property?

We have been active in both Dubai and Abu Dhabi, and will continue to do so.

We are working on developing a different risk assessment methodology in order to improve our customer reach, and cater to a wider market.

We are actively working to establish additional tie-ups with more Abu Dhabi developers in order to better serve this market.

In addition, our Saadiq Home Finance programme is a very strong complement to this market.