Boom time for property mortgages

Dubai: The property mortgage market in Dubai is expected to touch Dh17.5 billion by 2007, according to officials.

The emirate's home finance sector has recorded a 64 per cent increase in one year, touching Dh11.5 billion this year, up from Dh7 billion last year, according to Adel Al Shirawi, CEO of Tamweel.

With a start-up figure of Dh1.1 billion during the first year of opening up the mortgage finance market in 2003, it touched Dh4.1 billion in the following year itself.

Despite starting late, this shows not only a phenomenal growth in this sector but also the inclination of finance companies to help high-end consumers owning property on easy terms.

Al Shirawi, speaking as a panel member in a networking event organised by Dubai Property Group, (DPG) said there are mainly three reasons for the growth in this sector - the consumer's willingness to go for a longer term loan, awareness about the securitisation process and increase in prices of real estate, especially at the top end.

Villas which cost around Dh1.2 million couple of years ago have gone up to Dh4 million.

The mortgage market began to take off following Dubai's opening up of the property market for freehold ownership to expatriates in 2002.

The next stage of development is expected to be observed on a larger scale in Abu Dhabi followed by Saudi Arabia which are still in their early stages of mortgage financing.

However, Al Shirawi said Dubai has scope to make further improvements in this sector. It has to reduce the time gap of underwriting and securitisation from the existing one year to six months, he added.