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Bankers, Developers Differ
on Crisis Lending Strategy

DUBAI — Sharp differences are emerging between bankers and developers on the possibility of changing the lending levels by the banks in the UAE in the backdrop of the global financial crisis.

Discussionsat the Abu Dhabi Economic Forum onthe second day on Tuesday underlined the divergingperceptions of the two sectors on steps to be taken to revitalise the real estate sector.

While the developers said that the banks should ease lending by reducing the interest rates, the representatives of the banks noted that the global financial crisis has forced them to more cautious. The bankers said that they would be able toresume lending in full pace only after they assessed the depth of the crisis.

“The key issue that the real estate sector now facing is lack of liquidity. The critical input that is urgently neededis easy mortgage finance. There should also be a review of the pricing levels of real estate units,” said Gurjit Singh, Chief Property Development Officer of Sorouh Real Estate.

Faysal Abou Zaki, Deputy General Manager of Al-Iktissad Wal Aamal Group, said the banks and financial institutions in the Gulf region as a whole had become risk-averse because of liquidity problems.

“The banks had been paying high interests for deposits to woo morefunds. If they pay high interests on deposits they will have to charge high interestson loans as well.”

Hani Shama, CEO of Bloom Properties, said, in the UAE 90 per cent of the real estate market depended on speculation. “But after the global financial crisis, the outlook will keep away from speculation due to the withdrawal of speculators from the scene.”

This, he said, would provide a healthy environment. However, itwould take sometime toovercome the negative impact of the crisis and stimulate demand, he added.

Abdullah Al Shakra, Chairman of Saudi Al Hanoo Group, conceded that the financial crunch has affected all sectors including real estate sector in the region. He hoped that the sector would rebound with the implementation of the proposed property sector legislations.

Blair Hagkull, Managing Director of Jones Lang Lasssalle, called on developers to introduce new structural framework to address the imbalance in the supply/demand equation that persist in the Gulf real estate sector.

Mohammed Ali Yasin, the CEO of Shuaa Securities cautioned against overstating the demand-supply gap in Abu Dhabi. “This is a mistake that had taken place in the case of Dubai, and the prices that had to be paid were very high.”

Simon Williams, Chief Gulf Economist of the HSBC Bank Middle East and Dr Giyas Gokkent, Head of the Research and Chief Economist of the Asset Management Group ofthe National Bank of Abu Dhabi ,were among those who spoke on the occasion.

ramavarman@khaleejtimes.ae