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Analysts divided on UAE mortgage crisis

Nadim Kawach Emirate Business 247
Analysts divided on UAE mortgage crisis - Analysts - UAE - mortgage - crisis - real estate

A sharp decline in the UAE real estate market over the past few months after rapid growth in the previous two years has underscored fears about a possible mortgage crisis in the country.

While some experts believe the situation is still safe, others feel that the decline in property prices has left banks more exposed.

"I think the mortgage loans extended by the UAE banks are still within limits," said economist Mohammed Al Asumi.

"Their exposure to the real estate sector is still relatively low, which rules out any immediate crisis."

But other experts said they believe the decline of between 10 and 50 per cent in property prices in the past eight months after a surge of more than 300 per cent in the previous two years has exposed banks to defaults.

"Property prices are now far below their level a year ago. Those who bought property for investment might not be able to pay back their debt. If the bank repossesses the property, how much will it recoup at today's prices? Perhaps half the debt. Isn't that a problem," said Fadi Kiswani of the Sharjah-based Sharhan Securities.


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