DUBAI: Banks in the United Arab Emirates are increasing exposure to the country’s booming real estate industry betting that, five years after property values slumped and non-performing loans soared, this time it will be different.

Lending to the construction segment climbed 40% to 181 billion dirhams (RM157.8 billion) in 2013, according to the latest central bank data, the most since 2008 when loans jumped 81%. Emaar Malls Group LLC, a unit of Emaar Properties PJSC, raised a US$1.5 billion Islamic facility last month, according to a company statement on Sunday.

Non-performing loans at UAE banks grew to between 10% and 12% after the credit crisis as property prices crashed by more than half. Real estate values in Dubai, home to the world’s tallest skyscraper and one of the biggest shopping malls, increased at the fastest pace in the world in 2013, while bank lending growth accelerated to the quickest in five years.

“You can see in terms of business practices that things aren’t as hairy as they were in 2008,” Raj Madha, an independent regional banking analyst, said by phone from Dubai on Sunday. Back then “people were selling buildings, then looking for ways to build those buildings. We haven’t seen that come back yet,” he said.


This article first appeared in The Edge Financial Daily, on June 3, 2014.

 

SHARE
SPONSORED CONTENT
River Park Bangsar South to complete in 2026, offers upscale living at unbeatable pricing

River Park houses only 12 units per floor to ensure a comfortable density for a lifestyle-living experience. Two-bedroom, two-bathroom units come in built- ups of 812 sq ft and 861 sq ft. For greater spaciousness, privacy and exclusivity, you can also pick its unique semi-d layout design. Measuring 1,180 sq ft, they come with three bedrooms and two bathrooms.

read more