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28 March 2024

Real estate credit dips in Q1

Published
By Staff

Credit to the UAE real estate sector lost the momentum gained through 2010 and dipped by around two per cent in the first quarter of 2011 as the sector remains a key victim of the 2008 global fiscal crisis, according to official data.

The current political unrest in the Middle East and North Africa also appears to have allied with the post-crisis tightness by UAE banks’ to keep overall credit growth at low levels despite an acceleration in the country’s GDP growth.

The figures by the central bank showed the slackening growth in lending to real estate and other sectors was in sharp contrast with the massive rise in deposits with banks as they swelled by more than Dh50 billion or around 5.3 per cent.

From around Dh163.1 billion at the end of 2010, real estate mortgage credit receded to about Dh159.7 billion at the end of March, the figures showed.

The decline followed a recovery in such loans by around Dh22 billion through 2010 compared with nearly Dh16 billion in 2009, when the sector was hit hard by the 2008 crisis after years of boom caused by high oil prices.

Mortgage lending activity hit an all time high during 2008, when credit leaped by nearly Dh69 billion from Dh56.4 billion at the end of 2007 to Dh125.8 billion at the end of 2008, a staggering increase of about 123 per cent.

The activity was also at its peak through 2007, when real estate credit nearly doubled to around Dh56.4 billion at the end of the year.

The report showed total loans edged up by around 0.7 per cent to Dh778.7 billion at the end of March from Dh772.6 billion at the end of 2010.

Credit to the government rose to Dh102.6 billion from Dh99.9 billion while loans to the private sector grew to Dh583.4 billion from Dh581.2 billion. Lending to the public sector also rose to Dh92.6 billion from Dh91.3 billion.

Personal loans for business purposes increased to Dh183.6 billion from Dh181.9 billion but personal loans for consumption purposes declined to about Dh64.3 billion from Dh85.1 billion in the same period.

The report showed deposits with the country’s 23 national banks and 28 foreign units swelled by around Dh56 billion to peak at Dh1,105.1 billion at the end of March from Dh1,049.6 billion at the end of 2010.

All the increase was in resident deposits, which surged to nearly Dh988.4 billion from Dh929.2 billion in the same period. Non-resident deposits shrank to nearly Dh116.6 billion from Dh120.3 billion, according to the report.

A breakdown showed resident government deposits with banks gained around Dh11 billion to reach Dh194.8 billion while private sector deposits swelled by nearly Dh24 billion to reach Dh404.7 billion.

The banks’ total assets jumped by nearly Dh90 billion to peak at around Dh1,699.7 billion compared with about Dh1,609.2 billion.