Property, buyer profiles soon

A system that will enable real estate professionals to access information about properties and buyers is set to be launched in the first quarter of this year.

The "property profile solution" is being developed by UAE credit bureau Emcredit with help from Dubai's Real Estate Regulatory Agency (Rera).

"Work on the solution is reaching its final stages," said Emcredit Chief Business Officer Zaid Kamhawi. "Hopefully, it will be released in the first quarter of this year and made available to all real estate players.

"Rera will be the source of information for the property profile solution, which will include all the registered properties on the agency's database.

"The solution will enable all users, whether real estate agents, developers or conveyors, to access information about properties and property buyers. The standard information will include a property's location and size as well as mortgage data related to it."

And, in a further development, Emcredit plans to launch a credit scoring system by the end of this year or early 2010. This will give details of an individual's risk rating to banks and other lenders.

"We do not dictate lending terms and we don't set up credit policies stating that this is a good or a bad borrower," said Kamhawi.

"Let us say an individual's score is 600 out of 700 – that means he is a low-risk individual. But if an individual has a low score this will imply he represents a higher risk for banks to lend to."

"What we do at Emcredit is provide enough information for banks and other lending institutions to take a call in accordance with their policies as to whether or not they would like to go ahead and lend to this individual.

"In other words what we do is clearly define the risk profile based on an individual's total indebtedness and provide as much information as we can."

Emcredit said many lenders, estate agencies and property companies were realising the importance of basing their decisions on comprehensive information.

"We see a lot of banks contacting Emcredit asking to access our services," saidKamhawi. "We're also seeing a number of real estate agencies accessing our information, especially in connection with their leasing businesses as a lot of landlords are handing out flexible rental terms.

"A landlord who accepts post-dated rent cheques, especially monthly ones, wants information on their tenants' profile so they can understand their payment behaviour.

"What we are looking to do this year is to cover at least 20 per cent of the real estate market and have them on board as customers of Emcredit. We are trying to convert a lot of interest into actual business.

"Developers in the past couple of years did not see a need to run credit assessment checks on buyers."

Kamhawi said Emcredit was looking at ways to help banks identify their customers' debt-burden ratio.

"At present here are no specific profiles that one can access and there could be individuals who do not know how to deal with credit and over-indebtedness.

"By checking the debt-burden ratio banks can determine whether, say, 50 to 60 per cent of an individual's salary is going on paying bank loans and whether this individual should apply for further credit.

"The time has come to understand each individual's credit-worthiness and assess him individually so that customers can be retained in the long term.

"We believe lending institutions should continue in the business of lending. Banks have now reduced lending significantly and we see banks going towards extremes by treating all customers the alike.

"Banks have raised interest rates across the board for all their customers but we don't want them to do that since they risk losing their customers.

"What we are telling lenders is that they have to treat individuals differently according to their risk profile. Interest rate hikes should be based on individual circumstances."

Kamhawi is waiting for a federal credit information law to be announced that would allow information to be shared across the UAE. "I can't put an estimate as to when it will come into force but I hope to see it announced in this quarter of 2009."

Emcredit wants to establish agreements with other bureaus in the region in order to start sharing credit information. Kamhawi said the current situation in the property market was simply a case of it coming of age.

"The market is maturing and moving back to the basics of real estate investment. The market is going through a healthy correction and will settle at a point where we see price stability and an increased level of confidence.

"Market players who adapt quickly to this changed market and adopt new policies and procedures will be the first to benefit. Mortgage lenders will have to adopt tools that will enable them to assess borrowers and underwrite credit with reduced cost and turnaround times. Similarly developers will have to more carefully consider issues like affordability."

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