(DENNIS B MALLARI)
The value of mortgages registered in Dubai so far this year is far more than reported, the Emirate’s Land Department said yesterday.
Mortgages issued were worth a total of Dh57.5 billion while the value of plots and buildings sold amounted to Dh49.5bn.
The difference between the figures occurred because of the increased demand for liquidity – many borrowers took out loans secured against assets they already owned. The figures from the Land Department indicate that recent reports may have underestimated the size of the UAE’s mortgage market.
Yesterday Emirates Business quoted a report by investment bank EFG Hermes, which put the total value of mortgages issued this year in the country at Dh16bn.
However, Deputy Director Mohammed Thani said: “People are in need of cash so many mortgage their land and properties to get liquidity. They do this, not to raise funds to build on the land in question, but to obtain money for more than one project.”
Thani said the Dh57.5bn total did not represent the full value of mortgages arranged in the emirate as not all loans were registered with the department. The figures were welcomed by real estate company executive Akhilesh Bali, who said they meant people felt confident about the economic outlook of the UAE.
“The economy here is stable thanks to the governance and the support of the financial institutes,” he added.
Remortgages accounted for Dh16.2bn of the loans total. Bali added: “Factors remain the same. People who invested once will invest again.
“If they feel the market is good then there is high possibility of them applying for and getting a remortgage.”
Emirates Business yesterday revealed that the Land Department is drafting a new law to cover mortgages – a move that is likely to boost the real estate sector in the country.
The legislation will replace a federal statute drawn up in 1985 that is seen as inadequate and outdated.
The new law will cover areas such as secondary mortgages – where a property and the loan on in it are sold on as a package – mortgage insurance and the registration of agreements.
Penalties for breaking the terms of a loan will be set out, as will arrangements for selling repossessed properties.
(In dirhams) is the value of mortgages that have been registered with the Dubai Land Department in 2007.