Omniyat to set up $1bn islamic mortgage firm



Omniyat Holdings, the parent company of Omniyat Properties, plans to start a regional Islamic mortgage finance company with a capital of more than $1 billion (Dh3.67bn) by year-end or early 2009.

“We are doing the paperwork for it now and have begun the initiation to enter into this field,” Mehdi Amjad, President and Chief Executive Officer of Omniyat Holdings, told Emirates Business.

The company has not yet decided where the new firm’s headquarters will be located.

“It will be a regional firm, but we are yet to decide where the holding company is going to sit. Our aim is to become an owner, investment banker, fund manager, developer, operator and consumer financer.
This end-to-end integration will give us our capability,” Amjad said.

The company will effectively have different sub operations, he said, without disclosing which sectors it was targeting.

The UAE interbank rates (EIBOR) have fallen from 4.94 per cent in November 2007 to 2.78 per cent to date, according to Cairo-based EFG Hermes.

“The country has 23 mortgage players and more players will be entering the market. This will increase competition, but in turn allow end-users to benefit from a rate war,” a real estate analyst said.

Mortgage rates, which are usually three-month EIBOR plus 300 basis points, have fallen approximately 216 basis points, from 7.94 per cent to 5.78 per cent over the same period. The mortgage penetration rate in the UAE remains at about two per cent of gross domestic product, representing an overall market size of Dh16bn.
This has the potential of rising more than 900 per cent to Dh161bn over the next five years.

According to EFG’s UAE Research Yearbook 2008, there is a possibility that a housing finance company will look to acquire a licence either through the acquisition of a bank or a stand-alone banking licence.