Moody’s Investors Service, the credit rating agency, has placed the United Arab Emirates banking sector on a negative outlook, amid mounting signs that the country’s real estate market is heading for a correction.
The agency said that it was concerned about the impact of a deteriorating real estate market outlook on banks in the Gulf’s second biggest economy, after property prices starting to fall in Dubai, the commercial centre of the Gulf.
Though banks ostensibly have their real estate exposure capped at 20 per cent of assets, many have in reality exceeded this, and have lent to construction firms, developers and property speculators, particularly in Dubai.
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