UAE banks shun foreclosures

The window of the Better Homes estate agents at Jumeirah Beach Residence is full of properties for sale, but none of them are foreclosures. Outside, the street bustles with Saturday morning shoppers. There is little sign of housing distress here, despite prices of some apartments falling by 45 per cent since the end of last year.

Banks facing losses of as much as Dh24 billion (US$6.54bn) on bad home loans have yet to foreclose on properties in the Emirates, fearing they may become embroiled in a legal quagmire that could take years to resolve.

Instead, lenders are negotiating with distressed mortgage holders in a bid to recover some capital and avoid having to start potentially costly legal proceedings that hinge on an as yet untested mortgage law.