Dubai’s government has stepped up efforts to spur the emirate’s economy, allowing Dubai Islamic Bank PJSC to purchase a majority stake in mortgage company Tamweel PJSC with the aim of reviving lending.
The decision follows the announcement on Sept. 10 by Dubai World, one of the emirate’s three main state-controlled holding companies, of a deal with more than 99 percent of its creditors to alter the terms on $24.9 billion of debt. Dubai International Capital LLC, which is part of Dubai Holding LLC, another of the three holding companies, has proposed to sell assets over five years to repay $2.6 billion, two people familiar with the plan said Sept. 15.
The deepest global financial crisis since the 1930s led to a 50 percent slump in Dubai property prices from their peak in August 2008, according to estimates from Colliers International. Frozen credit markets blocked Tamweel’s and Amlak Finance PJSC’s access to funds and forced what were once the two biggest mortgage lenders in Dubai to stop lending.
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