The United Arab Emirates is preparing itself for a new wave of affluence in the booming real estate sector, particularly in Dubai and Abu Dhabi. The new projects that have been announced lately aim to invest in the country’s huge oil revenues and use the influx of people and capital lured in by the U.A.E.’s current stability. It is currently viewed as a “safe haven” in a region that has experienced the spread of Arab Spring revolutions in several countries in the past two years.
A report issued last month by AlixPartners about the Gulf banking sector stated that several regional banks have been adversely affected by financing faltering real estate projects in the past. There are also concerns about the quality of the proposed assets and indebtedness as a result of the latest boom in the real estate markets. Amid this spreading affluence, the U.A.E. Central Bank is imposing new limitations on the policies of mortgage loans to show the interest of the country’s legislative and regulatory bodies in this new real estate boom. Yet, local and international banks are still worried about loan policies related to real estate development projects in the country, at a time when many of these banks remain afraid to lend money for such projects.
How the UAE Can Avoid Another Real Estate Bubble
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