In2013.as predicted by the Al Mazaya
Holding Company weekly report, the
banking sector in the UAE experienced
strong profit growth. It is expected, when
all figures have been reported, that the
sector will achieved some 20 percent
growth on the previous year in 2013. As a
result, it is expected that in 2014 lending
will increase by as much as ten percent as
banks recognise the improved economic
conditions inwhich borrowers nowoperate.
Improved bank lending is vital
for the Gulf’s real estate sector
at this early stage of its recovery,
Mazaya Monthly Real Estate Report - February 2014
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For example, the UAE’s increasing
involvement in the Far East has already
brought about domestic real estate investment
by investors from South Korea and China.
Although reckless lending could see
the market’s momentum become
uncontrollable. It is important that upper
limits for lending to both individuals and
institutions are enshrined in literature
and thereafter respected as a way
of regulating the market’s growth.
The Gulf’s real estate market relies on
the health of other sectors to see an
inflow of liquidity. However, increased
bilateral ties at a state level with foreign
governments and markets will likely
see liquidity come from those countries
into the Gulf’s real estate markets.
It is risky, this report suggests, to interpret
real estate price increases as an infallible
indication of a return to robust health of
the sector, as often gains in price can be
related to other factors, such as a decrease
in the availabitlity of land for development.
The best way to adjudge the strength of
the sector is to look at inflows of liquidity. In
Kuwait, this inflow has seen a remarkable
rise, hitting KD3.9bn in 2013, an increase
of twleve percent on the previous year.
In Jordan, liquidity has been valued at
JD6.3bn, a thirteen percent increase
on the 2012 figure of JD5.6bn.
