The property market in the UAE will continue to grow this year on the tailwinds of the country's economic momentum, further driving growth in Abu Dhabi Islamic Bank’s home-financing business, its chief financial officer has said.
“I think we haven't reached the peak yet,” Mohamed Abdel Bary told The National in an interview.
“There's still going to be a lot of traction, just looking at the demand and supply, and activity in the market.”
A slowdown in property market growth may transpire next year, “but this year, I think the positive action will continue”, he said, in response to a question on whether the market is reaching bubble territory.
The UAE property market has continued to recover from the coronavirus-induced slowdown on the back of government initiatives, higher oil prices and other measures to support the economy.
Abu Dhabi recorded 5,472 property transactions worth Dh27.9 billion ($7.6 billion) in the first quarter of 2023, according to the latest data from the Department of Municipalities and Transport.
The value of the deals more than doubled during the three-month period to the end of March while the volume of transactions, which includes property sales and mortgages, rose by 66 per cent.
The value of property sales more than tripled to Dh16.2 billion while mortgage deals were up 70 per cent at Dh11.7 billion, the data shows.
In Dubai, the commercial and tourism centre of the Middle East, residential real estate prices rose in June at their strongest pace since 2014, as demand continued to rise.
The average price for residential units in the emirate grew by 16.9 per cent on an annual basis, up from 15.9 per cent, year on year, from the data recorded in May this year, consultancy CBRE said in its Dubai Residential Market Snapshot report on Tuesday.
There were 42,583 real estate units registered in the emirate between January and June.
During the period, 47,187 units worth Dh96 billion and 5,546 villas worth Dh15 billion were sold, the Dubai Media Office said last week.
The booming property market reflects the UAE’s strong economic fundamentals and the continued growth momentum it has maintained since bouncing back from the pandemic-driven slowdown.
The UAE economy grew by 7.9 per cent last year, the highest in 11 years, after expanding 4.4 per cent in 2021, supported by its non-oil sector at a time when the country is advancing its diversification strategy.
Mr Abdel Bary said the Dh18 billion mortgage-financing book of ADIB, one of the largest home-financing portfolios in the country, reflects the tailwind from the economic momentum and has already outpaced the average growth of the country's mortgage industry so far this year.
“We are growing very consistently”, he said, adding the lender recorded about 2 per cent growth in the first six months of the year.
“In absolute terms, it might not look big but … the official numbers from the Central Bank will dictate that the [home] financing market in the UAE has gone up 1 per cent year to date and if you are adding 2 per cent, it means you are actually going better than the market.”
The rise in transaction activity in the property market is driven by the fact that 70 per cent of buyers use cash and only 30 per cent are people who require financing, which is the mortgage pool for the financial institutions to participate in, Mr Abdel Bary said.
“We have a big share of that [pool] because of our strong alliances with the major developers. That's where we are playing. We don't go individually but we partner with … big entities in Dubai and Abu Dhabi and we offer unique, home-finance solutions for their clients.”
On Thursday, ADIB, the biggest Sharia-compliant lender in the emirate by assets, reported a 61 per cent annual increase in second-quarter net profit as revenue surged to a record.
Net profit attributable for the three months to the end of June climbed to Dh1.17 billion, its highest quarterly income, the lender said on Thursday in a filing to the Abu Dhabi Securities Exchange, where its shares are traded.
Revenue during the reporting period rose by 56 per cent to Dh2.2 billion.
The lender's first-half net income jumped 55 per cent on an annual basis to Dh2.23 billion while revenue jumped by 50 per cent to Dh4.3 billion.
The lender expects to maintain the revenue and profit growth trajectory in the second half of the year, driven by growth across all business segments and products, Mr Abdel Bary said.
“The good thing about ADIB’s business model is that it is not a volatile model. The moment you build volume, and you build your portfolio, it gives you the natural tailwind, which runs with you for a period of time,” he said.
“We are very comfortable that this positive trajectory will also continue in the second half.”
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Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
Leap of Faith
Michael J Mazarr
Public Affairs
Dh67
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Most sought after workplace benefits in the UAE
- Flexible work arrangements
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- Financial well-being incentives
What is Reform?
Reform is a right-wing, populist party led by Nigel Farage, a former MEP who won a seat in the House of Commons last year at his eighth attempt and a prominent figure in the campaign for the UK to leave the European Union.
It was founded in 2018 and originally called the Brexit Party.
Many of its members previously belonged to UKIP or the mainstream Conservatives.
After Brexit took place, the party focused on the reformation of British democracy.
Former Tory deputy chairman Lee Anderson became its first MP after defecting in March 2024.
The party gained support from Elon Musk, and had hoped the tech billionaire would make a £100m donation. However, Mr Musk changed his mind and called for Mr Farage to step down as leader in a row involving the US tycoon's support for far-right figurehead Tommy Robinson who is in prison for contempt of court.
