Abu Dhabi Islamic Bank's chief executive, Tirad Al Mahmoud, says that despite the slowdown in the overall mortgage market there is still healthy demand for what he described as middle-income housing.
Demand for luxury housing costing more than Dh20 million has dwindled, while units up to Dh2 million still had interest, Mr Al Mahmoud said. And while the slowdown as a whole has impacted new mortgages, the refinancing market is still going strong, he said.
“There’s a shift to more middle-class real estate from luxury real estate,” Mr Al Mahmoud said.
“For the new purchases of expensive units, demand for mortgages has gone down.”
“While sales of villas that sell at Dh30 million or Dh40 million have slowed down somewhat, there is increasing demand for units that are selling between half a million and Dh2 million. There is a change in the real estate dynamics.”
Over the past 12 months, demand for mortgages has slowed to single-digit growth from double-digit growth in the previous year as house prices become difficult to afford, banking executives have said.
Meanwhile, rents have been rising. Housing rents in Abu Dhabi alone rose by 12 per cent last year and another 2 per cent in the first quarter of this year despite the oil price retreat, according to data from the property broker CBRE.
“If you look at real estate in the UAE, it’s not the same story in every market. Abu Dhabi continues to be a very strong leasing market,” Mr Al Tirad said. “Supply in Abu Dhabi is not exceeding demand; on the contrary it’s falling short, slightly below demand. That’s why rents in Abu Dhabi are shooting up. So this is still a strong real estate market.”
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