Abu Dhabi Finance sees robust mortgage demand

Between 20 and 25 per cent of mortgages issued to home buyers in Abu Dhabi this year were from Abu Dhabi Finance.

Abu Dhabi Finance, a mortgage finance provider launched eight months ago, has emerged as one of the biggest lenders to home buyers in the capital, a top company official said. "It is our belief that we are now in the top two or three mortgage lenders in Abu Dhabi," said Philip Ward, the chief executive. Between 20 and 25 per cent of mortgages issued to home buyers in Abu Dhabi this year were from Abu Dhabi Finance, he said. The company received applications for Dh770m worth of mortgages, of which the company approved Dh600m, he said. The average mortgage size was Dh2.2m.

Mr Ward said he expected the mortgage market in Abu Dhabi to grow significantly in the coming year as major property developments are finished. "As more projects come online, the secondary market will grow and the need for mortgages will be greater," he said. By the end of the first quarter of next year, hundreds of units will be ready for occupation on Reem Island and Raha Beach alone as developers like Sorouh Real Estate, Aldar Properties and Tamouh Investments deliver projects. Abu Dhabi is reaching a critical phase in its development where developments that were just artist's renderings a year ago are now well out of the ground covered in glass.

Among the largest projects coming online are the Sun and Sky Towers, Marina Square, Raha Beach and Golf Gardens. Mr Ward said the impact of the financial crisis on the capital was not as severe as elsewhere in the country. There were less layoffs, more jobs being created and projects moving along at a healthy speed, he said. "The fundamentals of Abu Dhabi haven't changed," he said. "Plan 2030 is as valid today as when it was first announced."

In most developed markets, between half and two-thirds of purchases are made with mortgages, whereas less than 10 per cent of Abu Dhabi transactions are done with mortgages, Mr Ward said. One sign of the maturing market was an increasing number of inquiries from buyers who are "owner-occupiers", meaning they intend to acquire property to live in rather than hold as an investment, Mr Ward said. Another boost for the market may come with the likely lowering of interest rates in the coming months, as the Emirates Interbank Offered Rate declines, he said.

Abu Dhabi Finance was launched last November with Dh500m in start-up capital. Its original shareholders were Mubadala Development, Aldar Properties, Tourism Development & Investment Company (TDIC), Sorouh Real Estate and Abu Dhabi Commercial Bank. But Mubadala development is now in the process of increasing its stake from 20 per cent to 52 per cent by buying all of TDIC's shares and portions from the other shareholders.

The transaction "is nearly complete" and would "not affect the company at all", Mr Ward. said. [e-mail]