Tamweel expects growth to slow

Tamweel is likely to see slower growth in the fourth quarter, says the firm's chief executive.

ABU DHABI // Tamweel, the second-largest home finance provider in the UAE, is likely to see slower growth in the fourth quarter as the economy enters a more cautious period and credit remains difficult to access, according to the firm's chief executive. On Sunday, Tamweel announced that earnings growth had slowed in the third quarter compared with the same period last year. "We are not going to have phenomenal growth in the next quarter," said Wasim Saifi, the Tamweel chief executive. But the economy could start recovering as early as next year, as banks begin lending at higher rates and sentiment improves, he added. "I don't think any of us in living memory can remember working with an environment that is so volatile... But the real estate sector is very important to Dubai. Everyone is working to make sure it is sustainable." In the first and second quarters, Tamweel's net profit shot up by 249.4 per cent and 266 per cent respectively compared with the corresponding quarters of the year before. In the third quarter, however, profit grew by only 37 per cent to Dh185.7 million (US$50.5m), Tamweel reported. "We think that for the difficulties in the economic environment, 37 per cent is a fantastic achievement," said Mr Saifi. The company's stock price lost about 9.6 per cent today, closing at Dh1.98. Since the beginning of the year, Tamweel has lost 71.1 per cent of its share market value. Mr Saifi said he expected that deposit requirements, which have risen to between 20 per cent and 25 per cent, probably would return to between 15 per cent and 20 per cent by the end of the year. In the long term, he said developers would begin focusing increasingly on middle-class developments. "Today you have a fair amount of supply coming in at a higher price and affordability level," he said. "But the real sustainable demand is going to be the middle-class housing." In the short term, he said developers would ease payment plans to ensure people did not start defaulting on payments. "One of the things that we are likely to see is that people will be given more leeway in terms of payment plans. If you can't afford a payment at the six month deadline, they will give you until the seventh or eighth month." Earlier this month, Tamweel entered merger talks with the larger Amlak Finance in a bid to create the largest home finance company in the region and a company with the means to weather the financial turmoil in international and local markets. Mr Saifi said the merger was likely to be finalised by the end of the first quarter of next year. [e-mail]