Text size:

  • Small
  • Normal
  • Large
Serious negotiations are under way to restart City of Arabia, above. Satish Kumar / The National
Serious negotiations are under way to restart City of Arabia, above. Satish Kumar / The National

Khalid Al Malik urges banks to ease mortgages

Cityscape: Khalid Al Malik, the group chief executive of Dubai Properties Group, urges lenders to lower the cost of financing to stimulate the property sector. Watch video

The chief executive of one of the country's biggest developers has called on banks to cut mortgage rates to kick-start a housing market recovery.

Khalid Al Malik, the group chief executive of Dubai Properties Group (DPG), urged lenders to lower the cost of financing to stimulate the depressed Dubai property sector, where homes have lost as much as half their value since the market peak three years ago.

"They need to lower their rates," Mr Al Malik said in an interview at the Cityscape property show in Dubai yesterday. "The problem is that many investors bought near the peak. And when you add high interest rates to that, it doesn't make any sense for them."

Global interest rates have fallen to record lows as governments have sought to encourage consumers to spend more to help avert recession. Interest rates have fallen to 1.5 per cent in the euro zone and 0.25 per cent in the US.

The Emirates interbank offered rate, known as Eibor, has fallen 36.6 per cent in the past year to 1.48 per cent.

But mortgage rates in the Emirates have remained comparatively high, in the range of 5 and 9 per cent depending on the ratio of debt to equity and the status of the development. "We are struggling because of that," said Mr Al Malik.

"We are hoping the banks or the mortgage companies come up with new packages. Of course banks had many issues at the time of the crisis. But now things are becoming stable, they should look at this again."

DPG is a unit of Dubai Holding, one of three big Dubai Government-related conglomerates. DPG, which was formed in 2004, was one of the largest developers during the emirate's boom years, building the vast Jumeirah Beach Residence and Business Bay developments.

But even those projects were dwarfed by the 278 square kilometre Dubailand development, originally intended to include a series of sprawling theme parks such as Universal Studios and Six Flags. More than 40 projects were planned for the development, which was launched in October 2003.

But just a few housing schemes have been delivered as the global financial crisis sapped the market of funds needed to build projects such as the US$1.8 billion (Dh6.61bn) Aqua Dunyatheme park announced in 2004 or the $136 million Astrolab Resort announced the following year.

The Dubailand development is under review by DPG, and the developer has not yet disclosed which elements will be built.

Mr Al Malik said serious negotiations were under way to restart some projects, including City of Arabia, that stalled during the financial crisis that began in 2008.

But he said the development would grow in response to demand and in tandem with the growth of the wider economy.

"We need to be careful and learn the lessons of the past. As long as we respond to the economic needs of the city, we should be fine," he said.

DPG has delivered about 5,000 housing units this year, mostly in Dubailand. That is expected to slow next year as the developer switches focus to handing over apartments in its Business Bay development in downtown Dubai.

That includes the Bay Avenue development, which comprises about 53,340 sq metres of retail space and 140 shops.


Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National