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Lending for Gulf property projects seen selective

Developers in the Gulf Arab region have been rethinking and redesigning their projects as a result of the economic downturn.

October 5, 2010 8:40 by

Lenders in the Gulf Arab region will be more cautious and selective in their financing of real estate projects in six months time, and will better analyse their viability, bankers and executives said on Monday.

Real estate projects in the region have been affected by the global slowdown with Dubai’s once-booming property sector hit particularly hard, with house prices slumping some 60 percent from their peaks and lending all but drying up.

“For banks they will continue to look and focus on what they consider to be their best clients and fundamentally understand the project and what are the key demand drivers of the project,” Tim Luckhurst, head of real estate advisory Middle East at RBS said at property conference Cityscape Global in Dubai.

Luckhurst said there were good opportunities for investment in the underdeveloped mid-income sector and affordable projects for “normal people which will represent the majority of the people in the region.”

Developers in the Gulf Arab region have been rethinking and redesigning their projects as a result of the economic downturn, scaling down from building high end properties to focus more on the mid-income sector.

Graham Hallett, general manager at Abu Dhabi National Property Company, a subsidiary of National Bank of Abu Dhabi , said he saw opportunities in the United Arab Emirates to invest in infrastructure, healthcare, and telecommunications.

“I think we shouldn’t analyse real estate as a goal to get out of the economy. It will need to rely on the economy of the region to attract new business.”

Haseeb Haroom, director, Alpen Capital, said funding was available for viable projects.

“Our view is that there were pockets of liquidity always available,” he said adding that financing packages in the future would likely be “fairly structured and clearly controlled.”

“Gone are those days of writing blank cheques. Banks have gone back to basics. What, why, when – these questions are asked.”

“Banks over the last six months have been backing their best clients. Do we see a change to that ? No we don’t,” said Fergal Harris, head of commercial real estate Middle East at Standard Chartered . (Editing by Reed Stevenson)

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