Real Estate hits free fall

Bank credit to the UAE real estate sector has dropped by around 1.4 percent. Dubai’s housing market still has nearly a third too much supply which is deepening a three-year rout to nearly 60 percent from its peak, according to Reuter’s poll. Rents and prices in Dubai’s property market have been in a free-fall over the last few years, pummeled by the global financial crisis, ensuing global slowdown and unrest in MENA region. Figures by the Central Bank showed the slackening growth in lending to real estate and other sectors was in sharp contrast with the massive rise in deposits with banks as they swelled by more than Dh75 billion in the first five months. From Dh163.1 billion at the end of 2010, real estate mortgage credit receded to about Dh160.9 billion at the end of May, the figures showed. Credit to the government slipped to Dh98.9 billion from Dh99.9 billion after a steady rise over the past year while resident loans to the private sector declined to Dh577.7 billion from around Dh581.2 billion. Lending to the public sector surged to about Dh99.7 billion from Dh91.3 billion despite a sharp fall in credit to public financial institutions to Dh10.5 billion from Dh17.3 billion. Confidence has not recovered yet, Personal loans for business purposes declined to Dh180.9 billion from Dh181.9 billion and personal loans for consumption purposes to nearly Dh64.7 billion from Dh85.1 billion in the same period. Dubai house prices will keep on falling as market bust deteriorates, analysts say.