A high profile Dubai developer has called on banks in the United Arab Emirates to resume lending as soon as possible in a bid to restore confidence to the struggling real estate market.
Danial Schon, vice president, Schon Properties which came under fire from investors last year after long delays to its flagship Dubai Lagoon development, said he hoped to see banks take action quickly.
'People are losing jobs, visas are being cancelled, and traffic has decreased. Banks have a major role to play in building confidence. My worry is that banks will act later rather than sooner,' he said.
He called on them to start approving mortgages. 'Their job is to give end-user financing to residents. Mortgages are such an important function of the real estate cycle. Here, there are excessively high mortgages and they are very limited and there is a lack of mortgage flexibility. This market has been running on cash which can only last so long,' he added.
However, Schon said he believes Dubai will recover quicker than other places. 'It's a very dynamic place and now is the time you'll find out who the true believers in our city are and those who only speculate,' he said.
Schon Properties' Dubai Lagoon project has come in for criticism after the seven billion square feet development of 49 buildings and around 4,000 apartments, saw completion dates slip from December 2007 to 2011.
Schon said one reason for the delay was the plan by the Roads and Transport Authority to build a six-lane highway in close proximity to the development. After months of negotiation, Schon Properties eventually gave up 10 metres of land to the transport authority.
Meanwhile, Dubai based Union Properties is the latest real estate compnay to announce a loss. It made a fourth quarter loss of AED37.6 million ($10.32 million) due to lower land sales, it confirmed.
