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Changes in Dubai property market sets the scene for recovery

The first sign that banks are moving towards less severe lending criteria came this week when HSBC Middle East announced that it is to re-enter the mortgage market in a dramatic shift in lending policy.

The bank, which all but pulled out of the home loan market in the UAE due to the liquidity crunch, will now offer 75% financing on completed villas, 70% on completed apartments and 50% on off-plan units.

Previously its loan to value ratio had been lowered to 60% and 50% for villas and apartments, in a tightening of lending policy that was mirrored across the sector.

'This move will provide more flexibility and choice for our customers who are looking to own a property,' said Abdulfattah Sharaf, CEO of Personal Financial Services, Middle East.

Meanwhile one of Dubai's leading property companies is predicting that the property market will 'significantly rally' in the second half of 2009.

According to Iseeb Rehman, managing director of Sherwoods Independent Property Consultants the merger of developers and further reductions in construction costs towards the end of the year will boost the property sector.

He also said that real estate companies are addressing the need to be more flexible and to actively attract property investors back to the market.

'Current market conditions call for more attention to customer needs and expectations, which has become our primary concern as we enter into the rationalisation phase following the start of the credit crunch,' he said.

The property specialist expects Dubai buyers to enjoy greater leverage in negotiating prices and payments with developers mainly due to strong competition from the secondary market, which has resulted in a broader range of investment options.