The reports are “sending shockwaves across the country’s banking sector”, according to a report published on Monday on the Emirates 24/7.com news website.
“As you read this, most banks’ retail and mortgage heads are huddled in closed-doors meetings, charting their next moves and trying to estimate the repercussions of this new directive”, the Emirates24/7.com story added.
Reuters, which along with Bloomberg was among the first to report on the new restriction, said it was understood to be “contained in a circular issued to commercial banks” by the UAE Central Bank, which, it noted, is how such directives are typically issued.
Central bank officials could not be reached for comment, the Reuters report said.
Bubble prevention
The introduction of a 50% limit on the size of expatriate mortgages is seen as an effort on the part of Dubai’s government to prevent the development of another market “bubble”, in the wake of a dramatic plunge in property prices after the global financial crisis began in 2008.
The crash was so severe that the UAE government had to restructure billions of dollars’ worth of debt, and many projects that had already begun to be built or which were in the planning stages were delayed and in some cases still have yet to be completed.
News of the limit on expat mortgages coincided with the official unveiling of the 2013 budget by the UAE Government, which included a rise in Government spending of almost AED2bn, to AED34.1bn ($9.28bn).
It also coincided with one of Dubai’s peak tourism periods, as Europeans in particular escaped the gloomy December/early January weather in their home countries, attracted by the UAE’s warmth and sunshine as well as an annual fireworks extravaganza at Dubai’s Burj Khalifa, currently the world’s tallest building.
Separately, on Saturday, Sheikh Mohammad Bin Rashid Al Maktoum, Dubai’s ruler, unveiled plans for a new multi-billion dollar project to be called Mohammad Bin Rashid City, ArabianBusiness.com and other Gulf media outlets reported.
The new project is to be built by Dubai Holding and Emaar Properties on a site described as being located between Emirates Road, Al Khail Road and Shaikh Zayed Road, according to ArabianBusiness.
"No value has been given for the project but plans include building the world’s biggest shopping mall, a Universal family theme park and a park that is a third bigger than Hyde Park in London," the publication said.
Dubai is already home to the world’s largest shopping mall, the Dubai Mall.
