UAE's property market growth to continue this year, ADIB executive says

The property market in the UAE will continue to grow this year on the tailwinds of the country's economic momentum , further driving growth in Abu Dhabi Islamic Bank’s home-financing business, its chief financial officer has said. “I think we haven't reached the peak yet,” Mohamed Abdel Bary told The National in an interview. “There's still going to be a lot of traction, just looking at the demand and supply, and activity in the market.” A slowdown in property market growth may transpire next year, “but this year, I think the positive action will continue”, he said, in response to a question on whether the market is reaching bubble territory. The UAE property market has continued to recover from the coronavirus-induced slowdown on the back of government initiatives, higher oil prices and other measures to support the economy. Abu Dhabi recorded 5,472 property transactions worth Dh27.9 billion ($7.6 billion) in the first quarter of 2023, according to the latest data from the Department of Municipalities and Transport. The value of the deals more than doubled during the three-month period to the end of March while the volume of transactions, which includes property sales and mortgages, rose by 66 per cent. The value of property sales more than tripled to Dh16.2 billion while mortgage deals were up 70 per cent at Dh11.7 billion, the data shows. In Dubai, the commercial and tourism centre of the Middle East, residential real estate prices rose in June at their strongest pace since 2014, as demand continued to rise . The average price for residential units in the emirate grew by 16.9 per cent on an annual basis, up from 15.9 per cent, year on year, from the data recorded in May this year, consultancy CBRE said in its Dubai Residential Market Snapshot report on Tuesday. There were 42,583 real estate units registered in the emirate between January and June. During the period, 47,187 units worth Dh96 billion and 5,546 villas worth Dh15 billion were sold, the Dubai Media Office said last week. The booming property market reflects the UAE’s strong economic fundamentals and the continued growth momentum it has maintained since bouncing back from the pandemic-driven slowdown. The UAE <a href="https://are01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.thenationalnews.com%2Fbusiness%2Fbanking%2F2022%2F08%2F11%2Fuae-economic-recovery-to-continue-as-financial-system-remains-robust-central-bank-says%2F&data=05%7C01%7CSKhan%40thenationalnews.com%7C4a130c30c4644f7f779b08db8f5005b3%7Ce52b6fadc5234ad692ce73ed77e9b253%7C0%7C0%7C638261346075498753%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=wbUUGqxxjsIzb0wX2rtGB%2Fa9beSoEtIyKQt8JfeIbWw%3D&reserved=0">economy grew by 7.9 per cent last year, the highest in 11 years, after expanding 4.4 per cent in 2021, supported by its non-oil sector at a time when the country is advancing its<a href="https://are01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.thenationalnews.com%2Fuae%2F2023%2F06%2F20%2Fsheikh-mohammed-bin-rashid-congratulates-uae-president-on-global-achievements%2F&data=05%7C01%7CSKhan%40thenationalnews.com%7C4a130c30c4644f7f779b08db8f5005b3%7Ce52b6fadc5234ad692ce73ed77e9b253%7C0%7C0%7C638261346075498753%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=4hc15bOC5K%2BBK6jZa9tIH7BOHVrvSheZqptwpUupnu4%3D&reserved=0"> diversification strategy . Mr Abdel Bary said the Dh18 billion mortgage-financing book of ADIB, one of the largest home-financing portfolios in the country, reflects the tailwind from the economic momentum and has already outpaced the average growth of the country's mortgage industry so far this year. “We are growing very consistently”, he said, adding the lender recorded about 2 per cent growth in the first six months of the year. “In absolute terms, it might not look big but … the official numbers from the Central Bank will dictate that the [home] financing market in the UAE has gone up 1 per cent year to date and if you are adding 2 per cent, it means you are actually going better than the market.” The rise in transaction activity in the property market is driven by the fact that 70 per cent of buyers use cash and only 30 per cent are people who require financing, which is the mortgage pool for the financial institutions to participate in, Mr Abdel Bary said. “We have a big share of that [pool] because of our strong alliances with the major developers. That's where we are playing. We don't go individually but we partner with … big entities in Dubai and Abu Dhabi and we offer unique, home-finance solutions for their clients.” On Thursday, ADIB , the biggest Sharia-compliant lender in the emirate by assets, reported a 61 per cent annual increase in second-quarter net profit as revenue surged to a record. Net profit attributable for the three months to the end of June climbed to Dh1.17 billion, its highest quarterly income, the lender said on Thursday in a filing to the Abu Dhabi Securities Exchange, where its shares are traded. Revenue during the reporting period rose by 56 per cent to Dh2.2 billion. The lender's first-half net income jumped 55 per cent on an annual basis to Dh2.23 billion while revenue jumped by 50 per cent to Dh4.3 billion. The lender expects to maintain the revenue and profit growth trajectory in the second half of the year, driven by growth across all business segments and products, Mr Abdel Bary said. “The good thing about ADIB’s business model is that it is not a volatile model. The moment you build volume, and you build your portfolio, it gives you the natural tailwind, which runs with you for a period of time,” he said. “We are very comfortable that this positive trajectory will also continue in the second half.”

UAE's property market growth to continue this year, ADIB executive says

Booming real estate sector has not 'reached the peak yet' and will further drive the bank's home-financing business this year