The New Year will bring little cheer to house hunters who, as they ushered in 2013, will have learnt they may need to double their deposits as a result of a new mortgage lending cap.
Regulation can move like a pendulum - overcorrecting weaknesses in a market and creating further structural weakness in the process. The enforced cap on loan to value ratios threatens to do just this, analysts observe.
It emerged this week that expatriates will only be able to borrow up to 50 per cent for their first home purchase and 40 per cent for subsequent purchases. At the same time financing for Emiratis was limited to 70 per cent for the first home and 60 per cent for further properties.
The move will hit the very people it aims to protect - home buyers saving for deposits to buy houses they want to live in.
The aim may have been to protect the market from the excesses and exuberances of the past. But it is unlikely to achieve that outcome.
A note from Bank of America Merrill Lynch to clients this week makes this point, warning that loan to value limits are likely to affect end-user affordability instead of curbing speculation.
The New Year's Eve news would have landed like a bombshell for anyone in the process of buying a home and to a lesser extent anyone even thinking about it.
For the investor buying an average three-bedroom villa in Dubai for Dh2.7 million (US$735,094) this change would mean finding additional funds of more than Dh400,000.
Many mortgage-financed purchases will simply fall through - hitting prices and derailing a recovery that was beginning to boost consumer confidence in the wider economy.
VTB Capital said that Dubai property transactions could fall by as much as 60 per cent with prices dropping 20 per cent if the guidelines were implemented in full.
While it is sensible for the regulator to prioritise policy aimed at curbing the sort of rampant speculation that led to one of the most dramatic property crashes in the world four years ago, the collapse of house prices in 2008 was not about loan to value ratios.
It was about an off-plan funding model that permitted multiple house purchases only on the strength of a deposit - even before a mortgage had been secured - and the onward flipping of such purchases.
That created a 42 per cent increase in prices in a single three-month period at the start of that year. The system worked in much the same way as a pyramid scheme.
A lack of due diligence on the part of banks and developers, the absence of credit checks on investors and a media that failed to point out that the property speculation emperor looked rather underdressed, perfected the storm.
Four years later, many analysts have been dismayed by the trumpeting of relaunched projects by some developers and the eager phone calls to journalists alerting them to queues forming outside their offices with every new launch. Here we go again, we all thought. It was only a matter of time before the bragging brought a response from the regulator. But end users, not speculators, will be paying the price. It is an extension of a narrative that has also seen end users underwrite the losses incurred by banks from dealing with speculators who skipped the country after the last crash. While interest rates fell, many mortgage customers were locked into paying rates of between 7 and 10 per cent - even when they had signed up to products sold as tracking either the Fed Funds rate or Eibor.
Many are still unable to tap more attractive deals, trapped by penalty clauses that will be triggered by a transfer of a mortgage to a rival lender. However, these practices have not yet been satisfactorily addressed by the regulator.
The new mortgage caps are part of a broader set of reforms aimed at improving the asset quality of the banking system where bad loan provisions had until recently refused to abate.
As local banks' exposure to retail mortgages is less than 5 per cent, this move will hardly improve their balance sheets.
Instead, ratings agencies are much more concerned about the level of lending among and between government-related entities, particularly in Dubai, corporate restructuring in general and the different ways banks currently account for structured loans.
Ultimately, the fundamental drag on the banking system has been the assumption that asset values (largely property-related assets) would recover quicker than they have.
"This lagging phenomenon is a key to the negative outlooks for most Dubai-based banks, despite strong recoveries in the core sectors of the economy," said Moody's Investor Service in a July 16 report on non-performing loans in the UAE banking sector.
This points to another question raised by the plan to cap loan to value ratios.
Now that asset values are finally showing signs of recovery, any move that hurts property prices could by extension hurt the value of assets that indebted companies need to sell to repay their lenders.
So this could have the unintended consequence of weakening asset quality underpinning bank lending - not improving it.
Yet beyond all of this is a more basic problem that has nothing to do with the detail of the new guidelines but is rather about the message it sends to investors and the risk premium they attach to buying property.
If there is no certainty over the rules of the game, where the goalposts are likely to end up, or which way the pitch is sloping, it should not come as a surprise if some investors decide not to play at all.
scronin@thenational.ae
Clarification: According to the UAE Central Bank, the new limit on mortgage borrowing for expatriates is 50 per cent for the first property and 40 per cent for subsequent properties, not 60 per cent and 50 per cent as originally stated in this article. This story was amended on January 6 2013.
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Representing%20UAE%20overseas
%3Cp%3E%0DIf%20Catherine%20Richards%20debuts%20for%20Wales%20in%20the%20Six%20Nations%2C%20she%20will%20be%20the%20latest%20to%20have%20made%20it%20from%20the%20UAE%20to%20the%20top%20tier%20of%20the%20international%20game%20in%20the%20oval%20ball%20codes.%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3ESeren%20Gough-Walters%20(Wales%20rugby%20league)%3C%2Fstrong%3E%0D%3Cbr%3EBorn%20in%20Dubai%2C%20raised%20in%20Sharjah%2C%20and%20once%20an%20immigration%20officer%20at%20the%20British%20Embassy%20in%20Abu%20Dhabi%2C%20she%20debuted%20for%20Wales%20in%20rugby%20league%20in%202021.%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3ESophie%20Shams%20(England%20sevens)%3C%2Fstrong%3E%0D%3Cbr%3EWith%20an%20Emirati%20father%20and%20English%20mother%2C%20Shams%20excelled%20at%20rugby%20at%20school%20in%20Dubai%2C%20and%20went%20on%20to%20represent%20England%20on%20the%20sevens%20circuit.%20%0D%3Cbr%3E%20%0D%3Cbr%3E%3Cstrong%3EFiona%20Reidy%20(Ireland)%3C%2Fstrong%3E%0D%3Cbr%3EMade%20her%20Test%20rugby%20bow%20for%20Ireland%20against%20England%20in%202015%2C%20having%20played%20for%20four%20years%20in%20the%20capital%20with%20Abu%20Dhabi%20Harlequins%20previously.%0D%3C%2Fp%3E%0A
The specs
Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)
Company%20Profile
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3ENadeera%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Abu%20Dhabi%2C%20UAE%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3ERabih%20El%20Chaar%20and%20Reem%20Khattar%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3ECleanTech%3Cbr%3E%3Cstrong%3ETotal%20funding%3A%3C%2Fstrong%3E%20About%20%241%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EHope%20Ventures%2C%20Rasameel%20Investments%20and%20support%20from%20accelerator%20programmes%20%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%2012%3C%2Fp%3E%0A
Veere di Wedding
Dir: Shashanka Ghosh
Starring: Kareena Kapoo-Khan, Sonam Kapoor, Swara Bhaskar and Shikha Talsania
Verdict: 4 Stars
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Previous men's records
- 2:01:39: Eliud Kipchoge (KEN) on 16/9/19 in Berlin
- 2:02:57: Dennis Kimetto (KEN) on 28/09/2014 in Berlin
- 2:03:23: Wilson Kipsang (KEN) on 29/09/2013 in Berlin
- 2:03:38: Patrick Makau (KEN) on 25/09/2011 in Berlin
- 2:03:59: Haile Gebreselassie (ETH) on 28/09/2008 in Berlin
- 2:04:26: Haile Gebreselassie (ETH) on 30/09/2007 in Berlin
- 2:04:55: Paul Tergat (KEN) on 28/09/2003 in Berlin
- 2:05:38: Khalid Khannouchi (USA) 14/04/2002 in London
- 2:05:42: Khalid Khannouchi (USA) 24/10/1999 in Chicago
- 2:06:05: Ronaldo da Costa (BRA) 20/09/1998 in Berlin
The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
On sale: now
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EKinetic%207%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202018%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Rick%20Parish%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Abu%20Dhabi%2C%20UAE%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Clean%20cooking%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%2410%20million%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Self-funded%3C%2Fp%3E%0A
THE SPECS
Engine: Four-cylinder 2.5-litre
Transmission: Seven-speed auto
Power: 165hp
Torque: 241Nm
Price: Dh99,900 to Dh134,000
On sale: now
Australia men's Test cricket fixtures 2021/22
One-off Test v Afghanistan:
Nov 27-Dec 1: Blundstone Arena, Hobart
The Ashes v England:
Dec 8-12: 1st Test, Gabba, Brisbane
Dec 16-20: 2nd Test, Adelaide Oval, Adelaide (day/night)
Dec 26-30: 3rd Test, Melbourne Cricket Ground, Melbourne
Jan 5-9, 2022: 4th Test, Sydney Cricket Ground, Sydney
Jan 14-18: 5th Test, Optus Stadium, Perth
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Indoor cricket in a nutshell
Indoor Cricket World Cup – Sep 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
What to watch out for:
Algae, waste coffee grounds and orange peels will be used in the pavilion's walls and gangways
The hulls of three ships will be used for the roof
The hulls will painted to make the largest Italian tricolour in the country’s history
Several pillars more than 20 metres high will support the structure
Roughly 15 tonnes of steel will be used
Famous left-handers
- Marie Curie
- Jimi Hendrix
- Leonardo Di Vinci
- David Bowie
- Paul McCartney
- Albert Einstein
- Jack the Ripper
- Barack Obama
- Helen Keller
- Joan of Arc
Turning%20waste%20into%20fuel
%3Cp%3EAverage%20amount%20of%20biofuel%20produced%20at%20DIC%20factory%20every%20month%3A%20%3Cstrong%3EApproximately%20106%2C000%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EAmount%20of%20biofuel%20produced%20from%201%20litre%20of%20used%20cooking%20oil%3A%20%3Cstrong%3E920ml%20(92%25)%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3ETime%20required%20for%20one%20full%20cycle%20of%20production%20from%20used%20cooking%20oil%20to%20biofuel%3A%20%3Cstrong%3EOne%20day%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EEnergy%20requirements%20for%20one%20cycle%20of%20production%20from%201%2C000%20litres%20of%20used%20cooking%20oil%3A%3Cbr%3E%3Cstrong%3E%E2%96%AA%20Electricity%20-%201.1904%20units%3Cbr%3E%E2%96%AA%20Water-%2031%20litres%3Cbr%3E%E2%96%AA%20Diesel%20%E2%80%93%2026.275%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The%20US%20Congress%2C%20explained
%3Cp%3E-%20US%20Congress%20is%20divided%20into%20two%20chambers%3A%20the%20House%20of%20Representatives%20and%20Senate%3C%2Fp%3E%0A%3Cp%3E-%20435%20members%20make%20up%20the%20House%2C%20and%20100%20in%20the%20Senate%3C%2Fp%3E%0A%3Cp%3E-%20A%20party%20needs%20control%20of%20218%20seats%20to%20have%20a%20majority%20in%20the%20House%3C%2Fp%3E%0A%3Cp%3E-%20In%20the%20Senate%2C%20a%20party%20needs%20to%20hold%2051%20seats%20for%20control%3C%2Fp%3E%0A%3Cp%3E-%20In%20the%20event%20of%20a%2050-50%20split%2C%20the%20vice%20president's%20party%20retains%20power%20in%20the%20Senate%3C%2Fp%3E%0A
THE SPECS
Engine: 3.6-litre V6
Transmission: nine-speed automatic
Power: 310hp
Torque: 366Nm
Price: Dh200,000
Results
5.30pm: Maiden (TB) Dh82,500 (Dirt) 1,600m, Winner: Panadol, Mickael Barzalona (jockey), Salem bin Ghadayer (trainer)
6.05pm: Maiden (TB) Dh82,500 (Turf) 1,400m, Winner: Mayehaab, Adrie de Vries, Fawzi Nass
6.40pm: Handicap (TB) Dh85,000 (D) 1,600m, Winner: Monoski, Mickael Barzalona, Salem bin Ghadayer
7.15pm: Handicap (TB) Dh102,500 (T) 1,800m, Winner: Eastern World, Royston Ffrench, Charlie Appleby
7.50pm: Handicap (TB) Dh92,500 (D) 1,200m, Winner: Madkal, Adrie de Vries, Fawzi Nass
8.25pm: Handicap (TB) Dh92,500 (T) 1,200m, Winner: Taneen, Dane O’Neill, Musabah Al Muhairi
Teri%20Baaton%20Mein%20Aisa%20Uljha%20Jiya
%3Cp%3E%3Cstrong%3EDirectors%3A%3C%2Fstrong%3E%20Amit%20Joshi%20and%20Aradhana%20Sah%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECast%3A%3C%2Fstrong%3E%20Shahid%20Kapoor%2C%20Kriti%20Sanon%2C%20Dharmendra%2C%20Dimple%20Kapadia%2C%20Rakesh%20Bedi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
