Sunday, June 24, 2007

Banks should be facilitators rather than competitors in realty

Real Estate developers have requested the banks to leave the task of real estate development to them, and to focus on playing the role of a facilitator, rather than a rival.

A study covering the UAE real estate market during the past five years revealed that investment firms and banks have began competing with development companies.

The study by the Al Tharaa Investment Group states that once the banks become the competitors of the developers, they create very difficult conditions on developers who actually desire to seek the services of banks. The study says that permitting the banks to enter into real estate market is an "injustice" towards developers that might cause huge losses to a large number of developers. This could also result in a fall in growth of the real estate sector.

Without finance from banks for developers, and the property investors, the boom in property market that has been witnessed by UAE would have been impossible. The study pointed out that the bank is the most cherished partner for the developers.

However, the Banks view the realty sector to be the most flourishing one, and they have been allowed a certain percentage of investment in the real estate.

The CEO of the Dubai Real Estate Company, Obaid Al Salami, is of the opinion that the firms working in the real estate development should not involve themselves in financing, and hence the banks should leave the real estate development towards those specialized in it.

The Executive Director of New Dubai Real Estate Company, Ahmed Ali Al Abdullah said "The role of banks in the society and in the economy is a much bigger one than the real estate projects," but he however added that, it is good for banks to enter the property sector in a manner that does not harm the real estate companies.

Economist Ahmed Al Samarraie has said that the competition is open as long as it is in a transparent framework, involving economic freedom and equality.

Sultan Thani, the Director General of Dubai Land and Property department said that they do not intend to stop the banks from involving in the real estate sector.

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