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Business Banking & Investment UAE property crash bottoming out -MS
Jun 21, 2009 at 04:00 View count (83) | | | 1 | |

Morgan Stanley says the UAE's property crash is showing signs of bottoming out. Photograph: Getty Images
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International investors will begin buying up distressed UAE property-backed assets by the end of 2009, Morgan Stanley’s regional chief said in remarks published on Sunday, a sign the Gulf state’s property crash is beginning to bottom out.

“Once you see distressed funds coming to the market and picking up whole portfolios from developers and banks then you know we are on the mend,” Georges Makhoul, head of the U.S. bank’s Middle Eastern and North African operations, told UAE daily the National.

“That is the way bubbles clear themselves. I am waiting to see that.”

UAE property prices have slumped more than 50 percent from their mid-2008 highs in the wake of the global financial crisis, leading to rising loan defaults. Analysts have forecast prices will likely fall a further 20 percent by the end of 2009.

UAE banks are heavily exposed to the real estate market and could lose as much as $6.54 billion - close to half their overall exposure to mortgages - as a result of the slump in the property market, the National reported, citing Credit Suisse research.

Makhoul said the purchase of distressed assets would free up capital and help boost lending.

“Once you can establish a price where someone is willing to take over assets, you create a market and people trade that stuff,” he was quoted as saying.

“There will be good opportunities for people to make returns on that and to clear the remnants of the burst.”

Maktoob Business