The UAE property market is expected to continue thriving as the country pushes through with its bolstering economy.
In turn, Abu Dhabi Islamic Bank’s home-financing business is also seeing growth, Mohamed Abdel Bary, ADIB’s Chief Financial Officer said. He also expressed that just by looking at the demand, supply and activity in the market, there will still be a lot of traction coming.
According to the latest data from the Department of Municipalities and Transport, in Q1 2023, Abu Dhabi recorded 5,472 property transactions worth AED 27.9 billion. The value of deals saw a rise of more than double during the three-month period, while volume of transactions including property sales and mortgages rose by 66%. Property sales value more than tripled to AED 16.2 billion and mortgage deals were up 70% at AED 11.7 billion.
Dubai residential real estate prices rose in June, the strongest pace since 2014 with demand continued to rise. The average price for residential properties grew by 19.9% on an annual basis, up from 15.9% year on year, from the data in May 2023, consultancy CBRE said in its Dubai Residential Marker Snapshot. 42,583 real estate properties were registered in Dubai in the first half of this year. In this period, 47,187 properties worth AED 96 billion and 5,546 villas worth AED 15 billion were sold, Dubai Media Office reported.
The bolstering property market stems from the UAE’s strong economic fundamentals and continued growth momentum coming from a pandemic-driven slowdown. In 2022, the UAE economy saw a 7.9% rise, the highest in 11 years after expanding 4.4% in 2021, backed by its non-oil sector when the UAE was starting its diversification strategy.
Mr Abdel Bary said that the AED 18 billion mortgage-financing book of ADIB reflects the result of the economic prosperity of the UAE and has already exceeded the average growth of the country’s mortgage industry so far.
“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 increase in transaction activity is driven by the fact that 70% of buyers use cash and only 30% are people who require financing, which is the mortgage pool for 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.”
ADIB recently reported a 61% annual increase in Q2 net profit as revenue rose to a record. Net profit for the three months climbed to AED 1.17 billion, its highest quarterly income and revenue rose by 56%, which is equivalent to AED 2.2 billion. ADIB’s first half net income rose to 55% on an annual basis to AED 2.23 billion while revenue was up by 50% to AED 4.3 billion. Mr Abdel Bary said they expect to maintain the revenue and profit growth trajectory in the second half of the year, driven by the impending growth across all business segments and products.
“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.”