Emaar Drops as U.A.E. Said to Cap Expat Mortgages: Dubai Mover

Dubai’s real estate stocks fell, led by Emaar Properties PJSC (EMAAR) after the United Arab Emirates was said to have capped mortgages for expatriates, prompting concern a recovery in the property industry may be at risk.

Shares of the developer of the world’s tallest skyscraper dropped 1.1 percent, the first decline since Dec. 25, to 3.77 dirhams, at 10:30 a.m. in the emirate, trimming this year’s rally to 47 percent. The stock led a drop in the benchmark DFM General Index, which slipped 0.4 percent. Builder Arabtec Holding Co. (ARTC) and property companies Drake & Scull International (DSI) PJSC and Deyaar Development (DEYAAR) PJSC also fell.

The second-biggest Arab economy issued guidelines to restrict mortgages for expatriates to 50 percent of property value, according to three bankers who saw a circular issued yesterday. Home loans to U.A.E. citizens can be as much 70 percent of the value of the property for the first house and 60 percent for a second house, two of the bankers said. The bankers declined to be identified because the information isn’t public yet. There were no loan-to-value limits under the earlier policies.

The changes would be “clearly negative if implemented and could be even more so if applied retrospectively,” said Julian Bruce, Dubai-based head of institutional trading at EFG-Hermes Holding SAE. The move “might take the shine off the anticipated continuation of year-end window-dressing,” he said.

Nobody was available at the Abu Dhabi-based central bank to comment when Bloomberg News called.

Dubai’s real estate market is showing some signs of recovery after prices plunged about 65 percent over four years since the onset of the global credit crisis. Property prices in Dubai have crept up this year as the economy recovered and banks revived mortgage lending.

The recovery will help Emaar post a 16 percent gain in 2012 profit to 2.07 billion dirhams ($564 million), according to the average estimate of 11 analysts on Bloomberg. Arabtec shares have rallied 47 percent in 2012 and Deyaar’s have surged 69 percent, outpacing a 20 percent gain in the DFM General Index. (DFMGI)

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

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