Emaar Properties PJSC retreated the most in two weeks after the United Arab Emirates’ central bank 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 in Dubai dropped 1.6 percent, the steepest decline since Dec. 16, to 3.75 dirhams at the close in the emirate, trimming this year’s rally to 46 percent. The stock led a drop in the benchmark DFM General Index, which slipped 0.4 percent. Deyaar Development PJSC decreased 2.2 percent, the most since Dec. 4.
The U.A.E., where foreigners make up more than 80 percent of the population, issued guidelines to restrict mortgages for expatriates to 50 percent of property value, according to guidelines issued by the central bank yesterday and obtained by Bloomberg News. 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, according to the circular. 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.
The central bank’s new lending restrictions “will contribute to strengthening the property sector by encouraging serious buyers to invest,” a representative for Emaar said in an e-mailed response to questions today. “Emaar has recorded strong response to its property launches this year, and we expect the trend to continue in 2013.”
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. The emirate’s ruler in November announced developments including a new district that includes the world’s biggest shopping mall and a complex of five theme parks.
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. Twelve analysts recommend investors buy the shares, while four have a hold rating on the stock, data compiled by Bloomberg show.