The idea of undergoing the procedure was 'mentally and emotionally draining', the longtime Abu Dhabi resident said, but doctors eased her worries
Key sources of private debt include public and private pension funds, foundations, endowments and insurance companies. There has been a major growth in the size of the global private debt market (debt not issued by commercial banks) over the past decade. It has increased by 400 per cent since 2006 to around $638 billion as at the end of 2017, estimates JLL.
Despite continued growth in the size of the global private debt market, the Middle East has historically lagged behind, relying on commercial banks as the primary lending source for real estate developers and investors.
"Developers and investors continue to seek flexible debt terms for the development and acquisition of real estate assets," said Gaurav Shivpuri, head of capital markets for JLL in Mena. "With historical limitation of terms on lending from commercial banks, it is not unreasonable to assume that up to 10 per cent of the total real estate debt market could come from private debt providers within the next decade. Collective investment vehicles will also emerge as debt providers, as investors see debt as an attractive capital stack for taking real estate exposure, especially given the interest rate cycle we are entering in" he added.
Development financing is generally easier for large developers with established track records. Besides debt, since the advent of the freehold law in Dubai in 2006, developers in the UAE have used off-plan sales as an alternative means to fund their projects.
"Banks lend to companies based on their track record. There are developers who do not have a problem in securing project finance - although this is more of a contractor's issue, rather than developer's. However, there might be certain developers who might find it difficult to secure loans or raise debt due to a lack of credibility. As a developer, we do not see this an issue - if you have a prudent business policy. In fact, you might not need bank finance if the project planning, marketing, sales and construction schedules are done properly. Banks usually exercise caution in lending when they receive a loan application from a high-risk client," observes Atif Rahman, director and partner, Danube Properties.
These new sources of finance are likely to benefit tier 2 and 3 developers who currently find it difficult to obtain debt facilities from commercial banks without providing a high level of collateral as security and corporate/personal guarantees, and more flexible loan terms for all.
"Commercial banks have historically been reluctant to lend to second tier developers but that is now slowly changing as banks become increasingly comfortable with asset-backed lending and construction finance is a way to do that. Central bank statistics indicate that lending to this sector has started to grow again at high single digit rates again, following a period of sluggishness for a couple of years. As far as private sector debt is concerned, it is increasingly likely [especially after the passage of the Dubai mortgage law] which allows for recourse directly to the underlying asset and creates a direct locus standi," says Hussain Alladin, head of IR and research at Global Capital Partners.
The Middle East has historically seen less use of debt than the more mature overseas markets, primarily due to cultural beliefs and due to challenges related to lack of mortgage and bankruptcy laws. Steady improvements in market transparency and regulations are providing a more supportive environment for private funding sources to participate.
A total of $81 billion (Dh300 billion) of bank debt was lent to the real estate and construction sector in the UAE in 2017, with banks in Saudi Arabia lending $55 billion to the real estate sector alone, says JLL.
JLL estimates that around 10 per cent of the $51 billion of private debt that was raised outside of the three main global markets of the US, Europe and Asia Pacific in 2017 could have been lent to the real estate sector in the GCC. This would equate to around $5.2 billion, which is just 3.8 per cent of the $136 billion of bank lending to real estate in UAE and Saudi Arabia.
- deepthi@khaleejtimes.com
The idea of undergoing the procedure was 'mentally and emotionally draining', the longtime Abu Dhabi resident said, but doctors eased her worries
The ruins in the middle of Pantabangan Dam in Nueva Ecija province are a tourist draw, even as the region swelters in extreme heat
This covers traffic violations incurred until 2023
Friday's polling will be held for 88 of the total 543 seats in the lower house or Lok Sabha of Parliament with 160 million people eligible to vote
The bank’s liquidity profile remains strong as evidenced by an advances to stable resources ratio of 76% and an eligible liquid asset ratio of 16%, both comfortably above regulatory thresholds
Binghatti Hills is set to become the most expansive development within the community
Temperature will reach up to 36ºC and 33ºC in Abu Dhabi and Dubai, respectively
Facing the reality of such a health challenge at the age of 32 was unimaginable for her