There are clear signs that the credit crunch has finally reached these shores. The price of Brent oil fell below US$50 (Dh183.70) a barrel yesterday, hit by a worldwide lack of demand and a slump in economic activity. While Abu Dhabi at least may be immune to any downturn, other parts of the Emirates rely on international loans and economic activity. As credit dries up, so too will demand for properties, say analysts, causing job losses and cancellations of projects.
Amlak, the country's largest home lender, is suspending new loan applications until further notice, while other home lenders are also freezing their credit policies. Lenders are demanding larger down payments - sometimes as high as 50 per cent of the purchase price - effectively putting borrowing out of reach of many potential purchasers. Those most at risk are people who have already put down a deposit on a property without yet arranging the loan.
"I can fully understand the reasons why banks are reluctant to lend speculatively in the real estate sector," said Vincent Easton, the sales director at Sherwoods Independent Property Consultants. "However, if Dubai wants to secure its real estate market, it has to ensure that finance is available for the end user." To make matters worse, the cost of borrowing has soared. Three months ago, home loans were routinely offered with an annual interest rate of 7 per cent. That figure is now closer to 9 per cent, if it is available at all. It is not just the property sector that is affected. HSBC Bank is just one of several banks cutting consumer lending, making car loans more difficult to access and raising the salary limits for potential borrowers. Interest rates have also been raised. While the bank was offering loans at 4.5 per cent for new cars in August, that rate is now 5 per cent. Rather than lending, banks are focusing instead on attracting depositors. HSBC is sending text messages to selected customers, offering preferential rates of 5 per cent interest for those willing to leave money in accounts for up to three months.
Most analysts expect the credit crisis to continue for a couple of months at least, but unless some of the Government's Dh120 billion injection of emergency funds for banks - not all of which has been disbursed - filters down to customers and they resume spending, the likelihood is of recession here too.
rwright@thenational.ae
What it means to be a conservationist
Who is Enric Sala?
Enric Sala is an expert on marine conservation and is currently the National Geographic Society's Explorer-in-Residence. His love of the sea started with his childhood in Spain, inspired by the example of the legendary diver Jacques Cousteau. He has been a university professor of Oceanography in the US, as well as working at the Spanish National Council for Scientific Research and is a member of the World Economic Forum’s Global Future Council on Biodiversity and the Bio-Economy. He has dedicated his life to protecting life in the oceans. Enric describes himself as a flexitarian who only eats meat occasionally.
What is biodiversity?
According to the United Nations Environment Programme, all life on earth – including in its forests and oceans – forms a “rich tapestry of interconnecting and interdependent forces”. Biodiversity on earth today is the product of four billion years of evolution and consists of many millions of distinct biological species. The term ‘biodiversity’ is relatively new, popularised since the 1980s and coinciding with an understanding of the growing threats to the natural world including habitat loss, pollution and climate change. The loss of biodiversity itself is dangerous because it contributes to clean, consistent water flows, food security, protection from floods and storms and a stable climate. The natural world can be an ally in combating global climate change but to do so it must be protected. Nations are working to achieve this, including setting targets to be reached by 2020 for the protection of the natural state of 17 per cent of the land and 10 per cent of the oceans. However, these are well short of what is needed, according to experts, with half the land needed to be in a natural state to help avert disaster.
SERIES INFO
Afghanistan v Zimbabwe, Abu Dhabi Sunshine Series
All matches at the Zayed Cricket Stadium, Abu Dhabi
Test series
1st Test: Zimbabwe beat Afghanistan by 10 wickets
2nd Test: Wednesday, 10 March – Sunday, 14 March
Play starts at 9.30am
T20 series
1st T20I: Wednesday, 17 March
2nd T20I: Friday, 19 March
3rd T20I: Saturday, 20 March
TV
Supporters in the UAE can watch the matches on the Rabbithole channel on YouTube
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