Banking and Finance

Cairo – Mubasher: MARAKEZ for Real Estate Investment, a subsidiary of Saudi Fawaz Abdulaziz Alhokair, has signed a long-term loan agreement worth EGP 395 million with Emirates NBD Egypt.

“The facility will be used to finance Mall of Arabia’s development plans, including the development of Cairo’s first in-mall IKEA store,” at a total leasable area of 22,000 square metres (sqm), according to a statement on Monday.

This move is part of the property developer’s EGP 17 billion investment plan in the most populous Arab nation, CEO of MARAKEZ, Basil Ramzy, noted.

For his part, Amr Azab, head of credit sector at Emirates NBD-Egypt highlighted that the bank aims to expand into providing credit facilities to major projects in Egypt after it has acquired BNP Paribas Egypt in 2013.

“The bank succeeded in doubling the size of its corporate loan portfolio by an average accumulative annual growth rate of 44% through focusing on funding infrastructure and urban development projects," Azab revealed.

In 2019, MARAKEZ added 40,000 square metres of leasable area through the launch of the second phase of Mall of Arabia.

In September, the mall developer and operator signed a loan agreement worth EGP 1.5 billion with Arab African International Bank (AAIB), Banque Misr, and Banque du Caire, Misr Iran Development Bank, and Arab International Bank (AIB) to finance the establishment of the first phase of Mall of Katameya.

UAE - Mubasher: The crippling property sector in the UAE is putting the state’s banks at risk of deteriorating asset quality, with real estate prices falling by 20% from their 2014 peak, according to a press release by Fitch Ratings.

Despite being mainly driven by asset quality, viability ratings (VRs) of the UAE banks, which average ‘bbb-‘, are not under immediate threat, the American agency indicated.

The New York-based rating agency has rated 17 banks in the UAE with an average issuer default ratings (IDRs) at A+.

The real estate prices within the GCC country have been declining since early 2015, “mainly due to oversupply and weaker consumer sentiment linked to lower oil prices and a less supportive economic environment,” Fitch Ratings highlighted.

Accordingly, potential buyers postponed their purchases, the agency indicated, adding that UAE dirham appreciation, geopolitical tensions, and lack of confidence in the UAE made foreigners hinder from buying.

“Some real estate projects that began before prices started falling face significant delays and loans are increasingly being restructured, mostly through term extensions, while some developers have suspended payments to contractors,” Fitch said.

Rental prices in the UAE’s property sector are not expected to improve in the near term as oversupply is likely to carry on until after Expo 2020 Dubai.

The measures recently taken by the government to bolster the sector, including a new residency law and property ownership rules for foreigners in Abu Dhabi, are unlikely to significantly impact the real estate sector in the medium term, Fitch projected.

The agency further noted that the UAE’s bank have not been fully recovered from the real estate crisis that hit Dubai in 2010.

Stage 2 and Stage 3 loans at UAE banks' are projected to rise, while Stage 3 loan ratios are likely to see more real estate restructuring in the coming 12 to 18 months, the agency said.

“A significant proportion of the %23 billion loans to Dubai government-related entities due to mature by end-2021 may be restructured again,” Fitch noted.