Khaled Al Kamda

Tamweel has burst into the Dubai home finance market signing up $30 million worth of mortgage business in its first month and handling 9,000 enquiries and 3,000 odd applications.

With no salary transfer requirement, fixed as well as floating rates, no life insurance, up to 25 years to pay, and a decision within five days, this is a highly competitive offering.

'We have four mortgage products for the market and are working on more,' says Chairman Khaled Al Kamda. 'It has been a very strong start and we are working hard to make sure that we can meet our clients' expectations.

'The most popular mortgage is our 25-year lease-to-own option. This keeps the monthly mortgage payment as low as possible for family budgeting. It works out at very much the same level as a rental payment for a comparable property.'

Mr. Al Kamda is happy that his product offering is sufficiently unique in the Dubai marketplace at present to win business away from competitors. But he is not complacent, and is looking at ways of keep rates down in the future.

'As the Dubai capital markets develop then we will have greater access to local funds which will be cheaper than international markets for us. We should be able to pass that benefit on to our clients.

'In particular, we are looking at securitization of our mortgage products to raise funds, and issuing bonds in the local market. An IPO is another option but it is just one of many open to us.'

In the first month Tamweel - which is a joint venture between Istithmar, the investment arm of the Dubai Ports, Customs and Free Zone Corporation, and the Dubai Islamic Bank - landed a wide range of clients: 14% UAE nationals, 21% Arabs, 19% Europeans, 17% South East Asians, Americans 5%, Far Easterners 2% and others 20%.

'We estimate that the home finance market will be worth $4 billion over the next five years,' says Mr. Kamda who agrees that the UAE is still mainly a market for cash investors.

'It used to be the case that all the property investment in the UAE came from rich families. But increasingly we see more and more senior and middle executives choosing to make their home in Dubai. This is the market we are serving.'

At present Tamweel offers 6.5% floating rate mortgages and fixed rates vary from 6.4% to 8.75% depending on the length of tenure from five to 15 years. With rates likely to go up in the US next year is this a good time to fix a rate?

Mr. Kamda agrees that the introduction of lower cost finance from local capital markets will help to keep rates down. However, Tamweel's Chairman is mindful that international markets will still be critical to setting rates in the UAE. 'But it is possible local rates will stay the same,' he adds.