Banks wary of financing Abu Dhabi real estate projects

Dubai: Abu Dhabi banks are cautious about financing real estate projects amid concern the property market is slowing, an executive from the New York-based real estate developer The Related Companies said.
“Everyone is far more cautious about underwriting anything today,” Ken Himmel, chief executive officer of Related Urban, a subsidiary of Related Companies, said in an interview with Bloomberg TV. “I don’t know how any commercial bank could rationally underwrite another project in Abu Dhabi, given the dynamics of the market, given what’s going on with supply and demand.”
Oil prices have declined about 50 per cent in the past two years prompting Abu Dhabi to take measures to bridge a budget deficit, including withdrawing deposits from local banks. The emirate, holder of about 6 per cent of global oil reserves, is also combining two of its largest banks. Abu Dhabi’s economic growth will slow to 1.5 per cent this year, from 4.3 per cent in 2015, according to the International Monetary Fund (IMF) in May.
Gulf Related, a Related Companies joint venture with Gulf Capital, is building a $1 billion shopping mall that will house the Gulf’s first Macy’s Inc. department store. Himmel expects the mall to open in August 2018 instead of March.
Al Maryah Central will also include Bloomingdale’s, the Toy Store and British upmarket grocer Waitrose. Gulf Related has leased about 50 per cent of the available space in the 2.8 million square feet shopping center, the company said in a statement on Monday.
Gulf Related secured a $626 million loan from Abu Dhabi Commercial Bank a year ago to help finance the mall, with the rest of the money coming from the two companies and other investors.