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Amlak Finance to provide mortgages for Serenia Residences in Dubai’s Palm Jumeirah

Amlak Finance has struck a deal with Palma Development to offer financing at a Dh1.5 billion housing project on the Palm Jumeirah.

The Islamic home finance company yesterday said it would provide 25-year mortgages to buyers of the Serenia Residences, which has 250 apartments, on the Palm Jumeirah Crescent.

Amlak will levy fixed interest rates of between 3.7 and 4.9 per cent for the first three years.

The deal comes as Amlak seeks to boost its loan portfolio after resuming trading on the Dubai Financial Market in June, signalling a return to lending. Amlak, of which Emaar Properties owns 45 per cent, had faced collapse as the housing bust in 2009 came close to wiping out the value of its property portfolio.

A mismatch between the short-term bank financing Amlak relied on, typically renewed on an annual basis, and its long-term mortgage liabilities left it vulnerable to short-term changes in banks’ willingness to lend.

When the collapse of Lehman Brothers in September 2008 precipitated the biggest financial crisis in recent memory, Amlak’s creditors proved unwilling to roll over their funding arrangements with the lender.

The subsequent collapse of property prices in Dubai, in which houses lost up to half of their value on average, meant that Amlak took a major hit to its portfolio of mortgage loans and properties.

Amlak shares were suspended in November 2008 owing to fears of a shareholder exodus, and they resumed trading only in June this year.

The stock was unchanged yesterday and closed at Dh2.04.

After resuming trading in June, the shares surged from 75 fils apiece to as high as Dh2.92 on July 1.

In August, Amlak reported an 87 per cent decline in second-quarter profits, driven by a fall in revenues.

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