In the U.S. our housing market has been pretty bad over the past few years. But take heart America: at least you’re not Dubai. Sure it hasn’t had any foreclosures up to now, but that’s only because the laws there have made it difficult for banks to seize property. In fact, reading a report today from Bloomberg, things are far worse for housing in Dubai, and a tidal wave of foreclosures may be set to break.
Bloomberg explains:
Dubai’s housing rout sent prices down 52 percent in the past year, prompting some homeowners to abandon their cars and mortgage payments and flee the country. Not one received a foreclosure notice.
Until now.
Barclays Plc won the sheikdom’s first foreclosure cases in court, clearing the way for lenders holding about $16 billion of Dubai home loans to take action when borrowers don’t pay. Islamic lender Tamweel PJSC, the emirate’s biggest mortgage bank, has several of its own foreclosure claims pending and estimates about 3 percent of its mortgages are in default.
That situation looks a great deal worse than what the U.S. has been dealing with after the housing bubble popped. And it should be: speculation fueled Dubai’s housing bubble to an even greater extent than it did in the U.S.
But even though Moodys expects around 12% of residential mortgages in Dubai to default by the first quarter of 2011, that’s only out of 27,000 total mortgages. That amounts to a mere 3,240 foreclosures. So as bad as this news sounds, given how small those numbers are, the banks involved may have a relatively easy time cleaning up the mess, compared to the millions of foreclosures in the U.S. To put that number in perspective, Palm Beach County, Florida had more foreclosure than that (3,321) in November 2009 alone.
