The Qatar Central Bank financing controls on realty to lessen stress, augur well for REITs

The Qatar Central Bank financing controls on realty to lessen stress, augur well for REITs

The Qatar Central Bank's (QCB) move to tighten the credit to the real estate sector is expected to not only lessen the stress in the banking industry but also augur well for the proposed real estate investment trusts (REITs). "The (commercial banks') exposure towards the (real estate) sector has been a key stress factor. The latest salvo will certainly address the imbalance," an analyst with a leading investment house said, viewing the move as “positive” by market experts. Finding that realty is one of the problematic areas in the country's non-performing loans; he said credit concentration has remained a "cause of concern", a phenomenon common across the banks in the Gulf Co-operation Council. Although the banking sector’s asset quality is currently good and capital buffers remain strong, banks are exposed to "significant" lending concentrations (in the real estate), global credit rating agency Capital Intelligence had said. The central bank had last week put in place new real estate financing controls to include determining the maximum -loan-to-value (LTV) and tenure- for mortgages within Qatar, as part of measures to bulwark the banking sector. Branches and overseas subsidiaries of Qatari banks should comply with the instructions and conditions of the host regulatory