ADF sees 60% increase in lending to SMEs

22 April 2015

Abu Dhabi Finance (ADF), one of the UAE’s premier providers of innovative, flexible and transparent residential and commercial mortgage products to the local market, has seen a 60 per cent increase in its commercial mortgage business in Q1 2015 compared to Q1 2014. This growth has come from an increase in the number of ‘end users’ or SMEs buying commercial premises. ADF’s average commercial loan size is now AED 1.8m indicating an increased appetite amongst the often-neglected small business sector for commercial mortgages. 

Historically SMEs have faced challenges when it comes to obtaining finance for commercial units, not least because the commercial mortgage space, in comparison to the residential mortgage space, is under-served by lenders. But with commercial rents for prime office spaces increasing and interest rates remaining relatively low, commercial mortgages are becoming increasingly attractive for SMEs. For many small businesses, buying office space instead of leasing presents a more attractive proposition, particularly with a fixed term mortgage, as it protects against rent hikes, provides forward visibility and flexibility for balance sheets and is ultimately an investment. 

For several years ADF has led the market in commercial mortgage finance as one of the first lenders to make loans available to SMEs over a 15 year term (whereas most lenders historically have only lent over a maximum term of 5 years). In the last year ADF has seen a large increase in the demand for its “Anchor” Commercial Mortgage which is one of the most competitive products on the market in terms of fixed interest rates, Loan to Value, and mortgage terms. 

It is widely recognised that SMEs are the engines for economic growth and a vital contributor to the UAE’s non-oil GDP, so it is an encouraging sign that the commercial property market is beginning to open up and mature, with more and more SMEs buying property. It is also positive that SMEs are recognising the value in the forward visibility and stability that the right commercial mortgage can provide. Chief Executive Officer of ADF, Chris Taylor