Abu Dhabi, capital of the United Arab Emirates, has launched a state-backed mortgage lender to help finance the purchases of a slew of properties expected to come to the market in the future.

Abu Dhabi Finance has an initial capital of Dh500m ($136m, £89m, €106m) paid by its shareholders, which include Mubadala, the Gulf state’s sovereign investment fund, Abu Dhabi Commercial Bank and three big developers.

The decision to establish the mortgage company was made a year ago because of the “huge demand” for home financing in Abu Dhabi and was not related to a recent drop in real estate prices, Ali Eid al-Mehairi, company chairman, told the FT.

Mortgage companies are not allowed to take retail deposits, but Mr al-Mehairi said that while Abu Dhabi Finance would not disclose its financial strategy, the company would soon seek to raise more capital from “local sources”. He declined to elaborate.

Financial Times, The Times