The GCC mortgage market has the potential for a tenfold rise in the next decade, according to the chairman of Sakana, an Islamic mortgage finance provider.

Speaking at the GCC Mortgage Summit 2010 in Bahrain, Reyadh Sater said that since ‘freehold started, GCC markets have been worth $66 billion’, but the potential for them to increase tenfold within the next decade existed as the region geared up for a mortgage boom within 18 to 24 months time.

Premal Patel, executive director, Veritas Events, said that this boom would be “the biggest business opportunity for regional banks going forward.”

He added: “It might be 18 months to two years before the retail mortgage boom really gets going but the banks know that they need to be planning their systems now.”

Mungo Dunnett, chairman, Mungo Dunnett Associates, UK, warned regional banks that they risked missing out to the major international banks if they did not prepare properly.

He said: “It is not just a matter of offering the lowest interest rates, and actually for many banks, that is a very bad way to approach the mortgage business. Where price is the only consideration, then only the biggest banks will win.”

Instead he suggested that the banks to focus on customer retention and service, which would enable them to charge rates ‘up to one percent higher than the lowest rate.”

This would be a better way to compete with the international banks, who are presently offering lower mortgage rates.

Dunnett said: “It is much better to have a smaller mortgage business with higher profit margins than chase business through cost cutting.”

Richard Arlove, CEO, Abax Group, reminded delegates at the forum that Gulf regulators should be working on a framework to stop any future mortgage boom ending in another bust.

He said: “We are always trying not to repeat the mistakes of the past, but do so time and time again, why not try to be different in the GCC?”