ABU DHABI, Nov. 22 (Xinhua) -- The United Arab Emirates (UAE) announced on Saturday that its finance ministry has started the official procedures to merge the country's two leading mortgage lenders, local Emirates News Agency reported.

    The mortgage lenders Amlak Finance and Tamweel will be merged under the government-owned UAE Real Estate Bank to form the country's largest real estate finance institution, according to the report.

    "The new entity will provide a strong growth platform for real estate financing in the UAE, and will serve as the cornerstone of the mortgage market, which has significant growth potential," an official with the finance ministry was quoted as saying.

    The UAE property market, which has seen a boom since the government allowed foreign investors to buy property on a freehold basis in 2002, is likely to face a downturn this year.

    A HSBC report said earlier this month that property prices fell in October by four percent in Dubai and five percent in Abu Dhabi, which is the first ever since 2002.

    Amlak Finance is currently the largest publicly held Islamic finance company in the UAE, whose assets stood at 14.2 billion dirhams (3.87 billion U.S. dollars) in the first half of 2008.

    It announced Wednesday that it was temporarily halting new home loans as the rolling effects of the global credit crunch on Dubai's previously buoyant real estate sector continued to emerge.

    Tamweel, also a leading provider of real estate financing in the UAE, owns assets worth 10.8 billion dirhams (2.94 billion dollars) in the first half of 2008. Enditem