Confidence 'returning to the UAE'
Dubai, January 24, 2010
Confidence is fast returning to the UAE with the Abu Dhabi-Dubai duo leading way in the region, said a report by Chesterton, the international property agency, citing several economic indicators.
The Chesterton report said that the UAE Dirham had fluctuated between 5.5 and 6 to the Great Britain Sterling Pound, while another key indicator was that the Brent crude oil price (US dollar per barrel) had seen a steady rise since May 2009 and almost doubled in price.
“Undoubtedly, the UAE duo of Abu Dhabi and Dubai leads in the GCC and Mena region. As Dubai learns to be more cautious with financial support from its two tranches of bonds of $20 billion, there is every reason for it to make a strong comeback. The UAE duo recharged, reformed and combined will make them natural exemplary champions for the rest of GCC,” said Salah Mussa, chairman of Chesterton commented.
'While the rest of the world needs time to recoup saving and wealth, the UAE duo suffers no real loss which cannot be rebuilt in shorter timeframe,' Mussa pointed out.
'In its own way, be it petrodollar recycling or helping global rebalancing, the UAE’s surplus balance-of-payments can afford spending on investment and consumption. Its absorptive capacity may not be as big as billion-populated China and India, but GDP per capita in Abu Dhabi in particular, is among the world’s highest ($71,200 in 2007),” he added.
According to Mussa, several investment funds specialising in buying distressed developments had started moving into the UAE market.
'This is usually the first signs of recovery for a maturing property market and we believe that the bottom of the market is close to materializing. Dubai is on its way out of the property slump and this is due to a rise in confidence within the consumer and financial sector in addition to a surge in transaction volumes.' he commented.
'We have mentioned earlier this year that despite the current economic challenges facing the worldwide property market, Dubai is forecast to grow at a rate of 4 to 6 per cent per year until 2015,” said Robin Teh, director, Valuations & Research, Chesterton International.
“There has been a noticeable change in the property market where property prices appear to have stabilised. This has not been through the calming of the global economy, but the key fundamental characteristics of the Abu Dhabi market,' he stated.
The population of Abu Dhabi still has a need for housing regardless of global climates and with high rental levels remaining, owner occupation is the alternative.
The main factor which to some extent is retarding a stronger level of price increase or market activity is the cost of finance. Whilst remaining at above 7 per cent per annum, interest rates are continuing to favour the lenders rather than the borrowers,' Teh pointed out.
Movement has already been put in place to alter this and encourage the lowering of lending rates in line with other key financial indicators such as EIBOR and inflation,” he added.
Many of these countries are showing signs of reaching the bottom of the economic cycle, with some anticipating growth for 2010.
Many analysts are starting to believe that the duo growth engine of China and India will be able to steamroll the rest of the global economy out of recession next year. In China and South Korea, the governments are already planning new policies to curb excessive unsustainable growth of the economy, the report said.
Across Europe many of the economies are already looking forward to a stronger than anticipated 2010, whilst fiscal policies are brought in line with global and regional trade. Financial markets at present appear to have stabilised, with both the FTSE and the New York Stock Exchange making positive progress in 2009.-TradeArabia News Service