Abu Dhabi’s property developers are looking for banks to extend facilities as some tenants struggle to make rent payments during the current economic crisis caused by the outbreak of coronavirus.
In a virtual meeting held with top officials from the Abu Dhabi Department of Economic Development and Abu Dhabi Council for Economic Development, developers asked the government to direct banks to grant them more loans to “alleviate their financial burden”. A suggestion was made that the recently-established 'lending options review' committee that was set up as part of the emirate's stimulus measures could review companies' applications for extended loans and forward suitable requests to banks.
The Covid-19 pandemic has hit the global economy, which is set to contract 3 per cent this year and is projected to slide into the deepest recession since the Great Depression of the 1930s. The outbreak has hindered international trade and paralysed the airline and hospitality industries. It has also led to stresses in the real estate industry, as the pace of transactions slow and tenants face difficulties in making rent payments.
The UAE was the first country in the Mena region to roll out fiscal and monetary support now totalling more than Dh282 billion. The Central Bank of the UAE has provided Dh256bn of support, including Dh50bn in zero cost collateralised loans as well as loosening capital and liquidity buffers in a bid to encourage bank lending.
In March, the Abu Dhabi government unveiled measures to support businesses in the emirate, including the exemption of Tawtheeq real estate registration fees for commercial and industrial entities for the rest of the year.
It also set up the lending options review committee led by the Department of Finance, with members from the Department of Economic Development and local banks.
During the virtual meeting, developers said many companies renting offices have been unable to fulfil their rental obligations as their businesses had been adversely affected by the Covid-19 pandemic. Some firms also reported that executing projects on site had been difficult, but they collectively expressed their optimism on the sector's ability to recover with government support already extended, such as liquidity measures facilitating sales and leasing activity.
“The authorities recognised that the real estate sector, like other economic sectors, was directly affected by the spread of Covid-19 pandemic which had impacted the global economy and that the Abu Dhabi government has been in cooperation with the private sector,” the Department of Economic Development said in a statement.
“The authorities spare no time to help accelerate the recovery of affected sectors through proactive and immediate measures and finding smart solutions to address the losses caused by the current situation.”
Businessmen from the tourism industry who took part in the meeting called for government entities in the emirate to speed up the process of providing support through the economic stimulus package by reducing the relevant fees and taxes.
The Department of Economic Development and the Department of Culture and Tourism said they were closely monitoring the fate of the tourism industry around the world and discussed support measures, such as using unoccupied hotel facilities to help with precautionary measures to prevent the spread of Covid-19.
They also discussed other steps that can be taken to reduce losses incurred by tourism companies in Abu Dhabi.
The World Travel & Tourism Council in March said up to 75 million jobs were at risk in the travel and tourism sector because of travel restrictions and other measures put in place to stop the spread of the pandemic. It forecast a $2.1 trillion (Dh7.71tn) hit to global gross domestic product in terms of lost tourism revenue in 2020.