Construction boost for Dubai economy

Dubai's economy is on an upswing with a resurgent real estate and construction sectors.

Riding on the back of resurgent construction and manufacturing sectors, Dubai's economy grew by 5.3 per cent in the last quarter of 2012, as compared with the same period in the previous year.

These sectors along with transport, storage, wholesale and retail trade, property and financial enterprises contributed about 90 per cent of Dubai's GDP.

The consumer price index during the quarter fell 0.14 per cent.

The government budget deficit fell to less than US$2 billion last year, from $3.7bn in 2011, "as a result of the public spending rationalisation", according to the Dubai Economic Council (DEC) report Dubai Economic Outlook - Q4 2012 published yesterday.

Property prices in the emirate are on an upswing, increasing by 3 per cent per square metre compared with 2011 prices. Overall, the report said, the sector grew by 94 per cent during the last three months of last year over the corresponding period of 2011.

The number of guests staying in the emirate's hotels and apartments increased by 7 per cent in the summer of 2012 compared with the previous summer.

The number of buildings - hotels and hotel apartments - catering to tourists has increased by 200, and the number of hotel rooms reached 80,000, according to the DEC report. Occupancy levels in Dubai reached 83 per cent compared with 79 per cent in the corresponding quarter of the previous year.

In the second quarter of this year, Dubai hotels reported an upswing, according to data in May.

The revenue per available room in Dubai increased 18.8 per cent in May as against the same period last year to reach US$173.09, said the American research company STR Global.

In foreign trade, Dubai imported goods worth Dh186bn while the worth of goods exported stood at Dh117bn. Total trade at the close of 2012 reached Dh1,234bn, compared with Dh1,089bn at the end of 2011. Of the total trade, free zones handled 32 per cent, or Dh95bn during the fourth quarter.

High demand for investment and loans returned with increased economic activity in the last quarter of 2012, though in June the borrowing costs rose in Dubai as the emirate faces several bond repayments next year.

The ratio of loans to deposits in fourth quarter of last year increased to 89 per cent compared with the third quarter of the same year. As per UAE Central Bank regulations, the ratio should not exceed 100 per cent. Profits of Dubai's banks grew 6.6 per cent compared with the previous quarter of that year.