DUBAI // Dubai is beginning to recover from the impact of the global economic crisis as international financial markets show signs of thawing and federal financial support begins to take effect, said Nasser al Shaikh, the director general of the Dubai Department of Finance.
"We're witnessing a shift in the overall mood," he said yesterday. Mr al Shaikh said the Government and private companies had moved decisively from assessing the challenges of the global downturn to working towards a recovery that would take hold sooner than some had predicted. "It won't happen overnight, but it will be a shorter period of time than many expect," Mr al Shaikh said. "The fundamentals of Dubai haven't changed."
He pointed to the recent strong reception that international banks gave to the refinancing of corporate debt by the Department of Civil Aviation and by the Dubai Electricity and Water and Authority (Dewa) as evidence that credit markets were beginning to ease after one of the tightest periods in decades. Despite early hopes that it would escape much of the impact of the global crisis, the UAE was hit as foreign funds flowed out of the country and demand for property from overseas dried up. Like many other governments, Dubai has come up with emergency plans to help keep the economy moving amid corporate cutbacks and rising job losses that some economists predict could lead Dubai into a recession this year.
Mr al Shaikh has emerged as a key architect of the emirate's strategy for weathering the international crisis. In addition to his role as Dubai's top finance official, he is a member of the Government Advisory Council, which was set up in November, and the Supreme Fiscal Committee. He is also the chairman of Deyaar, the property developer, and a board member of the mortgage lender Amlak Finance. Mr al Shaikh said Dubai had carefully analysed the fall-out from the international economic crisis and the Government was "moving quickly to safeguard our economy".
"It took some time just to assess how deeply we are affected," he said. "For us to tackle these issues, it has to be a unified approach in Dubai." Mr al Shaikh also said he expected two of Dubai's major home finance lenders - Amlak and Tamweel - to be "reactivated" soon as part of efforts to revive activity in the property market. That should help alleviate one of the biggest impediments to activity in the sector, he said.
The two companies stopped issuing loans last year and began merger discussions in co-ordination with the federal Government. Making financing available to more prospective home buyers is a key to getting the market moving again, analysts say. Amlak and Tamweel were responsible for 65 per cent of Dubai's mortgage market, Mr al Shaikh said. "Their priority is to reactivate both companies soon and then work on the merger." The plans are being spearheaded by Sultan al Mansouri, the Minister of Economy.
Meanwhile, Mr al Shaikh said the Dubai Government planned a budget that would provide an economic boost to the emirate this year even as government departments focus on shaving costs to reduce a projected budget deficit of Dh4.2 billion (US$1.14bn). Early indications are that these efforts could lead to a balanced budget this year, he said. "A huge amount of savings has been achieved already." One of the impacts of the economic slowdown had been the evolution of the property sector towards a more sophisticated system, including less volatile prices and better protection for consumers.
"The market is maturing," he said. The Real Estate Regulatory Agency (Rera) earlier this year announced a number of new laws covering the property sector making it difficult for developers to sell homes before committing 30 per cent of the cost of the building. Rera also launched a monthly auditing process for each off-plan development, made available to the public on its website, and required developers to schedule payment plans to coincide with construction milestones to reassure property buyers.
"These are extraordinary times and we need extraordinary solutions," Mr al Shaikh said. @Email:bhope@thenational.ae
