Dahi slams banks for creating real estate crisis

Dubai’s police commander has launched a virulent attack on banks in the UAE and other Gulf oil producers, saying they are to blame for the real estate crisis in the region and for a surge in financial court cases.

Lt General Dahi Khalfan Tamim also criticised oil companies in the UAE over the recent spate of petrol price hikes, saying this would only aggravate the inflation problem.

In an economic session organised by the Saudi Arabic language daily Aleqtisadiah in Dubai, Khalfan expected escalating sanctions against Iran to push investors to Dubai and called for measures to brace for the capital inflow.

“There are hamours (big heads) inside banks….these hamours are running the banks according to their wishes….the crisis is not a real estate on but that of banks…these banks have adopted an uncontrolled lending policy away from government control to take advantage of the extensive investments in the real estate sector,” Khalfan said in a rare attack on the banking sector.

“The fragile management of these banks and real estate projects have prompted the GCC citizens not to trust any property project any more, particularly in the aftermath of the global crisis…this should prompt a revision of previous projects and plans and the preparation of new development plans.”

Tamimi dismissed claims by banks that they suffered from liquidity shortages following the 2008 global fiscal distress.

“There is sufficient liquidity with banks…their statements show they made high profits even in the middle of the crisis…these banks created a problem and I don’t think there was a real estate crisis but a banking crisis,” he said.

“Again I say that we are in face of big hamours in the Gulf banks…they are running them as they like…as far as I am concerned, I am talking about some banks in the UAE which I know very well…perhaps we would not have seen a crisis in the Gulf region had there been some pragmatism, rationalism and balance in the government’s strategic planning.”

Tamimi said Gulf Cooperation Council (GCC) countries, which control over 45 per cent of the world’s proven oil deposits, could have been saved from a strong financial crisis if the banks did not rush in extending loans.

“Most banks took the risk in giving loans to investors without any control…they lent without any reservations to any one who claimed to be an investor…this happened at a time when the GCC’s assets in the Western nations faced an uncertain fate during the crisis…the GCC countries did not take into consideration their national economic security.”

Tamimi said the crisis had not affected security in the UAE but had given rise to what he called investment and financial cases at local courts.

“We have witnessed a large increase in court cases involving parties with commercial, investment and financial disputes…many parties tried to link the global crisis to what happened in the GCC,” he said.

“What is complicating all these problems is that the GCC citizen no longer has faith in any real estate project because most investment companies have emerged as fragile and failing…their management emerged fragile and their Chairman emerged as the one who controls everything….another problem is that we have recently proposed a series of measures to curb this crazy rise in prices by reducing rents, hotel fees and consumer prices…every time we make such attempts, we find the government raising petrol prices…this is adversely affecting demand and supply and increasing costs…there is a general flaw in policies.”

Turning to Iran, Tamimi said he expected mounting US-led sanctions on Tehran over its nuclear programmes to push investors to Dubai.

“Dubai can accommodate these investors coming from Iran but we have to brace for this inflow…these funds are not politicized and have nothing to do with the Iranian government…those who own this capital are normal people and are engaged in known economic activities worldwide…Dubai now has a chance to attract these investments,” he said.

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