Dubai’s economy is back in business,c said in its latest economic report on the region, outlining data that suggests that even as the emirate’s core economic sectors of trade and tourism are roaring back to life, the worst impacted real estate sector too witnessing green shoots of recovery.
In the just published Middle East focus economic report, Standard Chartered analysts Shady Shaher and Victor Lohle maintain that the UAE’s first-half performance was driven by increased hydrocarbon output from Abu Dhabi and strong non-oil growth in Dubai. “We believe these two factors will continue to drive growth in the UAE for the rest of the year,” the analysts said.
Dubai’s “economy is back in business,” the report said, adding that “non-oil economic indicators in Dubai look positive, in line with our positive view on the emirate this year.” Figures compiled by the Dubai Chamber of Commerce and Industry show that exports and re-exports rose by 16.5 per cent in the forst half of 2011. The emirate’s tourism sector is also doing well, with hotel occupancy above 70 per cent in June (the off-season period in Dubai). Passenger numbers at Dubai International Airport were up 10.4 per cent year-on-year in June, and rose 8.9 per cent in the first half of the year.
“These figures suggest that this year, Dubai’s core strengths of trade and tourism will continue to benefit from the emirate’s excellent infrastructure,” the report said, while adding that “Dubai’s property market is also likely to receive a boost from the UAE’s decision in June to offer extended visas of three years to buyers of properties worth more than $272,000 [Dh1 million].”
It added that Dubai remains the preferred long-term residence for even those expatriates that work elsewhere in the region, and that the UAE’s decision to grant longer term residence visas to property investors will bode particularly well for Dubai.
“The decision will be positive for the Dubai property market in the medium to long term; many expats already live or base their families in the emirate while working in other parts of the region. The decision is likely to be a key factor in attracting expats in the region to buy first or second homes in Dubai, particularly as recent regional instability has reinforced the emirate’s safe-haven status within the region,” the report said.
“In the near term, however, investors will await clarification on aspects such as whether the minimum property value is based on current market valuations or purchase prices, as many buyers bought homes at the height of the boom. Also, prices will be kept in check by oversupply, with at least 10,000 new units expected this year, according to figures from the Dubai Land Department,” it added.
The bank has a Stable outlook on the UAE as a credit. “Abu Dhabi’s strength as a credit is underpinned by its strong hydrocarbon dynamics. Although Dubai still faces some medium-term challenges and recovery will take time, it has been a clear beneficiary of the unrest in the wider MENA region,” the report said.
The bank expects Dubai’s credit spreads to fall in line with Abu Dhabi’s as the emirate continues to chip away at its debt liabilities. “In the sovereign space, our top pick is DUGB 2015 [Department of Finance Sukuk], on the back of our expectation of the convergence of Abu Dhabi and Dubai spreads. Among the Abu Dhabi quasi-sovereigns we like the long end of Mubadala, given the steepness of the 5s10s curve. In the Dubai corporate space, our top pick remains the DP World 17,” the report said.
UAE economy seen expanding by 3-3.5% in 2011
The United Arab Emirates economy is expected to grow by 3 to 3.5 per cent this year, the OPEC member's Economy Minister Sultan bin Saeed Al Mansouri said on Sunday, reiterating his June comments.
"It (growth) will be between 3 and 3.5 per cent this year. Our GDP depends 30 per cent on oil, it is very important to see how oil prices will be," he told reporters on the sidelines of a financial forum.
Analysts polled by Reuters in June expected the UAE economic output to expand by 3.7 per cent in 2011, up from 1.4 per cent last year.
UAE Economy Minister sees no need to boost fiscal spending
The United Arab Emirates does not need to boost government budget expenditures, the Opec member's Economy Minister Sultan bin Saeed Al Mansouri said on Sunday.
"There is no need to boost fiscal spending. In the UAE, we have spent a lot on infrastructure and these investments are going on," he told reporters on the sidelines of a financial forum.