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(FILE)
The strong comments made by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on the strengths of the UAE economy and the stability of its real estate and financial markets have set off a chain reaction of confidence.
Corporate chieftains have come out in vocal support of Sheikh Mohammed's statement, made on the final day of Cityscape Dubai. Independent research too has confirmed that the UAE economy has the ability to emerge stronger.
"Our national economy, banking sector and financial markets are sound," Sheikh Mohammed said. "They draw their strength from a long-term vision, boosted by flexible legislations that protect local and foreign capital." He added that the UAE economy was able to weather economic downturns, even during Gulf's first and second wars.
Global Insight, a US-based economic and financial forecasting company, yesterday said the UAE is among the world's least risky countries along with Saudi Arabia, Taiwan and Malaysia. In the UAE, capital levels are high, liquidity is sufficient, bank management is adequate, and the regulatory environment is prudent, it added.
"In general terms, GCC countries exhibit high levels of banking sector stability, in sharp contrast to emerging economies outside that group. For the GCC countries presently under coverage, the UAE and Saudi Arabia banking sectors are rated as stable and as highly stable," Global Insight said.
Sheikh Mohammed's comment that the country's ability to grow can be attributed to the "clear vision, world-class infrastructure, availability of local and international expertise and the perfect and attractive business environment" has found a resounding echo among the UAE's business elite that Emirates Business spoke to yesterday.
Sheikh Mohammed said the UAE's economy was far from being affected by the global credit gloom and referred to the surge in real estate demand.
According to Global Insight, the global financial crisis has had relatively limited direct effect on banking stability in most emerging markets. "We looked at 33 emerging markets and found that credit expansion in many of these economies has been very rapid over the past several years, driven in large part by strong economic growth," said Toby Wight, manager of Global Insight's Banking Risk Service.
The nation's chief executives have firmly stood by Sheikh Mohammed's words when he said: "Our economy and markets are doing well. Our economic history shows the sound vision of the country's leadership and the best example for that is the huge demand witnessed in all sectors, especially real estate. We launch initiatives on financial, educational, technological and media fronts and then attract investments from all over the world which shows the success of such initiatives."
Nasser bin Hassan, Al Shaikh: Director-General, Dubai Department of Finance, and Chairman, Amlak and Deyaar
"The fundamentals of our economy are strong and over the past few years we have enjoyed surpluses besides having strategic reserves in place. Although we are part of the global economy, our position is much better than many countries since we do have solutions in hand whether it be on federal or local level.
Another important thing to be noted here is that we have always been fast in taking a decision and implementing it. This actually works in our favour in such an environment unlike some other countries where you see the right decision is taken, but so much time passes before the decision is implemented. Sometimes the delay proves fatal.
His Highness's comment is certainly a vote of confidence in the economy and no one can argue that the UAE or any other regional country does not have the solutions in hand.
Due to the global meltdown in the credit market, what has happened is that the international capital markets closed overnight. This caused a small disturbance in the system. However, since we have solutions in hand, the effects of the global credit crisis will be small on our economy.
The UAE Central Bank has moved fast to provide a Dh50-billion credit line for UAE financial institutions and this is just to compensate for the difficulty they are facing from international capital markets.
Sheikh Khaled bin Zayed Al Nehyan: Chairman, Tamweel and Bin Zayed Group
Today the whole world is going into a huge chaos. It is very important to bring rationality and also bring understanding of the issues. It is very important to know what has happened and how these issues inter-relate and can affect the local market and also who is in charge and who is responsible about what is happening.
Everybody is blaming the stock market, but this stock market is just a reflection of what is happening. Everybody is blaming speculators in the real estate market. These players utilise the opportunities that are there. This is a free market, and we would like to keep it open as much as is possible so that the market decides exactly where prices, where interest should go.
But unfortunately you hear of people who would like to control it, who would like to build dams in their way, which is really very strange. People need to have a fair chance in being able to utilise the opportunities in their interest as well as contribute to the growth of the whole economy. Yes, you would like to regulate, there is no doubt about that so that there is no abuse in this market. this is the new era of Dubai and it was the bold move of Sheikh Mohammed in this as well as his advisers and his team who have helped to develop Dubai. Everybody was saying, no it is not possible. It requires courage to go and build something like this, but it also requires knowledge to navigate in troubled times like this.
Salah Salem bin Omeir Al Shamsi: Chairman, Abu Dhabi Chamber of Commerce and Industry
The comments of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, are very strong and come at the right time. They have dispersed a lot of clouds that have enveloped the country's economy since the beginning of the global financial crisis. The statements have consolidated the position and solidity of the national economy and reassured national and foreign investors about their investments in the UAE.
Despite the fact that the world financial crisis has hit most of the world, its effects on the emirates are weak, and the UAE economy will be able to weather the crisis as it did the first and second Gulf wars.
And most certainly our financial institutions and real estate markets are now in a very strong position, and the government will intervene to protect them in case of any trouble.
The UAE has not been much affected by the financial crisis for two main reasons. The first is the sound economic vision of the politicial leadership that has enacted legislations to guarantee stability and protection for investors in various sectors that witness big growth. Evidence of this is the growing demand in sectors such as banking and realty.
The second reason is the strong growth in gross domestic product (GDP) which has exceeded Dh512bn and which depends on abundant liquidity secured by oil. Add to this the contributions made by the private sector.
Ronald Barrott: Chief Executive, Aldar Properties
I agree with His Highness Sheikh Mohammed, Vice-President and Prime Minister of the UAE and Ruler of Dubai. The UAE is good and a sound place for investment. The country continues to attract foreign investors due to its stable market. The investment conditions are excellent here, particularly in Abu Dhabi.
Lots of investors are coming to the UAE. With my experience in Aldar, we are doing well with continued growth, and we see no problem despite these crises.
Mohammed Sharaf: Chief Executive, Dubai Ports World
I strongly believe in the words of Sheikh Mohammed, Vice-President and Prime Minister of the UAE and Ruler of Dubai. There shouldn't be anything to worry about in terms of the UAE economy. We should pay close attention to what is happening globally to ensure we don't make the same mistakes, but historically when there has been economic strife in the world, the Gulf, and the UAE in particular, has continued to prosper. Yes, short-term investors in the stocks markets have lost a lot of money, but what many of them were doing was gambling. We have Sheikh Mohammed's comments and the UAE Central Bank has also stated that our banking sector is in a strong position, so what more do we need?
Habib Fekih: President, Middle East, Airbus Industrie
As far as the UAE is concerned, it is less affected than the rest of the world. The country has the resources and means to stay strong and grow.
For the aviation industry in particular, the UAE market will do fine. While airlines such as Emirates will be fine, we are waiting to see consequences for other airlines in the Middle East, such as the ones in Saudi Arabia, Syria, Jordan, Lebanon and so on.
Air travel performance depends on how much travel plans will be affected. But we are okay so far and not suffering from any serious downturn. The UAE economy will stand strong but our sector especially is linked to the world economy. So Airbus will suffer if some airlines in the region are not able to perform.
Arif Alharmi: Chief Executive, Amlak Finance
Sheikh Mohammed's comments came at the right time, and the whole market, especially the real estate sector, responded positively to the reassurance the economy is strong. We were always confident that the government will take all necessary measures to safeguard our economy and guide us.
Since the start of the global crisis, we worked closely with the authorities and implemented several measures to continue with our commitment of providing leading-edge home financing. However, the real estate sector needs to move forward with the completion of the numerous projects in the pipeline.
Farhan Faraidooni: Executive Chairman, Sama Dubai
The statement made by Sheikh Mohammed has reassured investors about the strength of the UAE economy and will certainly have a positive impact on the real estate industry here. Stock markets across the world have been hit badly and I believe that people will not invest there for a long time.
If we look at what happened after 9/11, I can certainly say that people will start investing in the real estate market here. In today's circumstances, it offers them a safe and secure investment opportunity in the medium to long term. Dubai now needs more long-term investors and new legislations have actually helped curtail speculation in the market.
I am very optimistic that the property market will react positively to Sheikh Mohammed's comments, and in the coming years will offer better returns to investors.
Sheikh Abdullah bin Fahid Al Shakra: Chairman, Al Hanoo Holdings
The UAE's diversified economy has made it capable of standing unshaken in such credit crunch circumstances. This market is based on solid foundations one of which is that it depends on local and regional liquidity.
Compared to the world market, the UAE and the regional markets are at their highest level of economic cycles. Many talk about the negative impacts of the credit crunch on the UAE market but that has not happened.
Khalid Al Malik: Chief Executive, Tatweer
The statement made by Sheikh Mohammed is definitely reassuring since it is coming from someone who has seen the ups and downs of a market. It gives a lot of confidence since it is coming from someone who is a visionary.
But we have to bear in mind that it is very important for us not to ignore the situation. There is a problem in the world and we are part of this world. The bottom line is: the ones who face the situation with confidence in the market are the ones who can bear the consequences of this. Those who don't have the confidence and only sit and think about the problem will not move forward.
Every market is different. A developer has to understand the market here. There is a certain demand and supply situation in each market, and what I advise a new developer is to look at the market before he ventures into it.
Saif Belhasa: Chief Executive, Saif Belhasa Group
The crisis in the US and Europe will affect our markets, but we won't know the extent of its impact for a few months. We will have to watch the situation very carefully. We have not seen any slowdown in the UAE, but we can't say there won't be any effect in the future. Our banks have a lot of money in Europe and the US, but the Central Bank has assured us that the majority of assets are in the UAE.
Sheikh Mohammed has been a great supporter of our markets. The Dubai Government will do everything it can to achieve its targets.
Sultan Butti bin Mijrin: Director-General, Dubai Land Department
The wise leadership represented by Sheikh Mohammed makes us confident about overcoming crises and taking advantage of them. This is due to the strength of the UAE's economic structure as well as the confidence that Dubai enjoys among investors inside and outside the UAE.
The current crisis will have positive effects on Dubai and consolidate its position as a destination for the world's capital. That was noticed at Cityscape. In addition, land trading witnessed a big revival. Land transactions at the end of Ramadan were not affected and were close to the transactions done at the beginning of Ramadan, though the real estate market was facing problems. Property registration also increased in 2008 compared to the same period in 2007.
Sina Al Kazim: Chief Executive, Meraas Development
We got a confidence boost by Sheikh Mohammed at Cityscape. When we launched the Jumeirah Gardens project, we were aware of the grim global economic scenario, and we were confident of the Dubai economy and the good prospects it offered. This was evident when we approeached banks for funds and got a positive response from them. This assures us that Dubai is financially stable.
Mohamed S Binbrek: Group Chief Executive, Dubai Properties Group
Sheikh Mohammed's comments will calm jittery investors' nerves and reinstate confidence in our economy. Our economic fundamentals are strong; we are a diversified economy with surpluses in our budget. In the real estate sector, only six per cent of the purchases are made through home finance options, while 94 per cent are buyers who pay cash.
Even the Central bank has strict restrictions in place, limiting sectoral lending. I don't see we will face any problems like the US. Moreover, we have checks and balances in place with 90 per cent lending in best-case scenario and monthly instalments not being more than 50 per cent of take-home salary. This is to prevent people from falling into excessive debt.
The market and people have a herd mentality and they follow what others are doing. A statement coming from the second highest authority of the country reinstates confidence in the market and calms jittery nerves.
Marwan bin Ghalita: Chief Executive, Real Estate Regulatory Agency
The market is doing well and we are part of the global situation, but we have good government support and, as Sheikh Mohammed said, most of the companies are run by the government and semi-government entities. What can I tell people other than that if you have invested in Dubai, you investment is safe. The only thing people have to bear in mind is that an investment in real estate should be long term.
In fact, if you look at the long term, Dubai is the best place for any investment because of the support and the strength of the system. The investor has nothing to worry about. The projects will be completed and they have a secure investment.
A buyer should always check his cash-flow and use professionals while deciding on where to invest. But I will say with all my strength: invest in Dubai's real estate.
Gerald Lawless: Executive Chairman, Jumeirah Group
It is great to see this kind of reassurance from Sheikh Mohammed. I am confident that Sheikh Mohammed is right and we will be able to weather this global storm. It is a good time to be promoting Dubai both on the leisure as well as business fronts. Whatever happens, we have to continue selling the destination. In terms of Jumeirah Group's future business, we've not seen any significant downturn. Our future bookings are already holding up very well. In fact, they are at the same level as last year's.
Khalfan Al Kaabi: Board Member, ADCCI, and Chairman, Ascorp
Sheikh Mohammed's statements have reassured many local and foreign investors who were scared by the fallout of crises in the US, Europe and Asia. The UAE needs two things to overcome the world financial crisis. First is the availability of liquidity. The real estate sector needs money on time to finish ongoing projects.
The second is strong government support to big financial institutions, especially banking and real estate, in light of the collapses seen in several countries.
Wasim Saifi: Chief Executive, Tamweel
The fundamentals of the UAE real estate market are very strong. There is no problem in the supply-demand factor. Demand is continuing with respect to new jobs in the region; plus we are seeing increased delays in project execution that will keep demand afloat.
The second concern for us today is the credit availability in the market. We have seen recently tight liquidity conditions but the UAE Central Bank is taking steps to mitigate that by introducing rate cuts. Liquidity will improve.
The sentiment of the market is the most important and we reassure investors that they have nothing to worry about. The recent merger talks between Amlak and Tamweel are not because of credit crunch in the UAE or in the region but to create one big giant establishment. Tamweel's investments are totally localised, whether it comes to who we lend to or the properties we lend to. We have come together to create one big giant lending corporation.
David Savage: Managing Director, Al Habtoor Leighton
Our business is not being affected by the global crises. The impact will be on smaller developers but it will be far less than the international markets.
Aaref Hejres: Chief Executive, Diyar Al Muharraq, Bahrain
Stock market and property investors in the Gulf need not worry about the current market situation and sub-prime crisis in the United States and financial meltdown in Europe because we are following a different business model in the region.
As far as the property market is concerned, investors such as Diyar Al Murarraq and Kuwait Finance House are bullish because there is a shortage of housing units in the Gulf. Despite the current crisis affecting property prices in the US, property prices in the region are going up. We have strong control over speculators.
Abdul Azis Glenjawi: Managing Director, Manchester Real Estate
Sheikh Mohammed's statement that the economy of Dubai and the UAE is strong came at the right time. He pointed out that investors in the UAE realise the ability of the local economy to remain firm through the crises that the global economies are going through. He expected that the rate of new investments in Dubai will increase to take advantage of opportunities that are still available.
So far, there is no sign that the local economic situation has been affected by the global crisis, especially in the real estate sector, which still generates big revenues. What has happened on stock exchanges cannot be considered an index of the economy, because stock markets are the most fragile and are affected more quickly than other sectors.
BR Shetty: Chief Executive, NMC Group
Trust, trust and only trust can protect you from this global crisis. Have trust in the local market, and have trust in the leadership that develops policies for the sbaility of the economy. We have trust and therefore are doing good business with 40 per cent annual growth.
Some greedy people have been withdrawing their investments and money due to lack of trust in the local economy. With my own experience of business in the country, the UAE is the safest place to invest. We see more and more foreign investors entering into the market. We see more and more joint venture companies and projects taking place in the UAE. this is because the country is safe for investors, thanks to the leadership.
Mohammed Ali Yasin: chief Executive, Shuaa Securities
The statement of His Highness Sheikh Mohammed bin Rashid Al Maktoum is very important and will have a positive effect on sentiment. The government has been quiet on the issue of the crisis gripping Western Banks, with most comments locally coming from either businessmen or the Central Bank.
A side effect has been the withdrawal of foreign liquidity from our markets, which has stretched our financial system, but the economy remains very strong. Banks do not want to lend to each other and further measures have to be taken to get liquidity moving again. Once this happens, people's fears will be calmed and the focus can return to maintaining the present economic cycle.
Robert Burnett: Vice-President, Hill International
I am not sure if the economic crisis that began in the United States and set off a global chain reaction was entirely due to financial reasons or due to fear. The market has reacted irrationally even to the support provided to the banks and a lot of it is a pure panic scenario. I do not think that it will affect the UAE in the same way.
A reasonable number of major developers who have their projects on hand will continue to go ahead. Also, UAE developers who have announced projects outside the country will continue to go ahead. A few projects might be held up or stopped but I think that the currect crisis is not as serious as the past market scenarios that we have seen such as the dot.com crash.
KV Shamsuddin: Director, Barjeel Geojith Securities
My business experience in the UAE in the past 38 years shows Dubai has witnessed and overcome several global crises, especially September 11 and the Middle East war. From all these crisis situations, Dubai has got some opportunities for growth and development and emerged stronger. I fully welcome His Highness Sheikh Mohammed's statement. There are sceptics but very soon they will be proved wrong. In my view, India, Brazil, Russia and the GCC countries will emerge stronger as a powerful economic block. And in the GCC, Dubai will be the leader and the centre that others will follow.
Kamal Vachani: Director, Al Maya Group
I am extremely happy about this statement from His Highness Sheikh Mohammed. It reiterates the fact that investors like us are putting their money in safe hands.
Dubai has always been different from other markets and even if there is any problem, Dubai will get out of it smartly. I believe everything will go smoothly and the markets are bound to recover from the assurance of Sheikh Mohammed. We have invested a lot of money in the property market and our confidence in the market has once again been reiterated.
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