Real estate recovery in 2011: UAE officials

The UAE’s real estate sector is expected to start recovering in 2011 as part of overall growth in the domestic economy, two UAE officials have said.

Non-oil sectors, mainly manufacturing, will ally with higher oil output and prices to drive growth in the country’s economy, the largest in the Arab world after the Saudi economy, they said in local press comments published on Sunday.

“Available indicators show that all sectors, without any exception, will grow next year, including real estate, banks and tourism,” said Mohammed bin Abdul Aziz al Shiri, director general of the ministry of economy.

“The manufacturing sector is expected to record high growth because of projects to expand existing factories and the approval of the small and medium enterprises (SME) law in 2011,” he told Emarat Alyoum newspaper.

The paper quoted another official as saying the UAE’s real GDP is projected to record relatively high growth through 2011 and the following years.

“As for the real estate sector, it will start recovering in 2011 but a full recovery needs around five years given its huge size, which makes it difficult for a complete recovery in a short period of time,” said Sultan Al Muezzen, a member of the federal national council (FNC).

The UAE said in mid 2010 it has drafted a landmark SME law and it could be enforced through 2011. It will include incentives for businessmen in a bid to lure in capital from the local and foreign markets.

Minister of economy Sultan bin Saeed Al-Mansouri said last week the draft law would be presented to the federal cabinet for approval soon, adding that it would give a strong push to SMEs, a key element in economic diversification.

Mansouri said the new SME law would encourage innovation and woo capital into the UAE, already the largest Arab destination of foreign direct investment after Saudi Arabia. Government statistics showed cumulative FDI attracted by the UAE has exceeded $74 billion.

 “We are now putting the final touches on the draft SME law, which will be presented to the cabinet shortly,” Mansouri said.

The UAE is already locked in a drive to diversify its economy by attracting investment and encouraging industrial projects, seen as a key factor in diversification given the country’s limited farm potential. The country is also planning to issue laws giving bigger access to projects by expatriates.

According to the government-controlled Emirates Industrial Bank (EIB), the UAE has around 208,000 SMEs, accounting for nearly 80 per cent of the country’s total companies. It said SMEs form the backbone of any economy and this makes them critical for the process of development and growth.

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