'No substitute for Dubai as region's financial centre'
Dubai remains the region's financial hub thanks to the underlying trade flows and capital flows, said Suresh Kumar, CEO of Emirates NBD Capital and Emirates Financial Services.
"There is no substitute for that and that position is still intact," he told Emirates Business. "The impact of financial crisis has been a little dispersed across the key sectors. Tourism, hospitality and travel for example, have been much more resilient than the real estate."
The banking sector, which has begun to release their results, has also fared better than expected.
"The banking and financial sector were sensible in capitalising themselves very well both in Tier 1 and Tier 2 capital," Kumar added.
"What that meant is that the banking sector absorbed the stress across the economy in various segment. By better capitalising themselves, they are much more capable of weathering the storm than those that were unable to come up with sufficient funds in times of stress like the banks in Switzerland or the US. The moment the crisis hit, they went around shopping for capital and equity infusion. That's the worst time to raise capital," he said.
NPLs are expected to peak this year but this is because it is a lagging indicator and is not reflective of current financial conditions, experts say.
Debates on whether the real estate sector has bottomed out continue but figures from Dubai Chamber show that generally, prices have already reached its lowest in June.
Official figures show housing and utility prices in Dubai, accounting for the largest share of the emirate's CPI weight remained flat thereafter.
"With the drop in rental prices, there has been growing interest among tenants in moving out of shared accommodation, which they have been forced to live in due to high rental costs) into single occupancy units," said Dubai Chamber.
"It has come apparent that when tenancy contracts expire, tenants are moving away from the outlying, low-cost developments in Sharjah into more affordable locations within Dubai," it added.
Dubai is also tempting individuals and businesses away from Abu Dhabi where rental costs are higher and where the quality of available accommodation is inferior to the ultra-luxury properties in Dubai, it said.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.
Follow Emirates 24|7 on Google News.