Crunch taught Dubai to focus on core business

Dubai : One lesson learnt from the global financial crisis is to focus on core businesses.

For Dubai, these are trade, tourism, re-exports and services, according to Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, Chairman and CEO of Emirates Airline and Group and Chairman of Dubai's Supreme Fiscal Committee.

"That is the future of Dubai," Shaikh Ahmad said in an interview with CNN Marketplace Middle East. "But the businesses involved in real estate should look at their [businesses] more carefully and what they're expecting of the future."

Asked about his expectations for economic growth in Dubai, Shaikh Ahmad predicted five per cent growth this year.

"I have to be conservative in giving the number and also the expectations and I hope we will be able to do much better than that," he said.

"If we look at the core businesses of Dubai, it is doing very good. Real estate — we have to allow it some time [to recoup]. It could take two years, three years, or five years to see it coming up, maybe not to the level we were talking about before."

Pre-crisis indicators

Commenting on whether there should be lowered expectations for the real estate market, Shaikh Ahmad said that the pre-crisis indicators must be considered.

"We should really forget about the year 2006-07, but if we go back to year 2004-05, we will see that kind of growth."

He pointed to a number of positive economic growth factors in other markets. With double digit growth in passenger traffic and cargo, there is a "strong demand and growth" in these areas which will continue in the same pace this year, he commented, given the 26 per cent increase in the first quarter of cargo traffic into Dubai and 20 per cent increase in passenger traffic.

"The environment in Dubai is much better than before. It is a bit cheaper in a way because rent has dropped, office space rent is much cheaper than ever before. So that must be very attractive for businesses to move into Dubai," he said.

Shaikh Ahmad affirmed that the overall market in Dubai has marked the bottom of the economic decline and is set to be on the "upside" now.

He also announced that the Dubai World debt restructuring deal will be finalised in a fortnight after some refining.

"I remain positive that it will be received very well," he said.

In the light of complaints that local creditors are receiving lower interest rates than their counterparts in the West, Shaikh Ahmad replied that the proposal has "always been generous for everybody."