Global slowdown unlikely to affect UAE

There is, in case you hadn't noticed, a major credit crunch sweeping the world at the moment.

The financial pages of newspapers make for depressing reading these days, as banks succumb to the global downturn on an almost daily basis.

The situation was thought to have reached a head in the US when Lehman Brothers went bankrupt and insurance giant AIG collapsed. Thereafter, Washington Mutual has become America's biggest bank-failure story and Congress had to pass a $700 billion (Dh2.57 trillion) rescue plan - an unprecedented step.

Across the Atlantic, the British Government is confidently expected to nationalise ailing Bradford and Bingley after the long-standing financial institution failed.

In Belgium and Holland, banking officials are fighting to save one of the Low Country's largest banks, Fortis, whose shares fell to a new low last week.

Unsurprisingly, considering those developments, confidence in the money markets is at a low ebb and it's fair to say that, in a climate where not even banks are solvent, the real estate sectors in Europe and the US have entered a period of depression.

So that's the bleak situation elsewhere, but what of the effects in the UAE? Will the ripples of the financial tsunami that has hit Europe and the US so hard be felt here as well?

The reality is that there is likely to be some kind of aftershock. For a start, it is likely to unsettle investors, and isn't confidence, or rather the lack of it, one of the main causes behind our current global situation?

If banks become less willing to lend and debt becomes more expensive, then the market will become tighter. Some of the Western money coming to the UAE will be in less plentiful supply than before, which could see a slowdown in the pace of the construction boom that's currently sweeping through the nation.

So that's the bad news. But there is good news too.

The good news

The oil and natural resources-rich UAE and GCC in general have always danced to a different tune than the European and US markets. Even if the construction boom slows down, it is entirely possible that it has more to do with the availability of raw materials than financial turmoil. There is enough cash in the UAE to continue building, regardless of the situation elsewhere.

That knowledge alone should give potential investors peace of mind and keep the demand high in the region's property markets.

In fact, the GCC can be seen as an island where growth is still being observed by its realty players in an environment somewhat insulated from the financial crises overseas.

When confidence elsewhere fails, the UAE can capitalise on buyers unwilling to risk their money in the West in this unsettled climate.

Dubai and Abu Dhabi both are an obvious choice among world markets for on-the-ball investors, looking for opportunities away from the European markets. In fact, some industry experts have put demand for property in the capital over the next 10 years in excess of 100,000 units.

Dubai boasts imaginative and creative property choices for buyers - just cast your eye over the list of projects in the pipeline or about to come online. There's Dubai World Central, a state-of-the-art airport in Jebel Ali which will also boast a residential city. Plots under the second phase of development at Dubai World Central are expected to be sold out and raise Dh6 billion.

There is also the Arabian Canal, the 75km man-made waterway which will flow inland from Dubai Waterfront, link up with Dubai World Central and meander back to the Palm Jumeirah.

The money in those projects is not in jeopardy - there is so much dynamism there and in other projects like them that we can be assured of continued growth in Dubai and Abu Dhabi and a sustained degree of protection from the global credit crunch.

The writer is the Managing Director of Better Homes