Dubai upbeat amid downturn

Dubai: The Dubai government said yesterday the emirate is experiencing sustained growth in business and tourism despite difficult financial conditions globally.

Mohammad Ali Al Abbar, chairman of the Dubai Advisory Council - a body set up by the Dubai government to tackle the impact of the global financial crisis, said the number of new businesses and air passenger arrivals in the last two months point to the good health of the city's economy.

A statement released on his behalf noted that Dubai issued 2,570 new business licences in November and December last year compared with 2,090 in the last two months of 2007.

Business licence cancellations in November and December in 2008 were recorded at average 148 per month compared with 131 per month for the corresponding months of 2007.

However, Al Abbar stressed that Dubai is fully integrated into the global economy and is not immune to the current worldwide economic slowdown.

He noted that Dubai's challenges as a regional hub are "cyclical in nature" and the government is "already making the structural changes necessary to best manage this new economic reality."

Standard Chartered Bank said in an analysis of the UAE economy yesterday that the effects of the global downturn are already being felt, as expressed by the downturn in real estate, a softening labour market and lower hotel occupancies. The construction sector, a key contributor to Dubai's economy in the last few years, is shedding jobs as a result of tough financing conditions.

The bank said Dubai has established itself as the world's third-largest re-export centre with re-exports comprising 44 per cent of its GDP in 2007 but now with the world economy in recession, global trade is slowing.

Speaking to a group of business leaders, Al Abbar said airline passenger arrivals have grown an average five per cent in the past two months. The number of passenger arrivals, excluding transit passengers, was an average of over 1.5 million per month in the last two months of 2008.

Al Abbar, who is also chairman of property development firm Emaar, expects real estate supply to match demand in 2009.

He said the most recent projections provided by the Real Estate Regulatory Agency (Rera) show that there is an expected supply of 28,000 new homes in Dubai this year, with the three main developers controlling overall demand and supply.

With the current trend of sustained growth of new residents, supply is forecast to be in line with demand this year, Al Abbar added.

"The Dubai government has already set an example with the recent announcement of its budget focused on increased public spending, with no new government fees or taxes," Al Abbar said, adding that "no one has ever accused Dubai of being afraid to think big or new or different."