Dubai's economy could grow by about 5 per cent this year, one of the emirate’s top officials said on Friday, in one of the most upbeat recent forecasts about the city's prospects.
Mohammed Alabbar, chairman of real estate giant Emaar Properties, said growth rates of 14 per cent registered during the city's petrodollar fuelled growth of 2003 to 2008 would decline by a third to about 5 per cent growth this year.
“There is activity in the city, but, yes, we have been affected by what is going on the world,” he told delegates at a World Economic Forum meeting in Dubai.
At a separate meeting on Friday, the central bank governor said the United Arab Emirates, including oil rich capital of Abu Dhabi, would probably register growth in the low single-digits this year.
Dubai would thrive, said Mr Alabbar, as it acts as the services hub for a population of 300m across the Middle East, Africa and parts of Asia. He also chided the media for “crossing the line” in its negative coverage of the city’s travails during the recession.
The mood has lightened after several grim months as the roads, hotels and restaurants get busy once again, but the city still has to deal with an $80bn debt pile and a property crash.
Mr Alabbar said the government had managed to pay off $10bn in debt this year.
In February, Dubai borrowed $10bn from the UAE central bank in an effective bail-out as it launched the first half of a $20bn sovereign bond programme and investors fretted about the city’s solvency.
Mr Alabbar said the ruler, Sheikh Mohammed bin Rashid Al Maktoum, had made it clear that the government was receiving healthy interest for the upcoming second tranche of its sovereign bond issue.
“He is confident that (the bond) is in its final stages and journalists should be fair as he has a track record of delivery,” he said.
Asked whether the bonds would be sold to the private sector or if the federal government would subscribe to the issue, Mr Alabbar said it was likely to be a “combination”.
“In my opinion, a reasonable chunk will be in the market,” he added, referring to private subscriptions to the programme as opposed to central bank support.
Officials have said the bond issue would be completed before the end of the year.
Mr Alabbar, one of the ruler’s close advisors, said the population of the services hub had risen 400,000 in the year to date, contrary to scare stories about an expatriate exodus. But it was made clear that this figure did not represent a net increase in population.
Analysts have predicted population declines. UBS has said the city’s population could decline by 8 per cent this year, and another 2 per cent in 2010, as slowing economic activity forces more redundancies.
Property prices in the emirate, which have plunged 50 per cent over the past year, have shown signs of stabilisation in recent months, however.
Mr Alabbar, who runs the region’s biggest developer, said there was “no supply coming into the market” and it might take a year or 15 months to work through an overhang of inventory. “But we are still alive, we are moving ahead.”
Dubai is carrying out restructuring and legislative changes to improve cost efficiencies within its economy. Emaar Properties is in the midst of a delayed merger with Dubai Properties, the real estate arm of government-linked Dubai Holding.
Investors have worried that the deal, which will see the government increase its stake in Emaar, will come at the expense of minority shareholders in the real estate company, which is the widest held and most traded stock on Dubai Financial Market.
Mr Alabbar said the authorities would protect minority shareholders.