High level committee set up in Dubai to assess effect of global finance crisis

A new committee has been set up by the Dubai government to assess the impact of the global financial crisis on the emirate's economy, it has been officially confirmed.

As Dubai braces itself for a major slowdown in the property market solutions are being sought to try to lessen the effect of economic slump and falling oil prices.

'The purpose of the high-level committee is to look at the impact of the global financial crisis on Dubai and what can be done in sectors especially real estate and banking,' said Nasser Al Shaikh, Director-General of Dubai Department of Finance.

'We cannot be in a state of denial about the challenges. The committee will make recommendations to the Ruler on the way forward for critical areas that have to be tackled to withstand future challenges,' said Al Shaikh, who is also a member of the committee.

Headed by Mohammad Ali Al Abbar, chairman of Emaar Properties, the committee also includes Mohammad Al Gergawi, Minister of Cabinet Affairs and Chairman of Dubai Holding; Eisa Kazim, Borse Dubai chairman; Mohammad Al Shaibani, head of Dubai Ruler's Court, and Marwan Bin Galita, CEO of Real Estate Regulatory Authority.

Dubai is considered the most vulnerable place in the Gulf in terms of the global impact on its economy. Most at risk are real estate and debt financing, according to Citigroup. Overall mortgage loans in the United Arab Emirates have doubled in the last year as the property boom reached its peak.

Just yesterday Dubai-based Amlak Finance PJSC, the UAE's biggest mortgage lender by market value, announced it has temporarily stopped granting new home loans. 'We are reviewing our existing credit policy to ensure optimum servicing of existing and prospective accounts,' said Amlak's Chief Executive Officer Arif Al Harmi.

Almost everyday there is a statement from a developer about future projects. The latest comes from London and Dubai-based property wealth manager MiNC, developer of Prodigy 1 in Jumeirah Village South. It confirmed that two local banks have withdrawn funding from the project making it impossible for construction to continue.

It is now asking investors to pay around Dh1,000 per square foot in order to get the project finished, a considerable increase in price. If that fails work will stop. 'The project is no longer financially viable. Costs have increased to the extent that MiNC would make a significant and material loss if it were to build this project,' the company said.

MiNC officials said it would look at all possible ways to continue. 'If our proposal is rejected, then we will wait until we get project financing. But I don't think we'll get financing for at least 18 months. We are talking to other banks,' said Simon Everest, director of operations.

Azizi Investments, one of the Gulf's fastest growing real estate developers, has also announced it will not launch any new development projects in light of the global economic crisis.

The developer said that its initial ambitious plans for growth in 2009 will be adjusted and insisted all its current projects would be completed. 'We are still very keen to implement our plans for growth, but this will now happen at a slower pace. We will focus on delivering our existing projects,' said Merwiss Azizi, founder and chairman of Azizi Investments.