Newly formed government council will stand by Dubai property market
The Dubai property market is undergoing a 'healthy correction' due to the global financial crisis but the government will intervene to help if it has to, it was announced today.
The new Advisory Council, a working group formed at the direction of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, ruler of Dubai, is watching the situation and will help ensure the long-term stability and growth of key sectors of the economy such as real estate and finance, the Dubai International Financial Centre Forum was told.
'We are rising to the challenge of managing the new economic realities. Dubai is a great city and we have accomplished so much in such a short time. For the past 18 years, we have witnessed remarkable growth across all sectors of our diverse and dynamic economy,' said Mohamed Ali Alabbar, chairman of Emaar Properties and chairman of the new Advisory Council.
'We have built roads and bridges, schools and hospitals, ports and airports, financial centres and power stations. We have built iconic structures and strong business clusters. Just look around the city and you will see for yourself,' he told the conference. And all that was not about to be lost.
He also hit out at recent speculation about how much Dubai owes and how it will meet its debt obligations. The Dubai Government's sovereign debt obligations currently stand at $10 billion (AED 37 billion), he said with key sovereign assets estimated at over $90 billion (AED 330 billion), excluding airports, bridges and the Metro.
The total debt obligations of affiliated companies stand at $70 billion (AED 256 billion), compared with assets valued at $260 billion (AED 950 billion) so the total value of the assets of the government and affiliate companies in Dubai is well over AED 1.3 trillion.
'Let me state categorically: the Government can and will meet all its obligations going forward. Dubai's borrowing is not used to cover state expenditures or fuel consumption. It is funding our long-term, risk-free infrastructure development. Our debt serves Government institutions and state-owned entities that have positive cash flows and that have extremely strong long-term value, he said, adding that the Government will step in and help associated and affiliate companies if and when the need arises.
He pointed out that intervention that has already taken place at the Federal level to ensure the stability of the country's financial system and the Central Bank will continue to act appropriately whenever necessary.
The Advisory Council has pledged to work closely with Dubai's three largest developers which control about 70% of the supply onto the market and other private developers, to manage the current and future supply of new projects onto the market, he confirmed.
'Let me assure you that we have our finger on the pulse of the real estate sector. For more than a decade, this sector has experienced rapid and sustained growth. Today, the real estate sector is witnessing a healthy correction. This is a consequence of global financial conditions and is inherent to the very nature of the market.
'By monitoring supply and sales, the Advisory Council is managing this important sector of our economy, ensuring that new supply is properly managed and that current and future demand is adequately met,' he concluded.
