Dubai was urged to regulate the speed with which its real estate market grows by IMF’s senior official Masood Ahmed. The director of IMF’s Middle East department warned that if the emirate does not take measures today, this may again result in a “boom-bust cycle.” Despite that, however, he expressed his confidence in Dubai’s ability to pay out its debts.
IMF’s senior official shared that the emirate needs to pay attention to the stock of property which is going to enter the market. In addition, Dubai needs to keep its real estate growth at a moderate pace in order to stay away for the boom-bust scenario.
Back in 2008, the real estate market in the region nearly collapsed. The global financial crisis reduced property prices in Dubai with over 60%. Nevertheless, the emirate managed to get back on its feet thanks to stable revenues from the travel and tourism sector. Now, according to Jones Lang LaSalle’s report for Q1 2013, sale prices of Dubai villas and apartments jumped with around 18% on the average only during the first three months of the year.
Masood Ahmed also discussed Dubai’s financial obligations. The director of IMF’s Middle East department stated that he believes that the emirate will have no problem paying its debts.
Back in 2009, Dubai had to borrow $20 billion from Abu Dhabi because a number of companies did not manage to meet their financial obligations due to the real estate bubble burst and the global financial crisis. According to Ahmed, the government-related entities have successfully rescheduled over the last nearly four years.
However, the senior official of IMF adds that levels of Dubai’s financial obligations continue to be really high. Ahmed claims that they amount to nearly 100% of the emirate’s GDP. He urged for more active operations, as well as better communication between the emirate and the investors.
Back in November 2012, Standard Charted reported that Dubai and its state-linked firms have a debt that amounts to $109 billion. In addition to that, there was another direct government of $32.2 billion.
Also, Masood Ahmed spoke of the MENAP region in general. IMF’ representative informed that oil importer in the region registered an economic recovery. Despite that it was really mild and was estimated to have reached only 3%. That was not enough to decrease the rate of unemployment in MENAP. Ahmed recommended that the region should find a way to diversify its economy if it wants to enjoy a growth and better employment levels.