Dubai on track to repay $10bn loan



Dubai is on track to repay a US$10 billion (Dh36.73bn) loan from the Abu Dhabi Government. The emirate says growth has returned and it does not need further financial assistance.

It received support from Abu Dhabi in the wake of the global financial crisis, when liquidity in the local property market - which had frenetic growth during the boom years - dried up.

Mohammed Al Shaibani, the chief executive of Investment Corporation of Dubai, said yesterday that Dubai's economy was "in a phase of growth again".

The deadline to repay a $10bn loan from Abu Dhabi - due in "a couple of years" - would be met, he said.

"We are on track," said Mr Al Shaibani, who is also the director general of Dubai's Ruler's Court.

"There is a deadline, and we are committed to the same deadline," he added. "With this recovery, with this progress that we see in Dubai ... we expect to pay anything that is due from us on time."

Mr Al Shaibani said Dubai was well positioned for a recovery in the wake of the financial crisis.

"The fundamental businesses are really doing well. We probably will be the first to recover from the setbacks that we see [in] the world economy," he said.

"We don't need any more support from Abu Dhabi."

Dubai raised $10bn from bond sales to the Abu Dhabi Government and state-controlled banks as part of a support fund for state-owned companies. It also raised $10bn by selling bonds to the UAE's Central Bank in February 2009.

Dubai's residential property market - hit hard by the recent recession - is beginning to recover. Mr Al Shaibani said that the market for commercial property was also set to make a comeback.

"There was a big oversupply," he said. "We anticipate that in another two to three years at the most you will find a complete recovery in [commercial] real estate."

Craig Plumb, the head of research at Jones Lang LaSalle in the Middle East and North Africa, agreed that Dubai's commercial property rents had bottomed out.

"The commercial sector - office space - was currently at the bottom of its cycle. Rents have been going down for the past couple of years. And we now see some stability," said Mr Plumb.

"We would expect to see a recovery [over] a two-to three-year period."

Mr Plumb said Dubai office rents have declined by about half since the peak of the market in 2008.

"The continued growth of the economy is leading to job growth, and that is leading to new demand," he said.

However, commercial rents in some areas are expected to recover quicker than others. Mr Plumb pointed to prime areas such as the Dubai International Finance Centre and Downtown Burj as those likely to recover the fastest.

Mr Al Shaibani was speaking on the opening day of the Forbes Global CEO Conference, which is being held in Dubai.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, was confirmed as the keynote speaker at the event. The Saudi Arabian billionaire Prince Alwaleed bin Talal also attended.

Steve Forbes, the editor-in-chief of Forbes, said that the outlook for Dubai's economy was rosy.

"Dubai is becoming a global crossroads between East and West. It's become a hub, a centre for world trade," said Mr Forbes.

"The fourth quarter in the US is not going to be very good … Dubai's performance is going against the global trend," he added.

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