The big government-related entities that were at the heart of Dubai's financial crisis have made great strides in recent weeks to pay down significant chunks of the huge debt they incurred in the wake of the financial collapse, according to an analyst.
London-based Capital Economics said government-related developers such as Nakheel and Dubai World had either paid off debts or gained agreements with creditors which has put them on a much more stable footing.
"The recovery in the real estate sector over the past 18 months has enabled property developer Nakheel to repay $2.1bn of debt four years early. At the same time, media reports suggest that GRE-giant Dubai World has struck a deal with creditors to restructure its heavy debt burden," the report says.
This referred to reports on Wednesday, 27 August which said that Dubai World had agreed a deal with its main creditors to restructure $10.3bn of debt with its main creditors over an eight-year period ending in September 2022. It also agreed to repay $4.4bn of loans over the next 12 months.
"These latest developments are certainly encouraging and will help to lift some of the clouds that have up until now hung over Dubai’s near-term outlook.
"Nonetheless, while the debt repayment profile is now less onerous, the overall bulk of debt remains extremely large, meaning it is probably too soon to declare that the Emirate’s problems are completely behind it."
Capital Economics also gave a positive verdict on the prospects for the UAE's economy, pointing to economic data from purchasing managers suggesting strong growth in recent months, as well as healthy export numbers.
"That all being said, some sectors of the economy appear to have come off the boil. Visitors to Dubai are now falling in annual terms and property price growth in Dubai has slowed sharply."