Dubai told international bankers on Monday that it was gearing up for another boom and did not regret the pro-growth policies which brought it to the brink of default five years ago. It appeared to win the endorsement of many of the bankers.
Over a dozen top Dubai officials and executives met about 100 representatives of financial powerhouses including Deutsche Bank, Nomura Holdings and Fidelity Investments for the emirate's first big investor roadshow since the crisis.
"If Dubai had to do the same again, most likely we would follow the same approach," Mohammed Al Shaibani, chief executive of sovereign wealth fund Investment Corp of Dubai, told the audience at Deutsche Bank's London offices.
He argued that heavy investment in Dubai between 2006 and 2008, which culminated in a 2009 debt crisis as a property bubble burst and state firms ran out of money, had succeeded in setting the emirate up as a major centre for finance and trade.
"Now we are leading the region and we have a mission to position Dubai as one of the world's main global cities. We are on the right track," Shaibani said.
The crisis forced Dubai's state-linked conglomerates to restructure tens of billions of dollars of debt, threatening many of the bankers in the room with losses. But many expressed support for the emirate's growth strategy on Monday.
Jeurgen Fitschen, co-chief executive of Deutsche Bank, said there was a danger of excessive growth: "Managing the expansion the right way and minimising potential risks will be crucial for future investments."
But he noted that Dubai's latest investment plans, which involve spending tens of billions of dollars over the next five years on infrastructure projects and preparations to host the 2020 World Expo, would be a strong stimulus for the economy.
"Dubai is known to be a success story," he said.
Dubai needs to restore full, healthy ties with the international financial community both to fund its growth plans and to manage heavy debt maturities coming due in the next few years, the legacy of its loan restructurings.
The International Monetary Fund estimates the emirate and state-linked entities will face $78bn worth of debt maturing between 2014 and 2017, an amount which it has described as "challenging".
Money is likely to be less readily available then it was before the global financial crisis, which has caused many foreign banks to become more cautious about lending.
Dubai officials and executives told the London meeting that after a slump immediately after the debt crisis, the emirate had entered a new phase of sustained growth on the back of burgeoning regional trade and financial flows.
"Dubai's 10-year plan was to grow the economy from $38bn in 2005 to $108bn in 2015. We are now at a GDP of $97bn with a growth of 5 percent expected in 2014," said Essa Kazim, chairman of bourse operator Dubai Financial Market . "We are ahead of the plan."
Much of the discussion focused on the risk of another bubble forming - property consultants JLL said in a report on Monday that Dubai's average residential property prices soared 33 percent from a year earlier in the first quarter of this year, with prices in some areas reaching their pre-crisis peaks.
In addition to threatening another crash down the road, surging property prices could hurt Dubai's competitiveness by raising its cost base. Hamad Bumaim, head of the Dubai Chamber of Commerce, said the increasing cost of living needed to be monitored.
But Dubai executives insisted that lessons had been learned from the last boom, and that this time policy makers would prevent the economy and markets from overheating.
Adnan Chilwan, chief executive of Dubai Islamic Bank, said the crisis had caused almost all financial institutions in the United Arab Emirates to review issues such as liquidity management, capital adequacy and asset quality.
"With each of these issues now addressed, the overall industry is geared to progress towards an agenda of growth whilst ensuring that adequate measures are in place to manage any unforeseen crisis," he said.
These arguments appeared to be accepted by many bankers and financiers at the meeting.
One European fund manager, who declined to be named because his company did not allow him to speak on record, said it was clear that Dubai officials had "become much more sophisticated and smart in dealing with their financials".
"We have a good exposure to Dubai debt and have recently realized that this is less risky than many of the instruments in the developed economies," he said.
Market movements suggest many international investors share this view. The price of Dubai's five-year credit default swaps , used to insure against a government default, dropped last week to its lowest level since mid-2008.
Abdulrahman Al Saleh, head of Dubai's Department of Finance, said on Monday that banks had shown willingness to help Dubai refinance an upcoming maturity of $1.9bn in Islamic bonds this November.
"It is still early but we are in talks with banks for bilateral loans or syndications. They are approaching us. We are considering various funding options," he told the audience.
The optimism at the London meeting was partly due to a positive atmosphere at last week's annual creditor meeting of conglomerate Dubai World, which has $4.4bn of restructured debt coming due in May 2015.
Shaibani told Reuters before the meeting that Dubai World had the means to repay the debt on time and expected to make some future repayments early. This partially eased concern that Dubai World might be selling assets too slowly to meet its obligations, bankers said.
In a sign of confidence in Dubai World, an executive of Emirates NBD, Dubai's biggest bank, said in London on Monday that the bank might this year write back its non-performing loan provisions against exposure to the conglomerate.
"We have sufficient confidence that we will be able to reclassify it as performing," Patrick Clerkin, head of the funding group at Emirates NBD, told Reuters.
Clerkin said the bank had set aside provisions for 5 percent of its AED9bn ($2.5bn) exposure to Dubai World. If that provision is written back, it could provide a one-off boost of about AED450m to the bank's profit.
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