UAE developers will find it “virtually impossible” to finance new projects because of the deepening liquidity crunch, the CEO of Dubai-based investment bank Rasmala Investments warned on Tuesday.
Ali Samir Al-Shihabi said there would be a dramatic slowdown in new projects being built, causing a “substantial and negative impact on the paper market” – schemes which are yet to be launched.
“It will be virtually impossible for developers to secure financing for new projects. Credit is expensive and difficult to get,” Al-Shihabi said, speaking at the Dubai Property Society’s monthly breakfast meeting.
The global financial crisis has caused credit markets to dry up and the cost of borrowing to soar, leading to questions being raised over how developers will fund future projects.
Al-Shihabi’s comments came on the same day that it emerged a top level committee had been set up by Dubai government to oversee future real estate projects.
The committee will decide on the launch of projects in a bid to help synchronise the plans of various developers to best meet future supply.
No current developments would be stopped and the committee will only look at projects still to be launched.
Egyptian investment bank EFG-Hermes in October cast doubt over the viability of recently launched Dubai mega-projects, stating their timing was not “ideal” due to reduced investor appetite and tighter credit conditions.
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