UAE property to ride out global credit squeeze

Population growth, shortages of supply to support UAE's real estate demand.
UAE property to ride out global credit squeeze
By Reuters
Thu 06 Sep 2007 04:40 PM

Supply shortages and surging demand will help the UAE real estate market to ride out an international credit squeeze triggered by US mortgage defaults, Abu Dhabi Commercial Bank said on Thursday.

Defaults on US sub-prime mortgages, home loans for people with poor credit, drove up borrowing costs in July and hit stock markets from Asia to Wall Street as investors fled to safer assets.

The economies of the UAE and five other Gulf Arab oil producers were shielded from the credit crunch because they were "net suppliers of savings and credit to the world", ADCB's Consultant Chief Economist Richard Gibbs said in a statement.

"The structural factors underpinning strong demand for UAE real estate would not be affected by the turbulence in financial markets, which had resulted in a re-pricing of credit risk in both advanced and emerging markets," he said.

Population growth, expansion of tourism and financial services and shortages of supply would support demand for real estate, Gibbs said.

The population of the UAE is growing at an estimated 9% a year, according to the Ministry of Economy's 2006 census.

Last year around 6.5 million people visited Dubai, the second largest member of the UAE federation, more than any Arab destination except Egypt.

Dubai is ninth most expensive city in the world to rent an office, according to a report this month from property services firm CB Richard Ellis. Abu Dhabi, the UAE capital, was ranked 15th.

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