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Mon 23 Nov 2009 07:02 AM

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UAE real estate will take 'some time to stabilise' - cbank

Governor says the economy is 'progressing well', rules out move to depeg from dollar.

The UAE's real estate sector will take "sometime to stabilise" but the country's economy was generally "progressing well", central bank governor Sultan Nasser Al Suwaidi has said.

The UAE's financial chief added that the country had "a very dynamic economy" and ruled out any move to depeg from the US dollar.

In answers given during a session of the National Media Council, reported by the official news agency WAM, he told foreign journalists that the country was still "very attractive in the region for tourism and investment".

Referring to the real estate sector in Dubai, where house prices have slumped more than 50 percent in some areas from peak prices in the summer of 2008, he said that it would "be resolved in a period of time since there are local as well as external forces that have consequences on it".

He added: "Vis-a-vis [the] global financial crisis, the UAE has overcame the liquidity problem whereas in the real sector it will take sometime to stabilise, as it can not be resolved immediately."

Last week, investment bank UBS said Dubai property prices could fall by up to 30 percent from current levels, and it may take a decade for prices to return to peak levels.

Despite real estate prices in the city having tumbled more than 50 percent from their 2008 peaks, the investment bank sees another 20 to 30 percent potential decline, analyst Saud Masud said, citing continued population outflows and the amount of supply set to hit the market.

Asked whether the UAE would depeg its currency with the US dollar, Al Suwaidi insisted it would not.

"The US dollar is the best medium of exchange in the international trade and we will continue to use it," he told reporters.