Will Investment Plans Save Dubai Economy from Nearing Downfall?
Best known for its ultramodern architecture, exquisite tourist locations, luxury shopping and exciting nightlife, the city of Dubai is witnessing a weakening trade sector from the past few years.
Even though the number of tourists visiting Dubai has remained stagnant for last two years, the real estate sector of the city has fallen by 21.5 percent to US$60 billion in 2018.
As per government data, in comparison to the 169 real estate project launches previous year, this year only 68 project launches have occurred.
The only thing that can draw Dubai out of the ongoing economic downfall is the Expo 2020 Global Trade Fair. In the recent years, almost 300,000 new jobs have been generated and hundreds of mega projects have been revealed because of which there is surplus supply, yet the prices of Dubai property plunged by 5.8 percent which is in its 11th quarter in a row.
However, if we believe the Chief Economic Advisor of Dubai Economy, Raed Safadi, the reports of slowdown of Dubai economy are false.
Speaking to AFP, Safadi said, “We are still growing. Yes, it is not at 4.5 per cent – the average between 2012 and 2016 – but given all the conditions around the world, it is healthy”. He added that it is estimated that the Expo 2020 will add nearly US$35 billion to the economy over the coming decade.
As per the London-based Capital Economics, because of the tough US sanctions and the ongoing US-China trade war, Dubai has been exposed to global trade tensions and economic downtown in Iran.
Many off-plan projects that had successful sales campaigns promising attractive payment plans for the investors, who run post-handover for a number of years, have strongly impacted the capital values of existing properties in Dubai and Dubai economy overall.
In a recent poll, wherein majority of Dubai analysts participated, it was revealed that the coming of affordable homes would solve major part of the issue.
Also, in order to attract higher portfolio investments into the UAE, many listed companies, specially banks, have announced plans to increase foreign ownership limits.
From an analyst point of view, this increased foreign investment in domestic banks must prove to be beneficial for the institutions concerned, the stock market and Dubai economy.
Despite the drooping finance, the Dubai Foreign Investment is optimistic. The CEO of this body, Fahad-al-Gergawi said, “We have passed through similar economic cycles in the past.” However, one of seven Sheikhdoms in United Arab Emirates are still under high public debt of around US$123 billion that are divided equally between the state-linked companies and the government.
People are still expecting that like 2009, the Dubai economy would yet again be saved by the oil-rich city Abu Dhabi.
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