insights into the dubai property market

Wednesday, September 21, 2005

Central bank says UAE at risk of property downturn

DUBAI, Sept 19 (Reuters) - Asset prices in the United Arab Emirates are rising sharply and could lead to a sudden downturn in the booming property market next year, central bank governor Sultan Nasser al-Suweidi said on Monday. Suweidi said he expected economic growth to pick up in nominal terms to 20 percent this year while consumer inflation will rise to between 5.5 and 6.5 percent. The energy sector accounts for about 33 percent of the UAE's GDP, less than for many of its neighbours, but profits soaring from oil prices are pouring into stock and property markets, powering an economic boom and feeding inflation. Many analysts are concerned that the breakneck expansion looks unsustainable.
"We are having some asset price inflation at this point in time," Suweidi told reporters at a meeting in Dubai.
"We expect real estate to do very well until next year -- next year we will have too many housing units and if we don't take steps it will cause us certain problems," he said.
He predicted rents would fall sharply in March 2006, adding that "is something we have to deal with."
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