Possible merger for troubled mortgage financiers Amlak Finance, Tamweel
(DUBAI) Dubai-based real estate and construction companies could get more help from the state, a member of a Dubai committee formed to tackle the fallout of the global financial crisis said yesterday.
Tough times: Dubai's real estate sector is facing a sharp price correction and hundreds of billions of dollars of construction projects have been cancelled in the United Arab Emirates as a result of the economic slowdown'Everyone is facing challenging times,' Omar bin Sulaiman, who is also deputy chairman of the United Arab Emirates Central Bank, told Reuters on the sidelines of a legal conference.
'You have already seen some help and I am sure you will see some more,' he said, when asked if there was any consideration being given to offering financial support for Dubai's real estate sector.
Mr Omar, governor of the Dubai International Financial Centre (DIFC) Authority, declined to be more specific.
Dubai's real estate sector is facing a sharp price correction and hundreds of billions of dollars of construction projects have been cancelled in the United Arab Emirates (UAE) as a result of the economic slowdown.
The UAE finance ministry and central bank have together launched 120 billion dirhams (S$49.6 billion) of funding facilities to help banks cope with the crisis.
The government, meanwhile, is looking at ways to help troubled Dubai mortgage financiers Amlak Finance and Tamweel, including a possible merger.
But concerns are mounting about whether Dubai will be able to refinance debts that it accumulated to finance expansion projects during a six-year economic boom spurred by high oil prices.
Abu Dhabi's move this month to inject 16 billion dirhams into five of its banks has also raised questions about whether Dubai could take similar steps to help its banks face growing loan defaults and investment write-downs.
The cost of insuring Dubai's debt with credit default swaps has gotten more expensive in past months as investors worry that the emirate could default on its debts.
Mr Omar said that Dubai has managed to meet its debt obligations in the past. 'Of course, of course,' he said, when asked if Dubai would be able to pay back its debts.
Dubai's mostly government-linked issuers will have to refinance about US$15 billion before year-end, compared with US$5 billion in the rest of the UAE and US$15-20 billion in the rest of the Gulf, Moody's Investors Service said last week.
The UAE government, meanwhile, said on Sunday that it was planning a federal law to regulate and manage the Gulf state's debt.
Dubai-linked companies have been restructuring their businesses, consolidating operations and announcing thousands of job cuts to help them contend with an economic slowdown.
Standard Chartered said yesterday that it expected the UAE economy would contract up to 1.5 per cent in the first half of the year before returning to growth.
Mr Omar said that there were 'no job cuts planned' for the DIFC, a hub for financial companies. He added that it was not the right time for the DIFC to sell any of its foreign assets.
DIFC Investments owns a stake in Deutsche Bank. -- Reuters
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