New Dubai projects support Dubai’s economic diversification plans – UAE minister

DUBAI (Zawya Dow Jones)–Dubai’s new mega development projects may have raised some questions about the debt-laden emirate’s ability to finance them, but the plans have received a vote of confidence from the U.A.E.’s minister of economy.

The city, which lists man-made islands and the world’s tallest tower as showcase attractions, unveiled in November two multi-billion-dollar projects largely focussed on boosting its tourism sector.

“The projects announced are mainly of the nature to enhance and support the tourism structure which has proven to be resilient to the economic crisis and very much supports Dubai economic diversification with focus on tourism,” Sultan Al Mansouri told Zawya Dow Jones in a recent interview.

Dubai’s new development plans come at a time when its economic growth is picking up on the back of trade and tourism. Its real estate sector, a key part of the emirate’s economy, is also seeing signs of recovery after going from boom to bust in the wake of the global financial crisis in 2008.
But the emirate is still servicing a huge debt pile and several of its companies remain in talks with creditors for better repayment terms. In this scenario, some analysts and observers have voiced their concerns about these ambitious projects.

Dubai unveiled in the last week of November plans to build a $2.7 billion leisure complex that will feature five theme parks. This came just days after the emirate launched a new mega tourism and retail complex that will include the world’s largest mall and 100 hotels.
“I am sure that the proper studies were done on these kind of projects and as it takes more of a futuristic approach, this I believe will be timely with the next economic cycle of growth that the world expects by 2017 and on,” the economy minister said.

Dubai’s economy grew 4.1% in the first half of this year on the back of a surge in the hospitality sector, according to the Dubai Statistics Centre, or DSC.

Given the number of major real estate announcements over the past few weeks, one could be forgiven for thinking that we were back in 2006 and 2007 again, analysts at Jones Lang LaSalle said in a recent statement.

“Encouragingly, there are also indications that some of the lessons of the last real estate crisis have been learned. The most important of these is the need to adopt a long term and co-ordinated approach, rather than developing too much real estate too quickly. Providing this proves to be the case, then the recent announcements can be seen as a positive for the market in the long term,” the analysts added.

Dow Jones & Co., Dec 04, 2012