The Arab world’s second largest economy is recovering at a rapid rate according to a team from the International Monetary Fund (IMF).
Following a visit to the UAE earlier this week the IMF team commented that: " Economic recovery has continued at a solid pace supported by construction, logistics and hospitality. "
They also reported that economic growth is strongly underpinned by large-scale infrastructure development in oil-rich Abu Dhabi and continued strength in Dubai’s services sector and property market.
The Emirates were hit hard by the financial crisis, with tumbling oil prices creating economic devastation for the fourth largest OPEC supplier. Between 2007 and 2011, annual economic growth averaged just 1.5%.
In quite a startling turn-around, the UAE economy grew by a whopping 5.2% in 2013. The IMF projected the economy would grow at a slightly slower pace of 4.25% in 2014 due to the decline in oil prices, with non-oil growth forecast at 5.5%.
Economic recovery has continued at a solid pace
With the UAE’s economy being largely propped up by Abu Dhabi and Dubai, if there is a sustained decline in oil prices as some predict, there could be a significant impact on revenues. Despite this, the IMF said that the Emirates have sufficient fiscal buffers in place to minimise the fallout.
Dubai’s real estate has seen significant price growth which led to concerns of a bubble forming in its property market. However the IMF ruled this out, recognising that in the last quarter price stability has been achieved as a result of less transaction activity.
" The slower momentum in the market is welcome news following a period in which prices had increased at a fast pace, " commented the IMF.
Dubai has continued to improve its debt profile after major restructuring since the 2008 crisis. While debt levels for some of Dubai’s government-related entities (GREs) remain significant, stronger financial positions and lengthened maturity profiles have served to reduce debt-related risks.
Due to the UAE’s continuing economic strength, property in the Gulf country is very appealing to foreign investors, particularly in Dubai. Despite a spectacular crash following a prolonged boom period in 2008, when foreign property investors left the Emirate in their droves, Dubai’s property is fast becoming flavour of the month once again, albeit with a much brighter outlook for the future.
Source: Property show rooms