May 13th, 2010
03:29 PM GMT
He is a prince wearing many hats, all essential to Dubai’s past development and its current economic debt restructuring.
Sheikh Ahmed bin Saeed Al Maktoum runs Dubai’s airline, its airports and oversees its Supreme Fiscal Committee - all at the same time. In an interview in Emirate’s Airlines rotating stand at the Arab Travel Market we talked about issues right across the sectors he oversees.
Investors in Dubai are eager to come to agreement on Dubai’s $23 billion dollar restructuring. This is not a simple task with nearly 100 banks involved and grumblings from local creditor institutions which don’t feel they are getting a fair shake from the Emirate.
Sheikh Ahmed talked about getting an agreement sealed in the next two to three weeks and was quite direct when he said that he thought the current deal was “always a generous proposal for everybody.” In a remark pointed at the local creditors, he said: “They have to think long-term about being here in Dubai.” It does not take a rocket scientist to read between the lines.
From insights from our interview together, data emerging from independent researchers and in discussions with others on the ground, one can ascertain that a floor is being put below what has been a nasty six months.
First some facts: Colliers International noted that property prices rose two percent in the first quarter of the year. The real estate group expressed some caution in its report, noting that a surge of completions will re-introduce downward pressure on prices by the close of the year.
We shot our TV programme links in Dubai Marina where demand is picking up again, but one can see plenty of empty flats and more to come with construction revving up again. At the close of 2009, the marina area was silent as cranes sat idle during the height of the credit crunch.
During our interview, Sheikh Ahmed did not hide the fact real estate will be slow to recover. He talked about investors re-adjusting their expectations and that 2005-06 are more accurate barometers for the future than 2007 at the height of the frenzy.
When asked what was the key lesson learned during the past six months as Chairman of the Dubai Supreme Fiscal Committee, Sheikh Ahmed said defining the Emirate’s core businesses: trade/export services, tourism and financial services.
Not by accident I am sure, he left out the property sector and nodded in agreement when asked if speculators were no longer welcomed.
Other data streaming in points to a Dubai recovery, although probably not as robust as Sheikh Ahmed predicted when he said five percent growth in the medium term was conservative. Cargo traffic was up 28 percent in the first quarter and passenger traffic was not far behind at 20 percent. Retail sales are also solid, illustrating that residents and tourists are not cash strapped and are expressing confidence about the future.
Dubai - and the region as a whole for that matter - has found out the hard way that it is not operating in isolation. The Emirate generated the ill winds of financial misdeeds last autumn and spread that fear East and West. Today, rebuilding has begun in earnest, but the EU-Greek tragedy is onto its third act and reaching beyond the borders of the newest members Bulgaria and Romania. While this may be an over-reaction on Wall Street, in Cairo and in Dubai, this will translate into more tenuous times ahead just as many hoped the recovery was taking hold in earnest.
We also cannot overlook the fact that Dubai still has another $55 billion in debt that needs to be addressed over the next year and a half. That is why Sheikh Ahmed, while sounding optimistic, was also eager to drawn a line in the sand with domestic creditors.
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