UAE: Dubai Economy

The local economy appears set to sustain its recent upward momentum, as investor confidence returns and some core sectors rebound. However, there are still concerns that weak performance of key trading partners and tight liquidity could hold back expansion.

Prices in Dubai’s residential property segment have posted solid growth over the past few months, and other areas of the sector are also showing signs that recent declines are beginning to reverse. However, due to excess supply in many segments, it will be some time before demand catches up with new development.

A determined optimism is pervading Dubai’s markets, with the emirate’s growth set to top many expectations this year. Few would suggest, however, that the emirate is immune from the looming debt crisis in Europe.

Set to ride a rising wave of interest in its free trade zones, Dubai is cashing in on its long-term investments to further bolster its economy by attracting new clients looking for a stable and central base of operations. Dubai’s free zones are becoming increasingly important to its economy and represent a strengthening bond between the emirate and global trade.

For Dubai, 2011 was a year of consolidation, with solid growth for many key economic sectors, the debt load of some of the emirate’s leading corporations sharply reduced and confidence growing apace, though concerns linger over how renewed economic slowdown elsewhere will impact the emirate.

Dubai’s economy is maintaining a steady pace of recovery, with confidence returning to the marketplace, investor appetite again being whetted and some of the longer-term development schemes starting to repay the faith and capital placed in them, though the need for care in managing the emirate’s debt burden remains key.