Dubai property bailout in the wings

DUBAI // The UAE could be preparing to bail out property companies in the country and might restrict new supply amid a downturn in property prices, EFG-Hermes said. "It is interesting that the government has yet to announce any bailout plans for the real estate sector, though we are inclined to believe that a federal plan is in the pipeline," the Egyptian investment bank said in a research note released on Monday.

While EFG-Hermes' own property index showed advertised prices in Dubai had fallen around 8 per cent in the last few months, anecdotal evidence suggested that transacted prices have fallen by as much as 35-50 per cent in areas such as Dubai Marina, Downtown Burj Dubai and Palm Jumeirah, the note said. "We believe the government will co-ordinate efforts to restrict the number of housing units coming on stream and we believe the number of housing units released in 2009 will be less than half our original forecast of 70,000 units," the bank added.

Morgan Stanley said last week property prices had fallen by an average of 25 per cent since their peak in September in Dubai and that some US$263 billion (Dh965bn) worth of projects in the UAE had been delayed or cancelled. Dubai's once-booming property sector has been hard hit over recent months as property prices fall, developers halt or scale back projects and jobs are cut. More than half of the construction projects in the UAE, worth $582bn, have been put on hold, Dubai-based research firm Proleads said last week.

Mr Iqbal added that changes in the federal constitution in December, which barr ministers, including the prime minister from commercial activities, made him conclude, "that the federal government is going to be doing more of the driving in the future." *Reuters