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UPDATE 1-Dubai property may get state aid-crisis panel mbr

Published 02/16/2009, 05:30 AM
Updated 02/16/2009, 05:32 AM
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(Adds details on UAE debt law, DIFC assets)

By John Irish

DUBAI, Feb 16 (Reuters) - Dubai-based real estate and construction companies could get more help from the state, a member of a Dubai committee formed to tackle the fallout of the global financial crisis said on Monday.

"Everyone is facing challenging times," Omar bin Sulaiman, who is also deputy chairman of the United Arab Emirates Central Bank, told Reuters on the sidelines of a legal conference.

"You have already seen some help and I am sure you will see some more," he said, when asked if there was any consideration being given to offering financial support for Dubai's real estate sector.

Bin Sulaiman, governor of the Dubai International Financial Centre Authority, declined to be more specific.

Dubai's real estate sector is facing a sharp price correction and hundreds of billions of dollars of construction projects have been cancelled in the United Arab Emirates as a result of the economic slowdown.

The UAE finance ministry and central bank have together launched 120 billion dirhams ($32.67 billion) of funding facilities to help banks cope with the crisis.

The government, meanwhile, is looking at ways to help troubled Dubai mortgage financers Amlak Finance and Tamweel, including a possible merger.

But concerns are mounting about whether Dubai will be able to refinance debts it accumulated to finance expansion projects during a six-year economic boom spurred by high oil prices.

Abu Dhabi's move this month to inject 16 billion dirhams into five of its banks has also raised questions about whether Dubai could take similar steps to help its banks face growing loan defaults and investment writedowns.

MEETING DEBT OBLIGATIONS

The cost of insuring Dubai's debt with credit default swaps has gotten more expensive in past months as investors worry the emirate could default on its debts.

Bin Sulaiman said Dubai has managed to meet its debt obligations in the past. "Of course, of course," he said, when asked if Dubai would be able to pay back its debts.

Dubai's mostly government-linked issuers will have to refinance about $15 billion before year-end, compared with $5 billion in the rest of the UAE and $15-20 billion in the rest of the Gulf, Moody's Investors Service said last week.

The UAE government, meanwhile, said on Sunday it was planning a federal law to regulate and manage the Gulf state's debt.

Dubai-linked companies have been restructuring their businesses, consolidating operations and announcing thousands of job cuts to help them contend with an economic slowdown.

Standard Chartered said on Monday it expected the UAE economy would contract up to 1.5 percent in the first half of the year before returning to growth.

Bin Sulaiman said there were "no job cuts planned" for the DIFC, a hub for financial companies. He added that it was not the right time for the DIFC to sell any of its foreign assets. DIFC Investments owns a stake in Deutsche Bank. (Writing by Daliah Merzaban; Editing by Rupert Winchester)

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