After a period of oil-soaked growth, Gulf economies increasingly resemble a Silk Road dromedary: ugly, stubborn and slow.
It’s not just falling oil prices that are responsible. Take the United Arab Emirates. Its $270bn economy is also heavily reliant on construction and real estate, two of the industries worst hit by the credit crunch. In Dubai, developers last week called a 12-month halt to initial work on the Nakheel Tower, a planned kilometre-high skyscraper, citing “current market trends”. House prices in the emirate fell 8 per cent in the fourth quarter, according to Colliers International, a real estate consultancy. Abu Dhabi, Dubai’s bigger, wealthier neighbour, has also seen job cuts, not just in construction and property but in financial services too. Mounting gloom recently led Standard Chartered, the UK bank, to cut its full-year UAE growth forecast to just 0.5 per cent from an earlier 2.7 per cent estimate – well below the 7 per cent rate of recent years.
Middle East property investors and developers are likely to be the saviours of the property industry which is currently facing financial problems due to high interest rates and tight lending conditions.
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