UAE economy slows as Emaar drops London listing

The global credit crunch will put the brakes on the regional economy of the UAE, according to the governor of its central bank.

The news came as Emaar, the largest property developer in Dubai, announced it had dropped plans to list on the London stock exchange.

Sultan Nasser al-Suweidi, the governor of the Central Bank of the UAE, has said that a correction in the booming real estate market in the emirates is now inevitable.

He told reporters at a meeting in Fujairah: “The slowdown will be imposed on us… in everything we will see contractions.”

On Monday, Emaar Properties chairman Mohamed Alabaar said that the developer would not now seek to list shares on the London stock exchange, having pledged to do so in November last year. Alabaar blamed the “current financial environment” for the change of plan.

But both Alabaar and al-Suweidi said that the fundamentals of the UAE economies were strong. Alabaar predicted that growth in Dubai's real estate sector would remain as high as 9%, and said “real demand” still exists in the market.

“Domestic demand for real estate continues to outstrip supply and it will be so for several years,” he said.

A global fall in oil prices has shaken the oil-based economies of the Gulf states. The price of crude oil has plummeted in recent months, losing around 60% of its value since July. On Monday, it hit a 20-month low of $59.10 a barrel. Saudi Arabia, one of the largest oil producers in the world, announced plans to cut sales to Europe and Asia earlier this week.