27 October 2008

* UAE property prices set to fall

Property prices could fall in the United Arab Emirates but local banks would be able to handle the long-expected downturn, the country’s central bank governor said at a conference on Monday.

“A real estate correction could happen, but UAE banks are cushioned... the banks are safe,” Sultan Nasser al Suweidi, the central bank governor, said at a conference held by the Arab Monetary Fund in Abu Dhabi, the capital of the UAE

The governor stressed that the domestic liquidity situation was improving and that the central bank stood ready to pump in even more capital into the banking system, but it is the first time a high-ranking government official has admitted that local real estate prices could fall.

Despite many warnings of corrections in recent years, property prices have continued to soar in the UAE, driven by booming economic growth, negative real interest rates, and a vast influx of expatriates.

Mr Suweidi also added credence to rumours of consolidation in the country’s banking sector, which is crowded by more than 50 domestic and international commercial houses, many of them government-controlled.

“At this stage I’d say mergers are a very good choice for banks,” Mr Suweidi told reporters on the sidelines of the conference. “[This is] not necessarily for weak banks but also for strong banks because mergers among strong banks will cut expenses and other administrative costs.”

Several Gulf governments, including the UAE, have deposited billions of dollars in local banks and issued blanket deposit guarantees to ease a liquidity crunch and prop up economic growth.

The UAE, one of the hardest hit countries in the Gulf region due to the relatively openness of its economy, has made up to Dh120bn available to local banks, some as direct deposits and some as a credit facility at the central bank.

Of the Dh50bn available from the central bank, about 15 per cent, or Dh7.5bn ($2bn) had been tapped so far, Mr Suweidi said on Monday.

Concerns over the liquidity squeeze and a possible downturn in real estate markets across the region - particularly in ritzy Dubai - have exacerbated the slump of local equity markets. The MSCI Gulf index has lost nearly half its market capitalisation this year.

The two UAE bourses in Abu Dhabi and Dubai both fell on Monday, declining 5.80 per cent and 2.01 per cent respectively. Saudi Arabia, the region’s biggest and most diverse stock market, slumped 5.0 per cent.

Oman’s exchange was the region’s worst performer, dropping 7.45 per cent, while Qatar fell 1.46 per cent and Bahrain declined 2.90 per cent.

Kuwait’s stock market fell 2.22 per cent, as the central bank was forced to issue a blanket guarantee of all deposits, after Gulf Bank, the country’s second-largest commercial bank, said it had lost money on a client currency derivatives trade.

The country “has recently faced mounting new challenges led by the current global turmoil and freezing international money markets,” Brahim Razgallah, an economist at JPMorgan, wrote in a research note.

“Kuwait has a long history of bank deposits guarantee that well served the country to maintain confidence in the banking system after the financial crisis of the 1980s and the first Gulf War,” he wrote in the note sent Monday.


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Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.