dubai world n the black as markets bounce back
News Posted On: 25 January 2010
US futures were up in early trading on Monday, as it emerged that Dubai World may not be in as bad shape as had been thought in November 2009.
On Saturday Al Ittihad newspaper wrote that at a recent meeting of creditors, an internal report was circulated valuing the state-linked development at $120 as of the end of 2009, down from $157 billion in 2008. This asset value however should still be easily enough to cover its $57 outstanding debt.
This news may be greeted with some relief around the world, since it indicates that for the time being at least Dubai debt has been contained.
While the company's property assets dropped around 35 percent in 2009 other elements in its portfolio fared somewhat better. Al Ittihad reported that investment and strategic assets fell by a smaller percentage – less than 20 per cent.
Meanwhile economic stimulus is being injected into Dubai's economy as its transport infrastructure gets a boost as part of the government's plan to turn the state into the Middle East's commercial and tourism hub.
On Saturday Mattar al Tayyer, chairman of Dubai's Roads and Transport Authority said in a statement that up to 7.5 billion dirhams are slated for capital projects in 2010.
While the department expect a revenue shortfall of about 4 billion dirhams in 2010, positive returns in subsequent years could feed through since maintenance of infrastructure is far less burdensome than construction. Thirteen new projects will be started, and over a hundred already in train (pun intended) in descending order include the Rail Agency (just under half), Traffic and Roads (just over a quarter), Public Transport (13 per cent) with licensing, marine agencies and corporate support services bringing up the rear.
Total spend on transport for 2010 is expected to be 10.7 billion dirham, with the remainder after the 7.9 billion dirham capital expenditure to be spent on operating costs.
If Dubai is really back in business so soon after the November scare, global property is sure to feel a positive ripple effect. There is nothing like collapsing pessimism to drive a market upwards.
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