Citi, one of the largest Wall Street banks, has upgraded the UAE's real gross domestic product (GDP) growth to 5.1 per cent for 2012 compared to its previous estimate of 1.9 per cent, citing resurgence in in the country's construction and real estate sectors.
"While we had previously expected a continued contraction of the construction and real estate sectors in 2012, we now expect modest growth of two to three per cent in real terms, with the net effect of lifting overall real GDP growth to 5.1 per cent in 2012 (previously 1.9 per cent)," Farouk Soussa, Middle East economist at Citi in Dubai wrote in the latest Global Economic Outlook and Strategy report.
Although the report stated that the recovery was mostly in the prime market, there was strong anecdotal evidence of an increase in general construction activity in the emirate, with stalled projects being completed and new projects being announced.
A number of small developers have restarted stalled projects in Dubai under the Dubai Land Department's funding initiatives with leading developers such as Emaar Properties and Nakheel launching new projects.
In its reports, Citi said it had upgraded its growth projections for Dubai, mainly on the back of a reassessment of the growth prospects in the construction and real estate sectors.
Dubai, this week alone, has announced three multi-billion-dirham projects – Mohammed Bin Rashid City, comprising the largest mall in the world, a park bigger than London's Hyde Park and over 100 hotel facilities; Dh10-billion leisure and entertainment destination with theme parks in Jebel Ali and Dh2.5-billion for expansion of JW Marriott Marquis, the world's tallest hotel.
Jones Lang LaSalle, a global real estate consultancy, said last month that Dubai had seen a steady recovery in the property market through the year, with villa prices rising by over 20 per cent year-on-year in the first half of 2012. Knight Frank, as well, has said that villa price have risen 20 per cent year-on-year.
The International Monetary Fund (IMF) said in October that the real GDP of the UAE is expected to grow from 2.3 per cent to four per cent in 2012 and raised estimates of economic growth to 5.2 per cent from 4.9 per cent last year.
The surplus of the UAE's current accounts is expected to reach 9.3 per cent of the GDP in 2012 compared to 9.7 per cent in 2011. The surplus of current accounts is may rise to 10.1 per cent in 2013, the IMF had said.