Dubai may face credit crunch of $20 bln

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Dubai, Oct 4 (UNI) Dubai government and its companies could face difficulty renewing about 20 billion dollars loans they have taken from international banks due to the escalating global financial crisis, and this may in turn hit the real estate sector, analysts say.

Analysts warned the lack of liquidity in the banking sector could see banks unwilling to refinance the debt, especially that of companies connected to the real estate sector, which could stunt economic growth, UAE daily The National recently reported.

''People are worried whether the big Dubai names will be able to roll over their debt, especially those who are related to real estate,'' Ibrahim Masood, a senior investment officer at Mashreqbank, was quoted as saying.

''Given the level of growth we've seen, there must have been a large amount of funding raised to fuel that growth, and the funding is not of an indefinite maturity.

''The credit prices for guys like Dubai Holdings are so high right now, that people are beginning to take a serious look at whether those guys will be able to roll over the debt when it reaches maturity,'' he said.

Eckart Woertz, an economist at the Gulf Research Centre, told the newspaper the UAE, and in particular Dubai, was ''vulnerable'' to a liquidity squeeze.

Scores of residential towers in Dubai Marina and other areas have been completed but are lying vacant, indicating lack of demand because of high rent and fall in speculative buying interest. Many Indian real estate developers like Shobha are late entrants to the real estate scene in Dubai.


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