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Dubai Inflation Down on Drop in Property Rents

DUBAI - Dubai has recorded a significant drop in inflation rate as it is reduced to 5.4 per cent during January to May this year mainly because of a sharp fall in property rents, a top Dubai government official said.

While during the first five months of 2008 it was 8.7 per cent, the head of Dubai Statistics Center, or DCS, was quoted as saying on Saturday.

Rental prices for residential units rose 3.2 per cent in the first five months, compared to a 5.4 per cent increase in the same period last year, Arif Obaid Al-Muhairi was quoted as saying in a report appeared in local media.

Rents in Dubai have at least doubled during a building boom that came to an end late last year after the global financial crisis and oil prices dropped off peaks of $147 a barrel last July.

Last month, the UAE’s central bank governor said a rapid price fall in the country, which saw inflation drop to 1.9 per cent in April, would not lead to deflation. With its revised growth estimates, Morgan Stanley last month predicted that the UAE economy to shrink this year. The International Monetary Fund has forecast the economy to shrink by 0.6 per cent in 2009, while another investment bank, EFG-Hermes, has estimated an annual decline of 1.7 per cent. Swiss bank Credit Suisse expects the economy to contract by 2.5 per cent. 


abdulbasit@khaleejtimes.com

· With inputs from agencies