Dubai Vulnerable to Lower Oil Prices, Citigroup Says

(Bloomberg) — Dubai, the second largest of the seven sheikhdoms in the United Arab Emirates, is the most vulnerable place in the Gulf to lower oil prices as real estate prices and debt refinancing pose “real risks,” Citigroup Inc. said.

The emirate “has been booming on the oil surpluses” from neighboring Gulf states and Russia, Citigroup’s Mushtaq Khan said in the report today. “Dubai’s two specific concerns are its real estate sector and how it will refinance the debt it has built up in recent years.”


Dubai has borrowed to fund real estate projects including Burj Dubai, the world’s tallest tower, and to buy stakes in Deutsche Bank AG, European Aeronautic Defence and Space Co. and Standard Chartered Plc, as it seeks to diversify its economy.

Outstanding mortgage loans in the UAE almost doubled in the year through June as property prices soared to a record. Mortgage loans leaped 92 percent to 87.6 billion dirhams ($23.8 billion), compared with annual growth of 55 percent in March, the central bank said yesterday.

Bloomberg