UAE asset bubble unlikely as credit growth is modest: IIF

[DUBAI] A surge in United Arab Emirates (UAE) property values probably won't lead to an asset-price bubble because credit growth remains relatively modest, according to the Institute of International Finance (IIF). Loan growth in the second-biggest Arab economy may slow to 11 per cent in 2014 from 13 per cent last year, the IIF said yesterday in a report.

Property prices in Dubai climbed 35 per cent in 2013, according to broker Knight Frank LLP, fuelling concern that the UAE's second-biggest sheikhdom is at risk of another bust after the 2008 property crash that almost pushed it to default.

"There are major differences between the current boom and the previous, which was more driven by speculative excesses," Garbis Iradian, deputy director for Africa and the Middle East at the Washington-based IIF, said. "The strong rebound in housing prices has been driven by a significant improvement in the underlying economic fundamentals."