Dubai builder eyes imports as Chinese yuan dips
Danube Group's Rizwan Sajan said he is is upbeat about GCC's construction investments despite low oil prices, adding a devalued yuan could reduce regional import costs
The founder and chairman of Dubai's Danube Group, Rizwan Sajan, said he believes the devaluation of the Chinese yuan could boost UAE imports.
In January, China allowed the largest decline in the yuan in five months.
According to Reuters, the People's Bank of China "shocked traders by setting the official midpoint rate on the yuan, also known as the renminbi (RMB), 0.5% weaker at 6.5646 per dollar, the lowest since March 2011".
Remarking on the impact of this devaluation, and expected declines in the future, Sajan said the development would, in theory, benefit the UAE's construction industry.
"Chinese goods will become a little cheaper for UAE consumers after the People’s Bank of China devalued the yuan by the largest single-day percentage in two decades," he continued.
"The fall in the yuan could, in principle, provide a boost to UAE imports of now cheaper Chinese goods.
"But the economic impact of the yuan’s devaluation on the UAE depends on how the devaluation affects commodity prices – including oil prices – and regional economic growth."
Sajan also denied reduced oil prices would dramatically reduce construction investment in the UAE.
"[Property] markets always go up and down, according to various factors in the region, [such as] oil prices and related sentiment," he added.
"But what I see is a simple supply and demand situation, and it will not have any bearing on the number of developments likely to be launched across the GCC in 2016."