If there was any doubt that Ahmed Humaid al Tayer's ascension to the helm of the Dubai International Financial Centre last November would mean a new direction for the hub, those misgivings were put to rest yesterday.
DIFC chief takes the hard decisions
If there was any doubt that Ahmed Humaid al Tayer's ascension to the helm of the Dubai International Financial Centre (DIFC) last November would mean a new direction for the hub, those misgivings were put to rest yesterday. Under the governor's aegis, DIFC Investments revealed US$562.3 million (Dh2.06 billion) of losses for last year, mostly from a decision to value property at market prices. DIFC Investments, an arm that holds most of the centre's property, had previously valued land and office space "at cost", a method of accounting that did not reflect market fluctuations.
"We believe that this change would provide a more relevant and accurate representation to stakeholders regarding the market value of DIFCI's investment properties," Mr al Tayer said. Indeed, given the large declines in Dubai's skittish property market last year - prices dropped by 50 per cent in areas, by some estimates - using market values to measure the worth of the DIFC's property holdings is a rational approach. It also demonstrates Mr al Tayer's desire to bring a dose of reality to the DIFC's financial position as he leads the centre into an uncertain new era.
Smart planning is only possible when built on a realistic assessment of where things stand, underlining the importance of the accounting change as the DIFC undertakes a wide-ranging strategic review with the help of the consultancy McKinsey. Recognising declines in the value of property and other assets - and possibly offloading some of them - will undoubtedly be a central starting point in the centre's long-range plans.