Although hit by a central bank overhaul of auto finance in May, car sales in the UAE are expected torebound significantly in 2011 as the country's economy demonstrates a fuller recovery from the 2009Dubai debt crisis and experiences the benefit of higher oil revenue.However, BMI's view that credit restrictions will create opportunities for vehicle financing units in theMiddle East is playing out, as dealers in the UAE launch finance programmes in response to new creditregulations. The new rules state that banks cannot lend more than 80% of the vehicle's value. Coupledwith that is a restriction on the amount of credit an individual can undertake in relation to their monthlyincome. Anecdotal evidence shows that vehicle sales in the UAE fell by between 20% and 40% year-onyear(y-o-y) as soon as the new rules came into effect, as many consumers predictably brought purchasesforward to March and April when 100% financing was still available.However, some carmakers and dealers are taking a pro-active approach to boosting sales with their ownfinancing packages. There is clearly a response to the new banking regulations in some of the schemes,which cut down the monthly instalments. Under the new regulations, loan repayments should not accountfor more than 50% of a person's monthly income.BMI believes there is already a precedent for the growth of carmaker and dealer-backed financing in theUAE, and evidence that it can encourage growth in sales. Following the global financial crisis, dealersbegan offering more finance packages, which led to a gradual uptick in sales from late 2009. Providingsome form of financing is vital to an autos market such as the UAE, which is very credit oriented.Dubai's car imports rose 33% in 2010. Car re-imports grew 8%, making them equal to the pre-crisis 2008level of US$2.45bn. In 2005-2010, Dubai imported most vehicles from Japan (44%) and re-exportedvehicles to Libya, Iraq, Iran and Saudi Arabia.Iraq, Ira

The Pentagon on Wednesday said an alleged plot by Iran to assassinate the Saudi ambassador to Washington required a diplomatic and legal response, playing down the possibility of military action.

Manssor Arbabsiar, a 56-year-old naturalized U.S. citizen holding Iranian and U.S. passports, was arrested on Sept. 29 at New York's John F. Kennedy airport and appeared in court Tuesday in Manhattan. Authorities say he has confessed and provided testimony about the role of the Iranian government in the plot.

Increasing tourism, strengthening investor confidence and the tentative shoots of lending in progressshow that the UAE is getting to the end of its real estate industry crash. GDP growth may well be small in2011, but it is positive. However, the state remains plagued by huge amounts of unoccupied property. TheUAE's commercial real estate sector remains under pressure from failing rents. In H210 the quotedmaximum and minimum rental levels for property across the board had dropped. However, when wespoke to our in-country sources again in the middle of 2011, rents had diverged. Maximum rents in thethree sub-sectors in Sharjah had rocketed. The other two emirates had a mixed bag of results. The officerents continue to decline a little in Dubai and substantially in Abu Dhabi - by more than half. Conversely,retail rents rose in both, with the same pattern of movement in Dubai and a nearly 40% increase in AbuDhabi. Industrial space commanded a moderate rise in rents in Dubai and a moderate decline in AbuDhabi.According to our in-country sources, we expect that rents across the board are likely to remain stablethrough the rest of 2011, at minimum and maximum levels. Considering the huge variations in previoushalf-years and by city and sub-sector, this may not be entirely likely. They do however, expect them todiverge again in 2012.Some key opportunities in the real estate market are:Plenty of development projects are being restarted, including Dubailand, one of the mostambitious developments ever conceived. Following an evaluation, the plans are to relaunch thelarge leisure project backed by Dubai Properties Group by the end of 2011.Investor confidence has improved as they become more comfortable with the emirate's debtsituation. The latest FPI investor attitudes report shows investor confidence in the UAE has risen5 points to 18, according to the Arabian Gazette in July 2011. Dubai Holding, a strugglingstate-owned entity repaid a

The United Arab Emirates cabinet approved a draft federal budget for 2012, projecting 41.4 billion dirhams ($11.4 billion) in revenue and spending of AED41.8 billion, leaving a deficit of AED400 million.