The real estate and banking sectors in Dubai are likely to see consolidation next year, according to a top government official.

"I personally believe we will see consolidation in real estate and banking in 2009," Nasser bin Hassan Al Shaikh, Director-General of the Dubai Department of Finance, told Emirates Business.

He, however, declined to comment if any Dubai Government-owned property developers would merge, saying: "It is up to the shareholders to decide, but consolidation will happen."

The UAE Central Bank is working out solutions to provide more funding to mortgage providers, Al Shaikh said. "We expect to see more financing options on the retail side as well," he added.

Banks and home financing companies in the UAE have curtailed retail lending with Tamweel and Amlak Finance reducing their loan-to-values from 90 to 75 and 65 per cent, respectively.

Last month, the UAE Government merged Amlak Finance, Tamweel, Real Estate Bank and Emirates Industrial Bank to create Emirates Development Bank aimed at providing facilities to property buyers and developers.

In 2007, the Dubai Government announced the merger of Emirates Bank International and National Bank of Dubai, leading to the creation of a national and regional champion with the largest asset base in the Middle East.

According to analysts, mergers and acquisitions will enable better control over the pace of real estate development in the emirate and the region.

"In the Middle East, mergers and acquisitions will be driven by government initiatives to strengthen the real estate sector, especially given the large indirect and direct government stakes in the companies," Robert McKinnon, Managing Director of Research at Al Mal Capital, told this newspaper.

A report by Bain & Company showed the number of M&A deals in the country reached 95, out of a regional total of 188 for the Gulf Co-operation Council.

The UAE leads the Gulf in the value of deals with almost 75 per cent share of the $9.2 billion (Dh33.8bn) total.

The value of deals in the UAE was 50 per cent of the total value in the GCC during the same period.

Major Dubai real estate firms have come out and assured the market that their debt obligations and projects will not be affected by the downturn.

Yesterday, Nakheel, the real estate arm of Dubai World, said it had enough cash to complete existing projects and foresees "no issues" when its $3.52 billion (Dh12.9bn) sukuk matures in December 2009.