|
Dubai Not So Hot Anymore
|
View this Thread in Original format
| HardTranceProd |
http://www.nytimes.com/2009/02/12/w...&pagewanted=all
What was promising to be a glamorous, shiny "wonder of the world" is quickly unravelling as a result of the global financial crisis. Not only that, but a hitherto relatively liberal nation is turning back and flirting with Muslim conservatism instead. (By the way, this is the same direction taken by Turkey in recent months.)
Laid-Off Foreigners Flee as Dubai Spirals Down
| quote: |
DUBAI, United Arab Emirates — Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.
Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.
“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”
With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.
The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here lose their work visas and then must leave the country within a month. That in turn reduces spending, creates housing vacancies and lowers real estate prices, in a downward spiral that has left parts of Dubai — once hailed as the economic superpower of the Middle East — looking like a ghost town.
No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled. But with the government unwilling to provide data, rumors are bound to flourish, damaging confidence and further undermining the economy.
Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.
Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.
“At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”
Some things are clear: real estate prices, which rose dramatically during Dubai’s six-year boom, have dropped 30 percent or more over the past two or three months in some parts of the city. Last week, Moody’s Investor’s Service announced that it might downgrade its ratings on six of Dubai’s most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai’s roads, usually thick with traffic at this time of year, are now mostly clear.
Some analysts say the crisis is likely to have long-lasting effects on the seven-member emirates federation, where Dubai has long played rebellious younger brother to oil-rich and more conservative Abu Dhabi. Dubai officials, swallowing their pride, have made clear that they would be open to a bailout, but so far Abu Dhabi has offered assistance only to its own banks.
“Why is Abu Dhabi allowing its neighbor to have its international reputation trashed, when it could bail out Dubai’s banks and restore confidence?” said Christopher M. Davidson, who predicted the current crisis in “Dubai: The Vulnerability of Success,” a book published last year. “Perhaps the plan is to centralize the U.A.E.” under Abu Dhabi’s control, he mused, in a move that would sharply curtail Dubai’s independence and perhaps change its signature freewheeling style.
For many foreigners, Dubai had seemed at first to be a refuge, relatively insulated from the panic that began hitting the rest of the world last autumn. The Persian Gulf is cushioned by vast oil and gas wealth, and some who lost jobs in New York and London began applying here.
But Dubai, unlike Abu Dhabi or nearby Qatar and Saudi Arabia, does not have its own oil, and had built its reputation on real estate, finance and tourism. Now, many expatriates here talk about Dubai as though it were a con game all along. Lurid rumors spread quickly: the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.
“Is it going to get better? They tell you that, but I don’t know what to believe anymore,” said Sofia, who still hopes to find a job before her time runs out. “People are really panicking quickly.”
Hamza Thiab, a 27-year-old Iraqi who moved here from Baghdad in 2005, lost his job with an engineering firm six weeks ago. He has until the end of February to find a job, or he must leave. “I’ve been looking for a new job for three months, and I’ve only had two interviews,” he said. “Before, you used to open up the papers here and see dozens of jobs. The minimum for a civil engineer with four years’ experience used to be 15,000 dirhams a month. Now, the maximum you’ll get is 8,000,” or about $2,000.
Mr. Thiab was sitting in a Costa Coffee Shop in the Ibn Battuta mall, where most of the customers seemed to be single men sitting alone, dolefully drinking coffee at midday. If he fails to find a job, he will have to go to Jordan, where he has family members — Iraq is still too dangerous, he says — though the situation is no better there. Before that, he will have to borrow money from his father to pay off the more than $12,000 he still owes on a bank loan for his Honda Civic. Iraqi friends bought fancier cars and are now, with no job, struggling to sell them.
“Before, so many of us were living a good life here,” Mr. Thiab said. “Now we cannot pay our loans. We are all just sleeping, smoking, drinking coffee and having headaches because of the situation.”
|
|
|
|
| DJ Damerchi |
this all is very ironic, and i couldn't beleive no one here saw it coming. The real estate bubble couldn't last forever. Dubai doesn't have much oil revenue at all, and it has definately taken a large impact.
Rents were becoming insane in this city. the lucky people were the people that moved here before the big boom. since people that were already situated in rental villas, there was a cap placed at 7 percent a year for the rent price to increase-but if new people lease the house they can lease whatever price they want. the house identical to mine behind me is twice the rent because the family just moved in there.
People were getting into some very risky investments recently promising high margins of return in real estate. Like buying entire floors of prime office for example (valued upwards of 5 million dollars). people would buy on 4 percent down f ex., then sell to someone else, one bank pays another and they keep the fat profit(which is the entire increased value of the property), which worked out percentage wise would easily be more than double the initial investment. It became a casual thing to do, like little schoolboys at shisha not realizing the fragility of it all.
Now there is widespread panic amongst these class of "Dubai middleclass" investors, many of them pooled with connected people for the purchase..many were certain they were gonna make sells at profit and they can no longer make payments. Many are desperate and selling at losses and just backing out. they are often not paying and are not worried about rules and regulations. many people here can use connections to avoid payments, withdraw from the project with no penalty. others are heavily penalized.
The censorship here is expected, its a monarchy after all. amongst the businessmen the figures do get around, there is an awareness that the formerly thriving real estate is in shambles. Ive always wondered what it would be like to work for the gulf news, now i know they life in a state of fear LOL.
I think the ghost town theory is definately an exaggeration. The city is still stable especially people working in executive positions for foreign companies in the tax free zones lets say. government sector jobs are solid, abu dhabi will compensate.
the labour class is apparantly getting even more mistreatment than usual, they are walking around hungry and homeless often times, with companies screwing them over with no flight back.
I heard they had started a program do move these "wandering labourers" to neighboring countries to get work, it wasn't stated if they were willing or not.
the entire system is based on overworked/ abused/deceived labourors....and at the top you have an emarati class that is just rolling in the wealth, and business is required to have an emarati partner no matter how unqualified he may be. |
|
|
| jerZ07002 |
| quote: | Originally posted by DJ Damerchi
this all is very ironic, and i couldn't beleive no one here saw it coming. The real estate bubble couldn't last forever. Dubai doesn't have much oil revenue at all, and it has definately taken a large impact.
Rents were becoming insane in this city. the lucky people were the people that moved here before the big boom. since people that were already situated in rental villas, there was a cap placed at 7 percent a year for the rent price to increase-but if new people lease the house they can lease whatever price they want. the house identical to mine behind me is twice the rent because the family just moved in there.
People were getting into some very risky investments recently promising high margins of return in real estate. Like buying entire floors of prime office for example (valued upwards of 5 million dollars). people would buy on 4 percent down f ex., then sell to someone else, one bank pays another and they keep the fat profit(which is the entire increased value of the property), which worked out percentage wise would easily be more than double the initial investment. It became a casual thing to do, like little schoolboys at shisha not realizing the fragility of it all.
Now there is widespread panic amongst these class of "Dubai middleclass" investors, many of them pooled with connected people for the purchase..many were certain they were gonna make sells at profit and they can no longer make payments. Many are desperate and selling at losses and just backing out. they are often not paying and are not worried about rules and regulations. many people here can use connections to avoid payments, withdraw from the project with no penalty. others are heavily penalized.
The censorship here is expected, its a monarchy after all. amongst the businessmen the figures do get around, there is an awareness that the formerly thriving real estate is in shambles. Ive always wondered what it would be like to work for the gulf news, now i know they life in a state of fear LOL.
I think the ghost town theory is definately an exaggeration. The city is still stable especially people working in executive positions for foreign companies in the tax free zones lets say. government sector jobs are solid, abu dhabi will compensate.
the labour class is apparantly getting even more mistreatment than usual, they are walking around hungry and homeless often times, with companies screwing them over with no flight back.
I heard they had started a program do move these "wandering labourers" to neighboring countries to get work, it wasn't stated if they were willing or not.
the entire system is based on overworked/ abused/deceived labourors....and at the top you have an emarati class that is just rolling in the wealth, and business is required to have an emarati partner no matter how unqualified he may be. |
It's funny (not really) that what started off as "america's problem" has slowly become a bigger problem for the rest of the world. Dubai is just one example of what I'm talking about. Another example is that Japanese exports are down 30+ percent, and GDP shrunk 12% on an annualized basis. This is not good at all! All signs point toward the big D word. I just hope we can somehow get out of this reinforcing spiral of negative news. People would be buying if they weren't worried about losing their jobs. For the first time in my life (maybe since graduating college) I actually said, "maybe I won't go out to eat so that I can conserve money." As stupid as that sounds, that's just not how I think. |
|
|
| jerZ07002 |
| quote: | Originally posted by DJ Damerchi
this all is very ironic, and i couldn't beleive no one here saw it coming. The real estate bubble couldn't last forever. Dubai doesn't have much oil revenue at all, and it has definately taken a large impact.
Rents were becoming insane in this city. the lucky people were the people that moved here before the big boom. since people that were already situated in rental villas, there was a cap placed at 7 percent a year for the rent price to increase-but if new people lease the house they can lease whatever price they want. the house identical to mine behind me is twice the rent because the family just moved in there.
People were getting into some very risky investments recently promising high margins of return in real estate. Like buying entire floors of prime office for example (valued upwards of 5 million dollars). people would buy on 4 percent down f ex., then sell to someone else, one bank pays another and they keep the fat profit(which is the entire increased value of the property), which worked out percentage wise would easily be more than double the initial investment. It became a casual thing to do, like little schoolboys at shisha not realizing the fragility of it all.
Now there is widespread panic amongst these class of "Dubai middleclass" investors, many of them pooled with connected people for the purchase..many were certain they were gonna make sells at profit and they can no longer make payments. Many are desperate and selling at losses and just backing out. they are often not paying and are not worried about rules and regulations. many people here can use connections to avoid payments, withdraw from the project with no penalty. others are heavily penalized.
The censorship here is expected, its a monarchy after all. amongst the businessmen the figures do get around, there is an awareness that the formerly thriving real estate is in shambles. Ive always wondered what it would be like to work for the gulf news, now i know they life in a state of fear LOL.
I think the ghost town theory is definately an exaggeration. The city is still stable especially people working in executive positions for foreign companies in the tax free zones lets say. government sector jobs are solid, abu dhabi will compensate.
the labour class is apparantly getting even more mistreatment than usual, they are walking around hungry and homeless often times, with companies screwing them over with no flight back.
I heard they had started a program do move these "wandering labourers" to neighboring countries to get work, it wasn't stated if they were willing or not.
the entire system is based on overworked/ abused/deceived labourors....and at the top you have an emarati class that is just rolling in the wealth, and business is required to have an emarati partner no matter how unqualified he may be. |
It's funny (not really) that what started off as "america's problem" has slowly become a bigger problem for the rest of the world. Dubai is just one example of what I'm talking about. Another example is that Japanese exports are down 30+ percent, and GDP shrunk 12% on an annualized basis. This is not good at all! All signs point toward the big D word. I just hope we can somehow get out of this reinforcing spiral of negative news. People would be buying if they weren't worried about losing their jobs because of all the negative news. For the first time in my life (maybe since graduating college) I actually said, "maybe I won't go out to eat so that I can conserve money." As stupid as that sounds, that's just not how I think. |
|
|
| DJ Damerchi |
| quote: | Originally posted by jerZ07002
It's funny (not really) that what started off as "america's problem" has slowly become a bigger problem for the rest of the world. Dubai is just one example of what I'm talking about. Another example is that Japanese exports are down 30+ percent, and GDP shrunk 12% on an annualized basis. This is not good at all! All signs point toward the big D word. I just hope we can somehow get out of this reinforcing spiral of negative news. People would be buying if they weren't worried about losing their jobs because of all the negative news. For the first time in my life (maybe since graduating college) I actually said, "maybe I won't go out to eat so that I can conserve money." As stupid as that sounds, that's just not how I think. |
yeah, it became really rabid here. Too many projects were getting built, and too many people were "buying" these with intent to sell A.S.A.P.. It just became a game of hot potato really, not many smalltime investors would plan on holding these projects for the long run(they didn't have the capital to keep going with the payments, just wanted a quick flip).In the midst of this mania financial background checks were improperly done when people bought these packages-they just assumed the surge of foreign investors would always step in to take the slack off, since the value just seemed to keep going up and up in the new islamic las vegas.
when that knowledge that the whiteman's "inevitable purchase" of your risky investment may become alot more unlikely, since people were obviously thinking this may not be the best time to buy real estate in the middle east---the panick starts! |
|
|
| Magnetonium |
I remember some time ago a thread about Dubai's prosperity and how so many foreigners move there - but I said that even if they gave me free money to move there and accomodation/job that paid great money, I would never even consider it. Glad I was proven right.
Nothing against the people of Dubai - I just never thought and still dont think that their government is worth my time. I never thought that their liberal ways of things would last.
Heck, an unmarried British couple got arrested for flirting on a beach few months ago, and there are quite a few foreigners in their jails. I wouldn't feel safe there at all as a foreigner.
If you're native of Dubai, you're better off I think. And I dont think the situation in Dubai as bad as the article says - for the native people of Dubai that is.
|
|
|
| jerZ07002 |
| quote: | Originally posted by Magnetonium
I remember some time ago a thread about Dubai's prosperity and how so many foreigners move there - but I said that even if they gave me free money to move there and accomodation/job that paid great money, I would never even consider it. Glad I was proven right.
Nothing against the people of Dubai - I just never thought and still dont think that their government is worth my time. I never thought that their liberal ways of things would last.
Heck, an unmarried British couple got arrested for flirting on a beach few months ago, and there are quite a few foreigners in their jails. I wouldn't feel safe there at all as a foreigner.
If you're native of Dubai, you're better off I think. And I dont think the situation in Dubai as bad as the article says - for the native people of Dubai that is.
|
that british couple 1) wasn't a couple (they just met), and 2) were having sex. but i understand what you mean.
throwing money at won't turn it into gold. |
|
|
|
|
