The Emirate of Dubai is one of the premier business hubs in the Middle East. However, petrodollars have not shielded it from an economic crisis.
Dubai based much of its success upon a strong property boom. Today, figures show that the property boom has officially gone bust. Many major property developers have begun firing staff, or reviewing future employment needs. Others are scaling back growth plans as financing for companies, and home buyers, disappear. Markus Giebel, chief executive of Dubai-based Deyaar Development Co., told the Associated Press that: “What happens in Dubai is very linked to the financial crisis”.
Stock Market Woes
Dubai's stock market this week suffered its worst week this year. The market could tumble to the same level that it started at in 2004; with the worst-hit sector being properties. Paul Davies, an expert in Middle East markets, told The National that: “... prices have fallen substantially, particularly for projects where completion dates are a long way off. These properties were popular with speculators, but this market is now very dead. There continues to be strong demand owing to population pressures, but the availability of financing is the problem. Finance providers have tightened credit criteria as they seek to reduce exposure to the sector and tackle their own liquidity problems.”
Expatriate Workforce
The crisis in the Dubai stock market is already having a negative effect in more socio-political ways. For example, Emirates NBD (the largest bank in the UAE) issued a memo confirming that: “In view of the current market scenario, it has been decided to suspend retail credit facilities to expatriate employees… due to possible restructuring, layoffs and job losses”. The bank has effectively stopped lending to expatriate employees of leading real estate companies in the region.This is very important to note because Dubai's workforce is mainly composed of expatriate employees.
Massive job cuts pose a more complicated problem in Dubai than in other places because they would also involve a mass deportation of workers. Most construction projects depend on laborers from India and Pakistan. Soaring inflation has recently triggered civil disturbances in Dubai; a property collapse could trigger the same if the government needs to deport thousands of these laborers. The government is already preparing itself for the possibility of deportations and resulting civil disturbances.
Abu Dhabi Safety Net
Analysts are expecting Abu Dhabi (the senior and controlling Emirate in the UAE) to help soften the blow of this crisis. For example, a recent report by HSBC confirms that Abu Dhabi has the cash liquidity to support its own banks and property companies. Therefore, Abu Dhabi is likely to use some of this liquidity and stability to help prevent a complete collapse of markets in Dubai. The UAE Central Bank has already confirmed that it´s board has discussed plans to launch facilities for supporting real estate lending in Dubai, as well as in the rest of the UAE.
The copyright of the article Dubai Hit Hard by Global Crisis in Emerging Business Markets is owned by Phillip Barea. Permission to republish Dubai Hit Hard by Global Crisis in print or online must be granted by the author in writing.
If Dubai would have real property rights and easy immigration, they could
have avoided this! Who wants to invest in this hopelessly overbuilt area.
$7,000 per night - laughable. Just read the job ads, age restrictions,
religious restrictions, language restrictions etc. Not somewhere I want
want lo live. Screw them. Now they can rent all the crap to their own
people. Ski in the desert, what a garbage. And sand all over the place.
Time for the Arabs to come back into reality, good for them.
Nov 19, 2008 9:01 AM
Guest :
Hi this for people who are searching for jobs in IT companies in dubai i
can say the first and foremost worst ever seen company there is
NETLINKBLUE.
The major issue there is they dnt credit salary for
any of the employees there, and the owner likes everything to keep it for
him self rather than sharing his profit. If its a loss he wwants to
share it saying loss no salary...
They have employees in visit
visa..... for years and years to go...
PLEASE EVER NEVER JOIN IN
NETLINKBLUE ITS FOR ALL NEW COMERS WHO COME TO DUBAI. DO NOT EVER JOIN EVEN
THEY GIVE MILLIONS......
Hope the GOVERNMENT TAKES RESPECTIVE
ACTION ON THESE COMPANIES........
Regards,
Truth
publisher..
Nov 30, 2008 9:12 PM
Guest :
the UAE has the potential to overcome this crisis. some people tend to
seperate Dubai and Abu Dhabi and speculate negatively pushed by obvious
prejudice and jealousy (like the below sick guest). to whome it may
concern UAE is a solid "Union" consolidated since 37 years by
late sheikh Zayed's extraordinary vision. UAE has achieved in 37 years a
magnificient record progress and development which was not achieved even by
"the western developed world" in such a short period.... I
truely believe that the current "world crisis" created by so
called developed world will at the mid to long term benefit UAE because
many capitals and net worth would seek safe heavens away from economical
turmoils affecting in a bigger degree the industrialized nations.UAE is a
safe heaven "par excellence"....the future Therfore belongs to
UAE which has proven all trough these 37 years its capacity to adapt to
various past world economical crisis....to guest i quote :_ "moral
indignation is jealousy with a halo " Wells.H.G
Jan 4, 2009 10:27 PM
Guest :
To the person saying "who wants to invest in this hopelessly overbuilt
area, $7,000 per night" I totally agree.
Dubai is nothing
but pure fake crap ! I've lived and worked there and I'm glad I left
because that's not a place I would want to be. Too many stupid restrictions
and too expensive.
Screw them. It's like the system is built to
make you pay most (if not all) the money you make. You don't get to save
money and there is absolutely no job security.
Jan 20, 2009 8:10 PM
Guest :
You're right. Dubai is crap. No doubt about it. This place has totally been
changed for the worse. It is sad in a way that this has happened because
prior to all this so called "development" people used to be able
to save quite a bit here and still live very well at easily affordable
prices. Well, it is different here today unless your statusquo is
effectively the same. But there are fewer people than before who enjoy the
same statusquo in today's terms.
Basically, this place is crap.
No one really wants to acknowledge reality here, especially the
authorities. Unless you have expats of your level surrounding you, the
demographics of this place are really very bad. Basic expenses like rent
are extremely expensive and they have purposely done that to curb the
outflow of what they consider their wealth to other countries via earning
expats. Its like there is so much to be said but you are not really
comfortable saying it because they do restrict a lot. The culture here in
general has become quite restrictive and unexpressive. And earlier, it was
neither restrictive nor was there much to express because things were going
pretty smooth economically and financially due to fair rents charged.
Basically, this is not a place where you can express yourself but I will
express myself. And I'm not saying anything that is wrong. Its true that
taxis cannot be hailed on the street here. Its true that the bus system is
bad. Its true that traffic has become congested. Its true that the place is
overpopulated. Its true that rents are unfairly and injustifiably
expensive. Its true that there aren't enough parks here. Its true that you
have to pay an official fee to unpleasant employees before being allowed to
enter. Its true that children don't really have a place to play here. Its
true that the cars look nice but how does that help people who can't afford
them?
Dubai is crap. I hate it here. Its true that they pick
ups huge cans of trash every other day instead of every day, which is
required. Its true that the authorities take little interest in the
problems of expatriates caused by their own systems. Its true that socially
this place is missing a lot. I hate it here. And I think that most people
who realize that things have gone bad here hate it too.
Jan 27, 2009 6:39 AM
Guest :
I totally agree with the guys here that Dubai is a crap, infact they have
started looting people and have pushed the middle and lower class out
purposly. They increased the rent so as to make us spend half of our
salaries here and keep their wealth in their own hands. There are no rights
even if you own a property you will not get similar rights as locals. Now
due to crises people are leaving this dubai place and selling the
properties at half of the price to pay of bank loans.
Feb 13, 2009 6:37 AM
Guest :
I have lived here 15yrs and today I'm planning to move back to my country.
Dubai is a city that has a prejudiced and insecure local population. They
charge for everything and high prices for everything. Real estate balloon ,
was fake and so was stock market. People lost entire life savings but the
locals earned. The rents increase everywhere and less control by
authorities except just policies and no one follows them
Its the
highest racist country, you are classified on the basis of Nationality,
Language, Education, Age, and lot more.
The locals here find
themselves highly superior, you cannot argue with them even if they are
wrong. The banks are very easy to take a loan but they ride on a tool
called Guarantee cheque which they arm twist people to pay up money and are
assisted by the Police in this. The banks lend at times at 48% p.a on
credit cards, No control each bank decides its own course. They give credit
cards to a person of 1000$ salary worth $15000.
It is not
recommended city to live your dreams as its that star that has lost its
shine. If you spend a couple of years in any other country the least they
do is recognize you and give you residence/citizenship but here you are a
visa stocker entire life.
Feb 16, 2009 3:55 AM
Guest :
I agree with people. This place is a piece of junk popping up in the
desert. Here skin colour rules. If you are a white then your qualification
educational background experience doesnt matter. You are straight away
propelled to a top post. But if you are an asian then you are made a slave
to lesser qualified masters. if at all u r planning to work here please
dont make a mistake more so if you are from the sub continent
Feb 17, 2009 4:41 AM
Guest :
I totally agree with those guys... these plays is totally ruled by the
greediness of the people who are manipulating the government. they are
prejudice and dont care about the expats.
Please dont be
fooled....
enough is enough....
Feb 23, 2009 11:47 AM
Guest :
If the place is that bad so stay in your own country. I am shoked by the
raciste comments about Arabs. None of you condemded the raciste
allegations. I must point out tha the arabs non locals are subjected to the
same rules as the other nationalities. It is the same rules for all expats.
Many poeple became rich in Dubai from all nationalities. Now that things
are difficult there you are sitting your hatered.
Feb 24, 2009 3:43 AM
Guest :
first of all , i want to say that all those procedure are applicable in gcc
countries, and if they do not change thier politics in hiring unprof
manpower the result will be worst that what they are expecting give your
expatriates the wrights to live like europ.no kafil ,give them insurance to
feel like home ..after 10 years give them the write to be nationals and you
will see the country will be in a good shape no crises .expatriates feeling
to work for a period of time and leave no ensurance at all
............things must change
Feb 28, 2009 9:25 AM
Guest :
Dubai = The city of every bad and stupid idea in the World! Dubai is
nothing then a fake place loaded with traffic, dust, stupid people, stupid
laws, stupid roads, stupid cameras, and stupid places. I lived then a
year and a half i was dying and I thank God that i left now! Im so happy i
just look at it and laigh at those people who are still suffering from this
evil country that has a fake adv.! its nothing more then a stupid place to
be. Expensive for nothing! The first day u step in it your full of
credits!! They have their own way of making money by stealing people!! This
country is a mess! No place to park, no taxi available at any time.! Stupid
drivers!!! stupid roads!! stupid hotels full of bitches! a country where
you work to pay ur debts! nothing more then that! a coutry witout sewages!
whe it rains its a tsunami there! How stupid they were ?? they forgot to
build sewages!! I can write alot about dubai and discribe how bad it is!
English is the first language, indian is the second, ordu is the
third and their native language is barely seen and spoken! I ruined my
english there!! They speak english like a chinese is speaking spanish! The food in dubai is all spoiled. when u eat u can get ill! it happened
to me many times! They introduced this silly salik! What a stupid
idea! They have he biggest mall in the world and only 1 lane to go in the
parking so you need arround 2 hours to arrive at the parking!! and 2 hours
to leave!! what a mess!! what a disorder!! what an UNCIVILIZED country!!
people lack of sleep in dubai! I hate this country from the deep of
my heart! i had the worst experience ever! and I thank god again and again
that i left this country alive. Becoz you ever know when u can die in a car
accident in dubai with teir stupid wrong roads and lines and stupid people
whom dont know how to drive!!!! Hope dubai will suffer more from this
crisis... To hell with Dubai!
Mar 3, 2009 10:04 AM
Phillip Barea :
As a follow-up on this story: In February, 2009, Abu Dhabi gave Dubai
$10 Billion to help them with their debt.
Mar 5, 2009 6:06 AM
Guest :
A lot of frustrated people commenting on this article ... what the hell!!
Some using the word "stupid" and "fake" a 1000 times,
as if it's the only word they know ... perhaps 2 words describing their own
opinion.
It is at it is: Dubai is a City and Emirate in proces
of development - hate it or love it, but don't post fake messages. Tell
people what those 'stupid' regulations are, have u ever heard of
"wrong" roads, somebody is even blaming Dubai for messing up his
English?? Come on man, get real!
Dubai can be a business
opportunity if you have a clear project in ur head; for tourists it is
definitely worth seeing how a new city rise. It's expensive, but salaries
are good, profits are huge ... and the livestyle is chilled.
Cheers. A1
Mar 9, 2009 1:12 AM
Guest :
Surprising, Dubai was Heaven on Earth for a majority till a few months ago.
All this have changed and the same good people who have enjoyed the same
Dubai’s goodness are calling her "Fake and Stupid and Garbage".
Unfortunate truly. I think, Dubai is still good for people who want to
make a quick buck and leave. If your intentions were to get a citizenship,
this is the wrong place. Why should someone forsake their mother-country
for a foreign country, go back to where you came from, go back to where
your forefathers were, that’s your history and tradition and culture. Now,
make the money if you can and just get out of this place. Where in the
developed or developing world can you get this easy access? Can you get a
visa to US or UK or AUS or CAN this easily? Atleast Dubai is there as a
common man's hope to make a living. Now, don’t blame Dubai. The
recession has hit the world over, not just Dubai/UAE. Maybe, if the
Federal Govt. relaxed rules on citizenship, definitely there would have
been lot of takers. This could have been adopted home for many which
indirectly would have lend a bit of support to the economy as well.
Investor confidence has to be built by the authorities for the property
sector to sustain or flourish. As we have realised, the property market had
nursed with it a vast spectrum of businesses that had supported many
segments of the society - from Investors to top executives to Laundries to
groceries and Labourers. And when the crisis hit, it hit the same lineage,
thus the huge slump in business. Imagine, a small time corner grocery
feeling the pinch on the crisis, it means what? The crisis has not just
affected the IT professionals or the Engineers or the Managers, but the
common labourer also. This huge 'crater' of redundancy situation that has
been created now and the even larger slump in businesses and in any
nation's GDP is not going to be leveled in the near future. Economist
expected a V shaped recovery; but it is poised and feared to be a L shaped
one and the subsequent recovery is now expected not in a couple of years
!!! THIS IS THE TIME FOR INDIVIDUALS TO ACT AS SELF-GENERATING
BUSINESS UNITS thereby creating ripples in the market; these ripples should
collectively be the large waves of economic prosperity that should stay for
a long long time to come. Try being productive oneself, the way one can and
be a partner in making every nations GDP back to healthy numbers.
Apr 4, 2009 2:26 AM
Guest :
OMG. what are these sick comments? I am an expat exactly like you but it is
crystal clear that all thes hate and " fake" comments are illogic
and nonsense. I BET anyone who believes that Dubai is crap if you ask
him "if you are offered the UAE nationality will you go back"
100% will accept. Hey MATURE&rational people, u can't say that is
dubai is noting, crap..... just because you were laid off or so. " the
reason might be behind your layoff is your mind which has that sick
mindset!
I do agree that there is clear racism same as in your
countires (but here in dubai racism between nationalities but in our
countries racism is within the same nationality).
Hey guys, if
you are complaining about that much, why you didn't leave it to your home
countires? and if you already left it, I doubt that you do not have traffic
there, you don't have taxes there, I doubt if you are safe!
PLEASE just imagine for a moment that that city is 37 years old only.
please, be constructive,Dubai is for the smart people.
Apr 22, 2009 4:43 PM
Guest :
The city was built by petrol money, and it wont survive on anything else
than petrol money. They tried relying on other sources in dubai and here
you have the result.. this city is too fake to be true!
May 1, 2009 4:42 AM
Guest :
I dont agree with all your bad comments about dubai, Dubai is a developing
country and soon will recover from this global crisis which most countries
are affected too. who benefited when dubai was booming is'nt we all expats,
I believe those people who throw bad comments they are the one who was once
something here and now they are nothing!dont blame the government or locals
blame yoursef. Dubai goverment treats foreigners fairly and also locals
here I believe are very good and hospitable people.
Jun 29, 2009 7:56 AM
Guest :
Dear all supporting Dubai, the reply is below:
Dubai is not
providing all rights for expats and there is nationalization: hiring only
locals. The locals come get trained by expats and promoted. Expat is still
in the low salary waiting for raise or good salary to support or to bring
family. The employees are burdened with several rules that they end up
either investing their saving and getting nothing or leave to their
country.
Many people became rich after sucking others money. It
is like take it or get lost. Rents are 80% of salary and living OMG… spend
ur salary and ur savings…
Abu dhabi gave that money to dubai’s
government but did you here they invested in companies to improve.. No and
also when Dubai kept the money Abu Dhabi bought the companies shutting
down.. it is also marketing not showing the real face. If they really
wanted to help why did not Abu Dhabi send the money directly to the
company.
If citizen is given 100% will accept you know WHY?
Because it is heaven for citizens getting good salary and other benefits
unlike expats have to suffer and suffer until they die or leave.
Dubai was built by Asian workforce but now Arabs are more preferable.
Asians are treated so bad same as US was treating blacks before.
Everyone take my advice or not it is your choice. However, most of the
negative feedback is very true.
It is also true when UAE was
growing expats did benefit but not same as Arabs or citizens in UAE/Dubai.
Since 2006 rents are high due to salary raise of locals but the people
paying rents are expats and they are still getting low salary.
If you want to work in Dubai accept offers not less than AED20000pm and
you can save little if they do not provide accommodation. Employers say
they do but inquire whether it is deducted from salary and it is near work
or not. If you are planning to invest then it should be new and unique idea
with capital AED1 million or plus but there is no assurance to get profit
first 5 years.
Nov 14, 2008
