Dubai economic crisis - what is happening?
What is really happening in Dubai?
While the Dubai Authorities and the local media tend to paint a rosy picture of an evident critical and problematic financial situation in Dubai, some of the International Media seem to be more open about it.
How much of this is affecting Qatar?
How will the Dubai crisis, impact on Qatar?
Here are some articles exposing what Dubai does not wish to disclose:
"Damac Properties in Dubai Fail to Pay Employees Full Settlement on Dismissal
If you were beginning to believe the press releases stating that Dubai is immune from the financial crisis, the latest report from Gulf news should disabuse you of that notion. Employees fired by Damac last month due to the financial crisis are not being paid their full settlement."
http://internationalpropertyinvestment.com/damac-properties-in-dubai-fai...
"...an average of 1500 work permits and visas are being cancelled in Dubai each day as companies lay off employees in the wake of the global financial crisis."
http://www.theaustralian.news.com.au/business/story/0,28124,24922355-305...
"Dream sours in Dubai
DUBAI - The global economic slowdown hits Dubai hard, as the booming city on the shores of the Gulf has to shelve projects and lay off employees. Property group Nakheel cut 500 jobs, followed by Damac with 200 job cuts and Al-Shafar with 1,000 layoffs..."
http://www.hurriyet.com.tr/english/finance/10697588.asp?scr=1
"More than 80 vehicles found abandoned at the Dubai International Airport recently may have been left by people fleeing the country, apparently because they couldn’t repay loans after losing their jobs, according to police officials."
http://www.khaleejtimes.com/DisplayArticle08.asp?xfile=/data/theuae/2008...
"The property bubble has burst.
Dubai’s “container economy” is in for a grind in 2010 and beyond. Owners of properties are uneasily aware that the crisis shaved off huge chunks from the value of those properties.
“Real estate companies have downsized; projects have been shelved, hundreds have lost jobs. The place is rife with rumours that Dubai is in colossal debt and is seeking an Abu Dhabi bailout,...”
http://www.expressbuzz.com/edition/story.aspx?Title=Buffeted+by+the+fin+...
"The financial crisis is forcing many parents who cannot afford increasingly high fees to pull their children out of schools and nurseries, teachers and parents say."
http://www.thenational.ae/article/20090126/NATIONAL/113330627/-1/SPORT
An economy based on services is always more vulnerable than an economy based on manufacturing. What does Dubai produce? Cars, airplanes, power plants, chips, food, clothes??
Alexes i dont think so Tourisim is finished from Dubai because Emorates have world's Best Fares which attract peoples to fly with emirates and Dubai only have Most Developed Visitng Places in Middle East and Asia ... which Dubai's Neighbours never have u talking about Doha and ABu Dhabi these are so back from Dubai....... which thing Dubai have today Doha will have i thought 30' years later
so how can tourists go Doha or Bahrain or Abu Dhabi ..
in an another Hands Dubai Got a big shock from real state but i am watching right how recovering there self...and 3rd shipping will never get any city then Dubai because there is no city in era which have enough power to get... so i hope Dubai will Recover soon every thing in mid of 2010 ..
Thanks Dr.Alexex But u knw this is only a Temporary Shock
thanks Dr. Alexis for your comprehensive thoughts about the financial crisis Dubai is facing.
How to Find Your One True Love????? (http://onetruelovenetwork.com/)
Dr. Alexis,
Thank you for your valuable input.
A very interesting and comprehensive view of the facts!
To understand Dubai's economic crisis it helps to understand the four driving forces behind its economic growth. Incidentally, these are the same four forces that brought the meltdown.
Dubai borrowed heavily in the 50s and 60s to expand the port. This was an excellent decision since world trade was booming and the growth potential was enormous. Earnings from shipping operations was one of the first main sources of income for the Emirate.
Along with the development of the shipping industry (1st force) came the development of the financial center (2nd force) to support the shipping industry and to offer companies the chance to be in the Middle East and closer (but not too close) to where oil is.
Establishing Dubai as a financial center meant the development of new buildings, hotels, shopping centers and entertainment facilities. This fact combined with the expansion of the airport and the world class service Emirates offered let to a jump in tourism (3rd force).
The popularity of Dubai, along with expectations of a possible de-pegging to the USD let to speculative investment in real estate that created a price bubble.
Unfortunately, the current global economic crisis turned these four forces against Dubai. The shipping industry is in a bad shape right now, the first time in lots of recession that the industry has been affected. No one I believe expected that this financial crisis would damage the shipping industry so badly.
The financial firms that established operations in Dubai either disappeared, or they are so bruised by the crisis that are not expanding operations, but rather they are decreasing them. Even if there are companies willing to expand operations in the Gulf, Dubai is not the only attractive place any more. Qatar, Bahrain, and Abu Dhabi now have both developed financial centers and offer the opportunity to these firms to be closer to their clients (oil and gas companies).
Tourism is down as a result of the global crisis. This is a temporary shock. However, there is a permanent shock that is important. Many of Dubai's tourists are traveling to other locations with Emirates, and stop in Dubai for a few days. However, the expansion of Bahrain and Qatar's airports means that a large share of these travelers will now be diverted away from Dubai. At the same time, Dubai is not the only place any more that offers such exciting architecture (although no other place is anywhere close to where Dubai is in that respect).
Finally, all the speculators are out of the market. The real estate price collapses. People learned their lesson and prices are not expected to come back for a long long time (given all the factors above).
Where does this leave Dubai? I agree with a previous commentator that Dubai is important for the region and we should all hope that it survives and become stronger.
My humble view is that when all these turbulence clears, Dubai will offer a different sort of service for the region. It will become the "entertainment" and tourist destination for the residents of the Gulf. As Qatar and Abu Dhabi (but also Bahrain) will be hiring more expats to work here, Dubai will offer the weekend getaway destination to go and relax. Dubai's neighbors are reluctant to "become Dubai" so they will be happy to help the Emirate through the tough times so that it can perform this function in the future.
I am no expert on the matter nor have I been here long enough. This is just some thoughts I have. Please view my thoughts with cautions.
Thanks
what happen in damac is worst than what is reported in the media. they are laying off people left, right and center. and it started long before december.
it was only a matter of time before this happened in dubai, the bubble was bound to burst, but i believe in them, we need a city like dubai in the region, i still have great respect towards sheikh mohammed and his vision in his city, and hopefully they will get through this, and the boom will be back on
my colleague back in september resigned from his job in our company and went to Dubai for greener pasture... but was laid-off in november... so he asked again our company if he can come back in doha and now, he's here!
As for him, the Dubai economy right notw is really bad... more people will be laid-off and will be sent home... so sad...
_______________________________________________________
~~Whoever loves discipline loves knowledge, but he who hates correction is stupid.~~
but very less number of tourist this time due to major crisis in European countries.
Only the UAE locals and residents with hefty paid jobs could help to bring out the country from the crisis situation with smart shopping and investments but should not hoard cash in their personal treasury.
8% of Dubai Airport Parking is occupied by cars...of the fleeing!!! (455 out of 6,000)
2 to 3 kids dropping out of school in Dubai!!!
Their economy is in shambles....
...well the DSF...Dubai Shopping Festival is still going on..lol
What we read, is whats happening.
______________________________________________
Listen to Many..Speak to a few.