No Longer The Same Dubai As Global Economic Crisis Hits Dubai Hard

Posted last October Crisis Hit Arab Nations, Sending Stocks Into Tailspin

I decided to check out how Dubai is doing.

Global Economic Crisis Hits Dubai

• Dubai's hey day, the sound of construction was everywhere. High rises and tourist resorts were built by legions of foreign workers, most of them from India and Pakistan. Dubai became an international magnet, reinventing itself as a financial capital and tourist mecca in the Persian Gulf. Then the global crisis reached this outpost and boom turned into bust.
• More than half of the construction projects in the United Arab Emirates, worth $582 billion, have been put on hold, according to the market research firm, Proleads. Some projects are still going ahead, thanks, in part, to the $10 billion bailout from the UAE's capital, Abu Dhabi.
• In the meantime, many Western professionals have simply left. Foreign news reports claim 3,000 cars have been abandoned at the Dubai Airport parking lot - left behind by debt-ridden foreigners fleeing the country. Dubai's police chief has angrily refuted the claim.
• "People are losing their jobs here," he said. "Money is being lost. There is an uncertainty about how long the credit crisis will last. However, we are optimistic of oil prices returning. Banks should start leading at the latter half of this year when the bailouts start filtering through. There will be a very quick rebound in Dubai."
• It is a hope to return to boom times and to complete a skyline of half-finished buildings - a hope that now seems distant.

No wait-and-see

• In fact, Dubai's open economy and strong correlation with international markets led it to be hit very hard by the crisis.
• "Dubai is not the same by any means. The streets are empty, the airport waiting for visitors and residents are wondering, what next?"
• "Sixty per cent of real estate projects have come to a standstill," he added.

Gaudí would have gawped Dubai wakes up to harsh realty

• There were images everywhere indicating the end of the era of excess. On Al Wasl Road, I drove by a row of broken-down villas. The friend I was staying with said he thought they were being demolished to make room for yet another grand real estate project.
• On Jumeirah Beach Road, there was a half-built mosque that had been painted black, a world away from the cheerful pastel minarets elsewhere, a manifestation perhaps of the fact that God may be magnanimous one moment but unforgiving the next. There are so many half-completed buildings in Dubai that it sometimes seems like a city recovering from an earthquake.

Dubai laborers in hard times

• The army of foreign laborers built Dubai when the economy was booming, but thousands of are now out of work. Most are from South Asia, employed in the past to build ultra-modern high-rises, hotels and resorts.Without money coming in, many have had to stay on in the emirate. Some have been unemployed for more than a month but say they say they cannot return home because their employers have ordered them to wait until work picks up. In many cases the employers hold the passports of individual workers, effectively blocking their chances of looking for other jobs under the country's sponsorship system.

U.A.E. Central Bank Steps In to Support Dubai Debt

• Home to the world’s tallest building, most expensive hotel suite and largest manmade islands, Dubai borrowed $80 billion to turn itself into a regional financial and tourism hub. Moody’s Investors Service said in October that Dubai may need help from Abu Dhabi to pay for its debt. The emirate may have to refinance $15 billion this year in maturing loans and bonds, Moody’s said.

Dubai Financial Market General Index is a capitalization weighted price index comprising stocks of listed companies, whose primary listings debuted on DFM on or after January 1st, 2004. The base value of the index is 1000 as at January 1st 2004.

A clip on YouTube.

As quoted, is this the end of the era of excess in Dubai?