Laid-Off Foreigners Flee as Dubai Spirals Down

[JuniorMan]

http://www.nytimes.com/2009/02/12/world/middleeast/12dubai.html?pagewanted=1&_r=1

[LLuke]

Free view period is now over, login required. Guess a.o. something about panick control, keeping things hidden, now starting to show anyway?

Wouldn't be surprised to see banks collapsing in the ME, real estate going from sky-high towards zero value, etc..

Don't think, however, that EK is more effected than other network carriers. Although their aggressive expansion plans will be hurting them a lot, I am sure they have access to unlimited amounts of money --too much invested to quit.



Just my 2c of course

[Seymour Skinner]

This is what it says / said....


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.”

[Jet II]

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.

what parts are looking like a ghost town? :confused:

[kit330]

well wat ever the paper says...I still get stuck in traffic jams all the time:ugh: ...n yah still looking for that ghost town 2..hehehe

[brassplate]

what parts are looking like a ghost town?


nowhere....that's coz the place is still full of indians. regardless of how bad dubai will get, their lives will still be better than a lot of places in india.
so it's not all bad.

[MR8]

This report is ridiculous..

Ghost town? Empty roads??

Already in the beginning the reporter shows to be completely out of touch with Dubai calling it the PERSIAN gulf city... Probably the reporter has never been here before and is just spicing up some hearsay..

I'm not denying the situation in Dubai is pretty bad, but I just can't stand bad reporting like this..

MR8

[LHR Rain]

Don't ever let it be said that we live in a 3rd world police state. There is a fine of a million dirhams for publishing stories that damage the reputation of Dubai. Like they have not done enough on their own to damage their precious reputation. Plus no one is denying that any of the stories are false so the truth be dam we will tell you what is happening and will be the sole propietier of the truth.
Let the free fall continue.

[Cyberbird]

what parts are looking like a ghost town? ...

well - htere are definitively a few in the new Build-up areas:

opposite the Daubai-Marina-Complex/ the second row buildings - where building-activities have litarally come to a standstill since months -
these aereas are really ghostly, deserted, scruffy &with rubbish flyin' through the empty streets :*

Same goes for the unfinished parts opposite of the JBR-ghetto:
totally deserted, unfinished concrete structures, with just nobody working - or even livin' there - a ghost-city like one out of a bad Terminator-movie ...
badly run down, with just a few totally dusty cars parked (or abandoned?) along the sides in the sand ... :sad:

and opposite the JBR - the previous Sales Center - is in the meanwhile totally deserted, the empty pool full of dirt, the garden piling up with rubbish - umbrella lying everywhere around, the pool-bar covered with massive dust & dirt - a real ghostly "nomans-land" - nobody seems to be using it anymore ...

.. it might face the same fate as the ex-Dubai-Hilton hotel soon, which has been blown up recently - so, there's even a little more dust over there ...:ok:
YouTube - Controlled Group blast Hilton Hotel Dubai (http://www.youtube.com/watch?v=RmcguDHniRo)

[Jet II]

opposite the Daubai-Marina-Complex/ the second row buildings

Eh? - if you are talking about JLT then building is still ongoing on all projects.

Same goes for the unfinished parts opposite of the JBR-ghetto:
totally deserted, unfinished concrete structures, with just nobody working

What parts opposite? - the projects along the Marina are still ongoing - Pier 8, Marina Central, Park Island, Marina Quays

and opposite the JBR - the previous Sales Center - is in the meanwhile totally deserted,

Thats because they are turning it into a beach club - one of 3 under construction along the beach.


Have you ever been to Dubai?

[Turkeyslapper]

Hello chaps

After a little bit of advice in reference to living Dubai. I am looking at a job in Abu Dhabi and at the moment rent there appears to be very expensive - my company will cover it to a point. Is property in Abu Dhabi likely to go the same way as Dubai in the near term or is AD better positioned to ride out the worlds financial storm.

One option I am looking at is living in Dubai and driving to Abu Dhabi for work. A couple of other questions:

Is this viable for a 5 days a week gig?
What would the travel time be each way?
What is the traffic like?
Where would a reasonable place to live in Dubai be with easy access to Abu Dhabi be?
Jebel Ali has been mentioned as a possibility, last time I was there a few years ago it was only a port - has this changed?

Thanks in advance.

Turkey

[BD-100]

Vacancy rate is AD is less then 1 % and in the near term rents are unlikely to come down from their ridiculous highs in AD .

Driving to AD on a daily basis seems like a bit much on the nerves for me but desperate times call for desperate measures. Driving time is about 1 hour if going to the AD airport, add another half hour ( at least) to reach downtown.

There are options closer to AD in the outlying areas but you will find few fellow expats there. Should you choose to live in Dubai anyway I would suggest the Green Community as the closest neighborhood.

Good luck

[Jet II]

Turkey - many people live in Dubai and commute to AD. They chose to do so because they get a better choice (and quality) of accommodation for a much cheaper price.

Commuting to the Airport, Raha Beach or even Mussafah is quite feasable - however if you are going onto the island at peak periods then it probably is not a good idea.

Areas to live in are the Marina or JLT for apartments and the Springs, Meadows or Emirates Hills for villas.

[ShinjukuHustler]

Good evening,

Have some cash holed up in HSBC Dubai, does anyone have an informed opinion on the potential fate of the banks there? I know HSBC is a world wide bank and you would assume that UAE branches are insulated from regional losses by the mother ship global entity but these are tough times and some of these things are not always what they seem.

I'm worried about the banks putting a hold on withdrawals to stop a 'dash for cash' Argentinian style but if I transfer it back home to the land of 'sh1t creek no paddle' then Johnny tax man is sure to want a slice.

Treasury bonds are a bubble according to some of the experts. No value in the property market yet, although there probably will be at some point in short to medium term. Invest in stock market?..No way. Horde it in the bank?...other 'experts' claim the dollar's value is artificially high and it will tank soon. Gold is an option I suppose but then where to keep it? I dont want to put it in the bank and don't trust those gold holding companies.

What to do..?

If you are a Nigerian prince needing a loan in order to secure your vast inheritance then don't bother calling me!

Hustle On:ok:

[Saltaire]

I'm sure HSBC as one of the biggest banks in the world should be fine, if it's not then the world would look much like 1929-30

You could also transfer it over to a bank like National Bank of Abu Dhabi, funds secure.

[mensaboy]

Shin,

Put it offshore. HSBC can do it for you I think. Probably as simple as getting some paperwork done and transferring without fee. Since HSBC has offshore, then you can have access to it on short notice too. Offshore Banks are typically not the same as investment banks so your funds should be much more secure.

[Touch'n'oops]

CYBERBIRD,

I'm currently in Dubai around the Marina and I see that nearly all of the building sites are still a hive of activity. I admit the JBR and most completed residential are mostly void of lights at night. But the place is a far cry from a "Ghost Town". There are plenty of people walking in front of JBR and near the NEW HILTON.

You should know most of the older buildings in Dubai are earmarked to be torn down for large builds.

However, I am waiting for the real implosion of the real-estate market. I think Dubai has a strong potential for being extremely F'd!!!
But I would hope not!!!

[Jet II]

Good evening,

Have some cash holed up in HSBC Dubai, does anyone have an informed opinion on the potential fate of the banks there?

UAE finance ministry has guaranteed the deposits of all local banks and local accounts of international banks.

If you put it offshore to somewhere like the channel islands there is no protection scheme - Isle of Man has a protection scheme but that looks to be in the sh*t as it is oversubscribed.

Cash under the mattress should be fairly safe - ACE have a sale on at the moment on safes - there's one the size of my fridge/freezer so it might just be big enough for a Captains salary..:ouch:

[Ali Baba]

Most of the GCC bank, not just UAE(your money is guranteed by the government so enjoyed man)

[ShinjukuHustler]

Thanks for the advice guys, if it all tanks then you owe me a few quid!

Have to say, am not feeling the 'ghost town' effect anywhere in M.East right now although it sounds like DXB might be a good place to pick up a new set of wheels cheaply, I wonder if any EK jockeys will park up some of the 330's at the gate in LHR or KL and do a runner! :}

Hustle On :ok:

[disconnected]

My 10 cents worth.

Good interest rates in HSBC but you don't get that without risk. As the banks look shaky others with exactly your concerns will run to pull the money out. You are not the only person with reservations at the moment and could get caught in the rush to get out.

Why should banks look shaky. Well same as the US - High mortgage rates will lead to default will lead to property declines leading to more defaults etc. etc. You have seen the movie...

Gold holding companies ok provided they back up your account with physical holdings. Try Perth Mint or Goldmoney for starters.

For the record HSBC in Jersey claim that Dubai is nothing to do with them or their regulations despite the UAE version being Jersey registered. As you say these things are not what they seem. I have had the debate with them and assure you that you will not get anywhere with this when the blood is spilt.

No empty roads here yet but definitely quieter. Jobs being lost at an amazing rate so even quieter they will become.

Not too many building sites operating either. Lots of stationary cranes. Draw your own conclusions.

As for property - Well I can sell you one. Are you interested?

[Trader]

The banks in the ME are seperate entities to their foreign masters - legally. The main corp. does not guarantee anything and they follow the local laws.

To be honest I simply do not trust them to that high a level and so my savings leave the country - I trust the Channel Islands more than I do the local regulations.

[GlueBall]

Believe only half of what you read. Besides, today's New York Times will be in tomorrow's trash can. :ooh: