Is the Dubai economic bubble about to burst?

[Gaza]

Is the Dubai economic bubble about to burst? From where I am sitting it certainly has developed a big leak!

• Job offers being withdrawn.
• Projects being put on hold
• Stake in Emirates Airline being sold
• Redundancies
• Government admission of a slow down

The saying: “If it looks like a dog, barks like a dog, it probably is a dog” springs to mind.

My question is what will a full blown recession in Dubai look like? With borrowing at more than 100% of GDP the Government of Dubai have nowhere to go. They would be 100% reliant on a bail out from Abu Dhabi or other GCC states. If that was to happen what would the price be?

For those who are saying a recession in Dubai will last less than a year I suspect you have fallen for spin techniques even greater than those of Alistair Campbell. Dubai seems to have gone in to this with its eyes closed. “We are largely immune” seems to have been the mantra (it is what I was told by the CEO of the company I was due to work for) but it seems they were not immune and in many ways I think Dubai is significantly more vulnerable than some countries.

My view is if Dubai gets in to deep doodoo it will take years to pull itself out. The “New Dubai” economy was largely built around tourism. If the rest of the world remains mired in recession then the tourists will not come. High hotel costs, traffic congestion, and the appearance of Dubai being one large building site will not aid the case.

It is my understanding that a lot of private development has been funded by individual speculators/investors. If these investors cannot see an acceptable return and suspect that the property market in Dubai will follow most of the rest of the developed world and see a property slump it will be a long time before they come back to the party. There also is the risk that worried speculators/investors will try to dump their properties in a hurry and cause significant house price deflation meaning that it will be almost impossible for developers to sell new properties.

I also believe the world of private investors has suffered a seismic shift. For many years huge individual City and corporate bonuses have been used to fund investments and lavish lifestyles. The days of enormous bonuses are over. I doubt we will ever see the likes again. If there is no “money to burn” then where will the funds for future (and current) developments come from?

Dubai has also tried to sell itself as a major international financial centre. I firmly believe that option is dead in the water. With greater international regulation to prevent a reoccurrence of current world financial situation I can’t see Dubai making it in a heavily regulated world. The lack of democracy and openness will see to that.

So if tourism at best stays flat and being an international finance centre is dead, where does this leave Dubai’s economy?

[QS & Kids]

Originally Posted by Gaza

So if tourism at best stays flat and being an international finance centre is dead, where does this leave Dubai’s economy?

In the hands of politicians, criminals, and racketeers.

[Andy Capp]

Originally Posted by QS & Kids

In the hands of politicians, criminals, and racketeers.

That sounds familiar....

[DXB-NY]

this part, you have to think, a lot of pple want to jump on the "believe in good wagon". I have noticed that ahem the media here is not very objective at all, and they rarely report anything news worthy. All the news i have read on the decline of Dubai has come from either reuters or bloomberg. So go figure. They are denying a bust when it wont do them anygood.

Originally Posted by Gaza

“We are largely immune” seems to have been the mantra (it is what I was told by the CEO of the company I was due to work for) but it seems they were not immune and in many ways I think Dubai is significantly more vulnerable than some countries.

[Gaza]

this part, you have to think, a lot of pple want to jump on the "believe in good wagon".

[Easy Rider]

One 'classic' argument is that Abu Dhabi will come to the rescue and help Dubai out of this mess. It's been used over and over again. Whilst there might be some truth in it, 1. Abu Dhabi will not lend money to Dubai for free (see for example how Dubai had to put EK and several others 'family jewels' as collateral), and 2. The oil wealth accumulated by Abu Dhabi, however great it might be, will never be sufficient to support Dubai's business model in the long or even the medium run.
In short, no, Abu Dhabi will not be Dubai's white knight. Will help sort out the current mess but I'm affraid that's about it.

[DesertStranded]

So should we all start packing?

[flossie]

Originally Posted by DesertStranded

So should we all start packing?

No. I think those of us who are left (touchwood) will enjoy less traffic, less construction, cheaper rents and a less frenetic way of life. I hope so, anyway. (Still feel terrible for anyone that loses their job, though. Been there, done that and it wasn't fun!)

[flossie]

Originally Posted by QS & Kids

In the hands of politicians, criminals, and racketeers.

Not much will change, then?

[stevieboy1980]

im in construction, so many jobs have been binned, on hold and alsorts, i am told just like this thread says, abu dabhi, will be no where to be seen.....
many people are saying dubai is stuffed, but then look at other countries... where would we go, back to uk? no chance? anywhere else... pffft...
The only country Im hearing that is starting to spend money NOW and big time is Qatar, my mate just got a job there and his salary is well put it this way, people would faint...

World Economy is crazy...

Thank our stars we currently have a job (as floosie said, sorry to those that do not) but trying to get a job now anywhere would be VERY difficult...

Our company reckon we have to bear with it, and slowly sail along for about 1 year, then it will settle down, but im not so sure...
Why dont a country just print tons of money!!!