“The amount is purely notional – in no way does it cover the extent of the Dubai banking losses,” says Jeff Chowdhry, head of emerging market equities at F&C Investments. “The banking sector is a house of cards that could come down due to the real estate market.”
According to the central bank, UAE banks had assets of nearly $400bn in January. Much of it is tied to the property sector in some form, either as direct property investment or as loans to contractors, developers and homeowners.
Given the parlous state of the real estate market and the phenomenon of redundant expatriates absconding from consumer loans, banks in the UAE could be sitting on a mountain of losses, most of it in Dubai, says Mr Chowdhry.
The second one is a comment piece by a former Reuters hack in the Middle East:News of Dubai’s death has been greatly exaggerated. Its fundamentals as a regional hub of shipping, services, people, trade and capital have not changed. “Disneyland Dubai has crashed,” as one Dubai-based banker put it, referring to headline-grabbing property projects, “but the core business model of Dubai remains sound.”
Dubai’s property bubble popped. Its hubris also (thankfully) popped. Its core business model, however, did not. Property corrections and over-leveraged state entities can be fixed. Becoming a poor environment for trade would be far more dangerous. When the world growth engine restarts, city-states such as Dubai will flourish. In the meantime, Dubai will serve as a vital, if somewhat clogged, artery in world trade. The battered but still battling hub city will rise again.
Dubai real state is many loss of global economic crisis and banking sector is down and failing the jog sectors and down property sector.
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Accepting that there are expatriates who ‘do a runner’ dumping car and outstanding property loans; what is the legal obligation of their ‘sponsor’ with regard to repayment of those outstanding loans ?
ReplyDeleteGood point oman, but it would probably be best if the UAE came to an legal agreement with most other major countries on this. I cannot for the life of me see why they havent yet. The current UAE system is even worse than the one in the US, as it is a massive incentive for anyone with "negative equity" on credit card debt, car loan and mortgage to simply scarper.
ReplyDeleteNot that the earlier estimates were wrong, and UAE economy is deemed to go down with the recession, but then we are living in a global village and you can't just detach an economy from those who are having trouble. All things considered, UAE may well be able to put up with the ongoing recession, but this economic unrest will definitely weaken the economy pillars.
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