Redefine News

The news about Dubai’s financial crisis has been travelling around the world faster than the speed of light. And millions of people, both connected and unconnected with Dubai and its markets are making decisions and taking sides even faster than that. It certainly is time to find out that behind all the smoke and mirrors, what is the real truth behind the supposed financial crisis in this fair emirate? For starters, here are a few facts that nobody can deny:

1.Dubai had been experiencing an unprecedented boom in housing, construction and finance for the last six years at least.
2.The appetite for its housing, renting, retailing and a lot of other sectors invariably connected with growth and prosperity also enjoyed the fruits of this growth.
3.The present recessionary trend in the USA has undoubtedly had repercussions all across the world, even affecting the UAE since the last eighteen months or so. Thousands of expatriate workers have had to leave Dubai with the downturn in the housing and finance sectors. Invariably this has slowed down economic activity in other sectors as well.
4.Presently concerns about the ability of Dubai World, a Government entity, to pay back US$60 billion in debt have started a crisis in the emirate. This was exacerbated by the fact that the Dubai Government first appeared to be supporting but later alienating itself from the beleaguered entity.

The mismanagement, rather miscommunication of the whole issue has added to the worries of investors, and the Western media is having a field day fanning all sorts of rumors that Dubai could be the epicenter of another financial fiasco. With Dubai World losing the support of its Government, it was left to the corporate entity to respond and lift itself out of the abyss of rumor and conjecture. In fact it’s quite typical of the Arab world to have a laid back attitude and say ‘Inshallah’ rather than strive to work itself out of difficulty. To its credit, Dubai World has lost no time in doing so and called a panel of experts from Deloitte to assist. What ultimately transpired was that Dubai World will be asking for a restructuring of US$26 billion of debt largely pertaining to two of its subsidiaries-Limitless and Nakheel- at a creditors meeting scheduled for next week. The moratorium will be for six months.

In the backdrop of all this, business activity in Dubai has slowed down but has not stopped altogether. There are still apartments for rent in Dubai at reasonable rates. In fact, many living on the edge have moved up to take advantage of better facilities at affordable rents especially when it comes to apartments in Dubai. Other investors have sought to Buy Villas in Dubai at almost throwaway prices. Indeed some of the Dubai Marina Apartments have also been selling at bargain prices. With the Dubai and Abu Dhabi markets in free fall over the last few sessions, a correction in perception is certainly awaited and necessary.