Dubai realty sector witnesses ebb

Dubai, port city in the United Arab Emirates on the Persian Gulf, is in huge trouble these days. This info, at the very outset, may bewilder many people since the city is known as the real estate hub of the globe. Well, latest reports suggest that the past glory of the city is hardly left in the city and the saga of property boom has ceased to exist already. As a result of this grim reality, a number of major Dubai-based property developers have begun firing staff, or reviewing future employment needs.

Markus Giebel, Chief Executive of Dubai-based Deyaar Development Co., told the Associated Press that: “What happens in Dubai is very linked to the financial crisis”.

Hence, there should be a reflection of this debacle in the stock market and Dubai’s stock market this week suffered its worst week this year. The market could fall over to the same level that it started at in 2004; with the worst-hit sector being properties.

Take for instance Paul Davies, an expert in Middle East markets. He elucidated the reality to The National and stated that: “… prices have fallen substantially, particularly for projects where completion dates are a long way off. These properties were popular with speculators, but this market is now very dead. There continues to be strong demand owing to population pressures, but the availability of financing is the problem. Finance providers have tightened credit criteria as they seek to reduce exposure to the sector and tackle their own liquidity problems.”

Emirates NBD (the largest bank in the UAE) issued a memo confirming that: “In view of the current market scenario, it has been decided to suspend retail credit facilities to expatriate employees… due to possible restructuring, layoffs and job losses”. The bank, in actual fact, has stopped lending to emigrant employees of leading real estate companies in the region. This is very important to note because Dubai’s workforce is mainly composed of expatriate employees.