However, we have been calling for this accurately and guiding everyone since 2015.
It kind of feels boring to have predicted all this collapse and chaos since 2015 and watching it occur in real time every single month and year ever since.
We do not relish this for one minute, however, the crisis is not even half way through yet and is already in it's 5th year of continuos and sustained decline that has vaporized billions upon billions of dollars across all sectors.
You may expect much worse days ahead for Dubai and Middle East in general in the days, weeks, months and years ahead for everyone without any exception because all business and liquidity has simply evaporated. Only exception may be retired multi-millionaires or rare exporters or select few royal family members etc.
If you do not have a Plan B, then you only have yourself to blame.
We strongly urge everyone including citizens and expats alike, to have a Plan B because when this hits you personally, then all roads will close at the same time and you will wish that you would have, could have, should have done something in the past.
It is never too late.
You may contact us in strictest confidence for discussing new citizenships, real estate opportunities, new investment opportunities or parking your banking assets in Singapore, Switzerland, HK or Philippines etc. via email under Contact Us page on the top right corner.
Bloomberg just reported yesterday about Dubai in a major article where they discuss closing stores & restaurants, declining real estate, bank bailout, dropping trade, more loan defaults in trade & property borrowers and merging banks etc. i.e. an all round collapse.
The problem is so huge that even the Bloomberg article below cannot cover it all which includes the massive job cuts in the region and UAE, wage declines, expats jailed, deported or leaving, schools closing and universities protesting, massive rise in fines, huge and sustained oil price declines, civil wars in the region, currency declines impacting trade in USD, trade tariffs by US impacting the world including UAE, new shipping ports in the region that are simply eating away business from Jebel Ali, trade, travel and tourism bans by UAE on Iran, Syria, Lebanon, Yemen, Qatar etc and by Saudis on Canada.
We have argued before that merging banks is a sign of weakness and not a sign of strength in current global economic conditions.
The bailout of a Sharjah based Investbank on which no news has been released after the first day in Dec 2018 is a terrible sign that the Govt is trying to hide the facts and reality.
As we have suggested previously that the first step of resolving a problem is to firstly accept that there is a problem.
Until UAE and Middle Eastern Govts will accept that they have a problem (instead of hiding it from public and covering the with media blackouts), unfortunately, we will never see the beginning of a recovery or any normalcy return to the markets in the Middle East.
The decline must continue until that day of accepting reality and only after that, after several years there may be a 1% chance of recovery or at least stoppage in decline all across.
Etihad has already defaulted several months ago but in any bond we have up to 6 months or even longer before the investors will sue in a court or formally declare a default. Abraaj's USD 15b lawsuits keep piling up in UAE and globally.
We will need to wait until a mega corporation has a default in UAE that cannot be controlled by the Govt like it happened with Nakheel during that deadly November of 2008.
Until then, everyone is in the dark and remains oblivious to the obvious.
And for all the positive people out there, hope is not exactly a strategy.
The video and the article of Bloomberg is a must watch and must read.
Bloomberg just reported yesterday about Dubai in a major article where they discuss closing stores & restaurants, declining real estate, bank bailout, dropping trade, more loan defaults in trade & property borrowers and merging banks etc. i.e. an all round collapse.
The problem is so huge that even the Bloomberg article below cannot cover it all which includes the massive job cuts in the region and UAE, wage declines, expats jailed, deported or leaving, schools closing and universities protesting, massive rise in fines, huge and sustained oil price declines, civil wars in the region, currency declines impacting trade in USD, trade tariffs by US impacting the world including UAE, new shipping ports in the region that are simply eating away business from Jebel Ali, trade, travel and tourism bans by UAE on Iran, Syria, Lebanon, Yemen, Qatar etc and by Saudis on Canada.
We have argued before that merging banks is a sign of weakness and not a sign of strength in current global economic conditions.
The bailout of a Sharjah based Investbank on which no news has been released after the first day in Dec 2018 is a terrible sign that the Govt is trying to hide the facts and reality.
As we have suggested previously that the first step of resolving a problem is to firstly accept that there is a problem.
Until UAE and Middle Eastern Govts will accept that they have a problem (instead of hiding it from public and covering the with media blackouts), unfortunately, we will never see the beginning of a recovery or any normalcy return to the markets in the Middle East.
The decline must continue until that day of accepting reality and only after that, after several years there may be a 1% chance of recovery or at least stoppage in decline all across.
Etihad has already defaulted several months ago but in any bond we have up to 6 months or even longer before the investors will sue in a court or formally declare a default. Abraaj's USD 15b lawsuits keep piling up in UAE and globally.
Until then, everyone is in the dark and remains oblivious to the obvious.
And for all the positive people out there, hope is not exactly a strategy.
The video and the article of Bloomberg is a must watch and must read.
In Saudi Arabia, the Govt has deported approx. 3-4 million expats in the last 3-4 years.
Now, the Saudis refuse to work for salaries that were earlier paid to Pakistani, Indian or Egyptian workers.
It is hilarious to read that Saudi citizens find that working 9 hours a day with one day weekend off is "hard work".
Seems they did not realize this when expats were working 10-14 hour days with the same salaries and now karma is catching up with them.
"Saudis working in car spare parts shops said the salaries are low and are forced to work a minimum of nine hours daily without the weekend off."
Hello.
ReplyDeleteMy opinions. Problems in the Middle East due to tied to $. Many currencies around the world have fallen to $ 50% -400%.
A strong currency makes tourism and business in the Emirates become very expensive.
Best Regards
Hello and good day,
DeleteThanks for your comment which is most appreciated.
USD strength is one leg of the table. The other legs are:
1. Sustained decline in oil from USD 140 level to USD 40-60 level leading to lack of cash inflows and savings and spending.
2. Lack of cash reserves in GCC states, that have seen declines in excess of USD 300-400b each.
3. Civil wars and bans causing trade to go down to zero and never to return and changing trade flows from old centres to new ones.
4. Currencies as you mentioned.
Since all 4 legs are broken, hence the collapse.
Hope this helps.
I saved your web site. Interesting other opinions too. thank you
DeleteOil began to grow after the crisis in 2008, when the United States started QE or began to print money and gives to everyone at low interest. Now the rates are raising and oil will fall as the economy slows down.
Do you think the Middle East will keep a strong currency or untie from usd and how much reserves does it has to keep it all tied?
Best Regards
Thank you for saving our website. Appreciate it.
DeleteWe do not believe that there is any link whatsoever between QE and the price of oil nor can there ever be. One is linked to money supply and other is linked to demand and supply.
We believe Middle East must and should break their tie to the US dollar. If they do not do this, they will go bankrupt and keep collapsing.
They used to have reserves of USD 1 trillion plus in UAE, now all they have is USD 400b approx and all of it is stuck in paper assets or real estate not in cash or bonds plus they have margin calls from around the world.
Saudi had probably USD 1 trillion plus as well but they also have no cash but only paper assets and real estate with no cash remaining.
This year Saudi and UAE need to accept yuan for oil which is another reason why there is so much turmoil in the oil markets and with USA.
Thank you.
Your view of what will happen to the economy when they accept the Chinese yuan?
DeleteYou may also be interested. Why oil prices will not grow.
https://ourfiniteworld.com
Best Regards
Hello,
DeleteThank you for your comment and the site. It is a good one.
Sorry for the delay due to travels.
It is extremely hard to predict which asset values will move and which won't but given the political, economic, business, bans and military conditions in the Middle East it wont be good for Middle East.
In my view, currencies will need to be depegged and either repegged or depreciated. Real estate etc will lose huge values. Overall, much more grimmer than it already is today.
This article we wrote in Oct 2018 should give you more insights.
Please click the first link in the article. That is the only article in history where a Saudi person close to MBS has used the word yuan for the very first time.
Saudi Standoff Could Lead To Pricing of Oil in Chinese Yuan Eroding US Dollar Superpower Status!
https://voiceofthemarkets.blogspot.com/2018/10/saudi-standoff-could-lead-to-pricing-of.html#.W8RgAztoQO4.whatsapp
The whole matter has been pushed into the realm of political backroom maneouvering of the elites and is being discussed in hush tones.
Even Trump who had warned Saudi King along with Senator Graham three times that Saudi King wont last without USA for more than 2 weeks have taken a back seat due to the tensions building up due to the decision of yuan acceptance by Saudi.
I continue to believe that this must happen in 2019 because Saudi is desperate and pressure from USA is building. Saudi will go bankrupt because of the speed at which they are borrowing and taking loans. It is unsustainable and ratings agencies will downgrade them like the 3 GCC nations which are all junk already.
Economies go into turmoil like Iran, Zimbabwe or Venezuela once their currencies and thus economies come under pressure. More importantly, this is a frontal attack on the USD. This would cause the USD to start slowing instead of rising.
Because once Saudi says ok, more countries will want to buy from Saudi and UAE in yuan (so many already accept yuan but Saudi is more prominent and the 1973 agreement was between USA and Saudi) and thus the USD 50b to USD 200b of annual trade will jump overnight into yuan and with such an event, other trade will rise in yuan as well catapulting yuan into No 2 position from current No 5 or No 6.
That is why Trump is throwing hissy fits at China while keeping a lid on the Saudi yuan problem.
The decision of Saudis is the only decision that will be last nail in the coffin of the USD.
Overall, very hard to predict short term but in the long term, more countries, importers and tourists will gravitate towards the yuan than the USD thus shrinking the wider acceptability of USD and also hurting the ability of USD to borrow from foreigners.
All in, this is not good for US dollar and will mark the beginning of a new world where yuan will rise even more than it already has in the last decade.
Hope this helps.
Best regards,
Doesn't Abu Dhabi have the largest oil reserve in the world?
ReplyDeleteHello,
DeleteThank you for your comment.
No, they do not and never did. According to some rankings Abu Dhabi has the 8th largest reserves.
America has the largest known and recoverable oil reserves in the world.
Previously, it was Saudi. America always had more but they never told anyone until last year.
U.S. Overtakes Saudi Arabia In Recoverable Oil Reserves
https://oilprice.com/Energy/Crude-Oil/US-Outstrips-Saudis-In-Largest-Recoverable-Oil-Reserves.html
Interesting insights. I have been travelling to Dubai on business for the last 20 years and have seen the previous boom bust cycles. You are right, things are strikingly different in this downturn. Dubai's (probably under pressure from Abu Dhabi) decision NOT to remain neutral anymore in the regional geo-political conflicts is going to leave a lasting impact on its future. However, regarding Dubai's real estate, I can't come to grips with non-stop launches of new projects by developers across all tiers - Emaar, Meeras and Dubai Properties (Tier 1 developers) - Damac, Danube, Azizi..(Tier 2 developers). Moreover, unlike in 2008/2009 this time around all these newly launched projects are very aggressively being constructed. I was shocked to see the progress on some of these new mega projects. With the extended payment plans that is being offered by these developers how are they able to finance these projects? Moreover why are they building so much in the first place? Your insights on this would be appreciated!
ReplyDeleteHello,
DeleteThank you for sharing your observations.
Economic situation in Dubai is consistently dropping as indicated by the 5 year Dubai stock index chart which is why it was put there. It is 50% down (almost the only worst stock market in the world) and almost is in a single straight line decline since 2015.
Dubai has lost 100% control of it's policies whether within UAE or outside. You will rarely see Dubai ruler announcing any foreign policy decisions or immigration or even police matters. This also extends to financial matters and nationality bans or war decisions that impact Dubai directly as well.
Things are so bad that Dubai has given control of it's hotels and various other assets to Abu Dhabi. Dubai had to give up it's immigration department back in 2011 until when it was fiercely independent just like all 7 emirates but no more.
New launches are done because cost of construction and land is literally zero. Land is obviously zero but they rarely pay the contractors or architects and then find new ones to fleece next time around.
Currently, Emaar has stopped paying Brookfield of Canada last year who started constructing a few towers around Dubai mall and therefore construction of those towers has come to a halt and investors who purchased in 2015 (despite my strict advice not to buy) have lost millions all over again.
Most projects are just show off and nothing is being sold except a few new "idiots" or brokers milling around.
Prices have plunged from 7-8m villas now selling for 1m in off plan. This is of Emaar so naturally others will die because I have suggested since 2016 that Emaar single handedly shall reprice the market because they can, and private developers will simply run away (like Schon) or collapse like who will occur in 2019.
Imagine, contractor agreements signed in 2014-2016 are at 700-800 dirhams per sq ft plus land for 500-600 sq ft plus profit of 100-200 per sq ft that's a total of 1,300-1,400 per sq ft for an average tower (cost of luxury tower was 1,700-1,800 per sq ft), this selling price alone has dropped every year and is now below 700-800 per sq ft (luxury barely at 1,200 to 1,400 per sq ft, way below signed agreements)) making every single private developer with projects launched during the above period as insolvent.
...2/2
DeleteExtended plans are just gimmicks, they are playing with fire. If some contractor is stupid enough to complete an entire project without being paid, the buyers will be lucky and might have some structure else most will just freeze like Dubai Pearl or Pentominium or Emaar Brookfield towers among hundreds that are frozen out there.
As I said, they are building because to launch a USD 200-300m tower, all they need is USD 1m for marketing, rest all is funded by the contractor. The returns are astonishing but now the entire empire built on debt is collapsing. To make it worse the contractors take loans from banks owned by the rulers themselves making it a ponzi scheme (that works only in 1 direction). Buyers are also financed by the same banks so banks have twice the loan exposure of an asset, though ledning has dropped and most are cash buyers as compared to 2008.
With population declining and all the points like Iran and Syria bans and macro situation of oil and currencies and wars impacting them like a perfect storm, there is simply no way, this mess can be turned around.
Their hopes for AI, space or Expo can never bring back the massive banks with their bulging pockets or thousands of Chinese, Russian and Iranian buyers who never thought before buying anything and spent hundreds of millions of dollars each. The gap between the gilded era of 2003-2008 compared to today is not even 5% and is simply unfillable.
Most importantly, the quality of people has deteriorated in UAE, as compared to a decade ago. The opulence of 2003-2008 era can never be replicated ever again nor can be seen in today's contemporary Dubai.
Currently, over the last 1 year, there are only panic sellers who are very wealthy people for the most part and are booking massive losses or are simply frozen or not buying at all. Some of the best and top investors that we know who have dozens and dozens of properties each have not seen one buying enquiry in the last 2 - 2.5 years and are just not having any buying power.
Most people who ran away from UAE were in 2015-2017. 2018 onwards will only see billionaires in jail or fall apart which will obviously move slowly since it takes a lot for a billionaire to run.
Businesses will keep closing until there is no business left in UAE but the ones sticking it out in 2019, it's their choice to stay because business is really at zero while costs keep rising every single year.
Hope this helps.
Regards,
Doesn't seem like you have a good idea of what you're talking about on the construction finance side; Brookfield and many others have been building projects based on export credit lines, this doesn't mean the developer pays nothing during the construction period. Granted these finance lines are usually based on industrial projects or long-leased assets but doesnt change the fact that developer is paying throughout construction period.
DeleteAnd while RE prices are down, I dont know anything that has dropped from the 7mln to 1mln mark, care to elaborate? Not disagreeing that market is tough and there is a lot of changes that we need to see, much of which will only come about based on time and pain to investors, but seems a bit sensationalized. Someone not living here might actually believe what you're saying.
Dear Jalal,
DeleteThank you for your comment.
Villas were being launched and sold in Meydaan, Dubai Hills etc and were sold at 6-7m plus in 2014-2015. Today, Expo villas are being sold at under 1 million. Those are facts. Some by a developer named Emaar.
If you have insights in Brookfield please do share instead of making generalised statements offering no value with a built in ad hominem attack.
This is a blog offering our insights, if you wish to start one, please go right ahead and start one with your own views and correct us with some facts or your insights.
Our clients have been sent letters by Emaar and construction has been halted on Brookfield projects regardless of what your 'opinion' may be and are facing losses in millions which does not seem to be the case for you since your millions are not on the line here.
Thank you,
So you're comparing villas in Meydan and Dubai Hills, to Expo area; apples to oranges. I'm not one to shy away from the facts, and I generally agree that the economy is going through tough times and will continue in some sectors for a while. But I think sensationalizing the figures and portraying 80-90% price drops is not fair and some people may actually believe it.
DeleteRe: Brookfield, China State and other contractors, what I was referring to are the deals they usually structure being backed by export credit agencies from their home countries, basically allows developers to pay 30/70 or 40/60 but carries a rate of interest and is by no means a 0 payment plan where contractor works for free. If Emaar stopped payments to them I'm sure there is a reason, ultimately investors are the ones getting hurt.
Yes you are right I didn't put millions into construction projects by Emaar, that was pretty easy to see as an unfavorable opportunity the past 3 years.
Stick to the facts! We have enough sensationalist media in the world
This comment has been removed by the author.
DeleteWhat you say is true, it is very easy to sensationalize such conditions especially when there are low quality standardized data and the government obfuscates these intentionally!
DeleteIt's becomes tough to remove confirmation bias in such cases; to look objectively data for benchmarking and granular comps.
Plus, it's a tiny region/market to boot!
Good luck all
Dear Jalal Merchant,
DeleteSince you do not seem to have worked inside a bank nor a funding company nor have ever managed money for investors, we sincerely request you to stop commenting here.
This site is targeted to the financial astute and those who wish to learn and have civil and well articulated discussions.
Comparing residential funding to project finance was done by you, not by us. This indicates you have no clue of either.
We are not comparing apples to oranges. Thats just in your mind because it doesn't seem to fit in your cocoon world.
We are comparing villas, by same or similar developer, a few miles apart in the same city in same currency and under same laws.
Apples and oranges will be to compare apartments in China to villas in Dubai.
For any logical person, that is clearly not apples and oranges, besides yourself.
This is our site and we will discuss what we wish to and present our opinions on this world and on finance.
We do not need advice from anyone what we can, should or should not write or say on our blog.
You are not paying us. You may continue reading Gulf News and CNN who will keep telling you what you want to hear.
People come here to learn and discuss.
We sincerely request you to not read our blog if it does not confirm with your extremely limited views of how this world works and if you find that reality is sensational.
You are the king of your house and you may keep your views therein, where no one will dispute you and you may continue to pass on your excruciatingly wrong views to your loved ones that do not even deserve a rebuttal from us.
But you are 100% wrong and you should not comment on things that you are not familiar with.
Thank you and best wishes.
A friend who runs a landscaping business in the UAE once mentioned that during one of his meetings with the heads of the developers they said to him that they are surrounded by some of the largest population catchments in the world and most of these homes were targeted towards them.
ReplyDeleteAlso vast stretches of sand has no value/cannot be sold. However the same stretch of desert when developed can be milked for top dollar or dirham.
Hello Erika,
DeleteThank you for your observation.
This comment is from the same presentation that was shared and used by every single human being in the UAE between 2003-2008. :)
Emirates, Jebel Ali, Free zones all use that statement word for word. and they all believed that growth of Dubai will always be in a straight line up until the 23rd century! :)
However, as I replied above, the quality of people matters. Since 2014, only maids, drivers and sales boys/girls are being imported for the monthly opening of new malls to replace bankers/accountants/lawyers/businessmen.
The spending power of each of these groups can never be the same. So while quantity of population remains, quality is not even 1% of the previous ones who have fled.
Secondly, Russians, Chinese, Iranians, Britishers, Germans, South Koreans etc were BIG investors in Dubai until 2008, but once cheated they simply vanished. There are some stories against the top people that we cannot share here publicly that we are aware of from 2010 circa.
Not one investor from these nations is interested in Dubai unless they are businessmen doing business which is nothing as compared to the billions they had brought in the first decade of the 21st century.
Thirdly, we all know, but the Govt refuses to let the public think by blacking out all media that Iran, Syria, Lebanon, Qatar, Bangladesh, Libya and many more are simply banned to even enter UAE so how they can invest even a penny. In fact they have pulled out creating a double whammy.
UAE was supposed to be a mecca (just as in your observation mentioned which even I used to believe until 2011 when Iranians first got banned and were impacted) for all those folks in the region who could not get a UK or US or EU visa so they used Dubai as an alternate for shopping, banking and real estate.
It worked until 2011 for sure and made Emirates airline and Jebel Ali what they became before the current decline that began in 2015. Once banned, this money has left and will never return due to the insult of a ban
In all, I don't see UAE ever coming back because the rivers of gold that paved the Middle East and UAE have evaporated over the last decade because price of oil is down and also most Govt reserves have disappeared while ranking of UAE and Saudi keep dropping every year in global list of sovereign funds.
We only hear of closures, defaults and bans every year. Crimes are at insane levels from robberies to suicide and all jails are filled to the brim. Not one such incident used to occur in the 1970's to 2000 (there are legends of people leaving their doors open until then), it increased a bit in 2000-2010 but not like what we have seen 2010 onwards simply due to the stress caused by laws that jail individuals for bounced checks or mortgage and car loans.
I will leave you with one more saying from Dubai: Let the expats bring their money and buy the land and apartments, they can never take the land or apartment in a plane when they leave so the money will always remain in UAE.
Such attitudes and the bans are the reason of the calamity facing UAE else they could have banded together as brothers and fought it off, instead, they chose to fight amongst themselves and the western Govts are loving every minute of it (partly because all banks who are yet to be paid back by UAE and other ME Govts belong to UK and US as well).
Best regards,
Scared for the middle class in Dubai. Upper class as it is has no problems, it is the middle class who suffers the most. I have friends working in Dubai and news coming from them is not good. There are no jobs, people are being fired, stores are being closed. More people will either go back or send their families back once the school academic year finishes in March. One UAE national told a friend expats can go back to their countries, where can the locals go. If expats are suffering even the UAE nationals are having problems.
ReplyDeleteWhat I fail to understand is who is buying all these properties in the new projects ??? Not all expats can afford to buy. Looks like supply is more than demand. If the Indian and Pakistani governments are asking details about their nationals then I doubt if Dubai will attract citizens of these countries. Local newspapers publish reports of everything being hunky dory.
We can only hope for the best.
Hello,
DeleteThank you very much for your comment which we agree completely.
Every school year ending over the last 3-4 years, thousands of parents have sent their families back or left totally. We have seen nursery owners run away, pet shop owners run away, schools being shut which is why fees were hiked all over UAE and except Dubai all have reduced the fees, Dubai only froze school fees but never reduced it.
UAE nationals are also struggling because most don't know that over 90% of UAE nationals are not rich. They have free housing, free medicare, free education so they spend all their earnings on cars or travel or watches etc hence appear to be rich and have no concept of savings because they believed that good times will never end.
There are rare exceptions but very infrequent.
Even UAE nationals must make a Plan B like a second passport or overseas business or overseas jobs if they can else they will be also the ones to suffer as we have seen in Saudi where Govt can confiscate their assets if they feel like or in Kuwait where locals refuse to work because wages are low and work is hard.
This collapse is a total collapse and does not differentiate between a local and an expat. Although, locals will be impacted slowly because Govt is doing everything within it's powers to keep them employed.
No one is buying those properties. Most data is fake. There can be some investors who believe based on marketing propaganda that things are ok and come for the first time and get enticed. Otherwise, anyone with a brain and some contact with Middle East over the last 10-15 years or longer, knows that one must not buy but only sell.
Not only Indian or Pakistani Govts are asking data and sending tax notices for investigation, Kenya, Nigeria, South Africa etc are also sending Govt delegations to recover money from Dubai. The rest have already fled like the British and Iranians etc.
Dubai was forced to sign a OECD compliance agreement in exchange of receiving EXPO 2020 to share all data on bank account holders or real estate that began sharing data effective Jan 2018 with any Govt who will ask which has also frozen all investors who are criminals (which was 80% of investors) from bringing any money to UAE and are rather leaving, causing a double whammy.
Most countries even have heightened travel alerts for UAE and Saudi etc.
What remains unknown to most people that criminals from almost around the world have invested in UAE which is why UAE is still hanging in there. These moneys are now being frozen or leaving which are in billions which is why UAE has no other way now to control the collapse of the prices.
I mean who can compete with 1 criminal who brings USD 9 billion to UAE and buys real estate or keeps in banks and now is frozen and is busy selling or taking money out of UAE. There are hundreds of such people in UAE, not all with USD 5-10b but starting from USD 10m all the way to USD 20b.
Hope this helps.
Regards,
What goes up has to comes down. They went up too fast so have to come down fast but in the process so many innocent people have been directly indirectly affected.
ReplyDeleteHello,
DeleteYes that is very true.
However, UAE and Dubai in particular went TOO high.
We wish they had stopped at 500 hotels but they have 1,000. We wish they had stopped at USD 1 trillion in real estate but they have over USD 1.5 trillion.
The kind of lawsuits that are coming towards UAE will shake this entire world.
Losses of people, banks, developers, businessmen etc run in hundreds of billions.
The worst is yet to come.
Thank you and regards,
Hi Manoj
DeleteWho can fight these people? Do you think they were unaware of the wrong doings happening in and around Dubai. Even if a lawsuit is filed they won't care. They have the resources and connections to get out of it. They haven't lost anything, its the expats who lost their life savings and they cannot knock on any door for justice.
Do you really think there will be lawsuits? Cheating and fraud has increased since the real estate boom began. Very few developers went to jail or lost money. The people who lost money are those who paid to buy a roof over their head. Those projects were cancelled and they were told their money would be returned. What is shocking is those people are get back maybe 5%, 7% or 10% of the amount they paid. Is this fair? Imagine someone who has paid a Dhs. 500,000 and is told he will get Dhs.25,000. Sadly, this is the reality.
ReplyDeleteDear Mr Rajesh,
DeleteThank you for visiting and for your comment.
Cheating and fraud has been the hallmark of UAE and especially Dubai since 2002 which is truly sad. They have cheated Russians, Iranians, Britishers, Germans etc out of billions of dollars and thats why we have been warning that everyone else will face the same situation.
Now Qataris were short changed in 2017 plus Saudi Govt was given all info on UAE bank and real estate info so they were confiscated in 2018. Syrians and Lebanese and Libyans are banned and are being deported.
Now Indian and Pakistani Govts want to freeze assets or get as many criminals deported or ask how Indians and Pakistanis got money out when it is under capital controls.
It's sad but the entire economy/country is crumbling and there is no money to pay back to anyone.
It was all speculation since 2002 when it all began and it will end up in a massive bankruptcy because they never planned how to follow laws and implement. They did not even have a RERA law until 2010 and keep changing visas on real estate every 2 years. Nothing is what it appears to be.
It's a desert mirage and all will go back to zero unfortunately. Money cannot be returned because it has been used to buy land, pay architects, contractors, steel, cement etc so it's basically gone and there are plenty of lawsuits of individual investors. But if the developer is an Emirati then it is unenforceable.
People who get 5-10% should consider themselves lucky.
Lawsuits have already begun though not in real estate yet because one is not allowed to sue Emaar, Nakheel, Dubai Properties etc. However, banks will be sued and one day developers too.
We have seen lawsuits arising in Abraaj case by Air Arabia and Kuwait Govt etc. Kuwait also wants to sue because Dubai won't give back USD 500b.
We have seen Air Berlin sue Abu Dhabi to recover EUR 2.2bn.
https://www.arabianbusiness.com/transport/409743-air-berlin-liquidator-sues-etihad-airways-for-22bn
We will see many more because we are not even half way through the collapse.
Our advice has been to stay away from this region altogether. Because elephants like British Govt/banks, major lenders including private equity will fight cases worth billions of dollars each.
Etihad is unable to pay bonds nor interest so those bond lawsuits should start any time.
We can expect lawsuits on all airlines since they cannot make payments nor keep the old planes due to lack of business/profitability.
Middle Eastern banks will also be sued as will the developers but slowly at first and very rapidly thereafter. Contractors too.
Saudi Oger, Galfar in Oman, Al Jaber in Abu Dhabi all have defaulted, not to mention the massive ponzi case of Al Ghosaibi, things are so bad that we will lose count this year as to how many lawsuits are going on and who is suing whom.
In Dec 2018 the first bank in ME from Sharjah was bailed out. No news whatsoever on it as they are trying to hide the damage but it will blow back in their faces soon.
It's very unfortunate for people who have lost but no one should have played the real estate game after 2009 or after 2015 because it was only criminal funds in cash and very few smaller people had the courage or the thought to enter and they will be the biggest losers as they will never be able to make that kind of money again nor recoup their losses.
Very sorry for them but there is not much hope unfortunately. However, lawsuits will keep growing every month.
Thank you and best wishes,
If the buyer is getting only 5% or whatever from the developer, then the developer hasn't gone in any loss. On the contrary he has made money. Why should only the buyer/investor suffer the loss ? Why does the government tom tom that all cancelled projects money will be returned? Isn't it better to say that some amount will be returned instead of raising hopes of people. We lost our hard earned money. We are not criminals who brought in billions.
DeleteHello,
DeleteYou are right but they don't have any laws in UAE and so far no country, no foreign bank, no foreign investor etc has taken them to task. so they are quite brazen in UAE to say anything and getting away with it. They make new laws as they go along.
It is very sad for those people who are not criminals and didn't bring billions and are now caught when these billions are leaving or being confiscated by various Govts and have simply stopped coming in the last 1-2 years and thus price of everything and all businesses have collapsed.
UAE Govt has no choice but they are trying their best to keep things afloat, however, their days are really coming to an end and they are now on borrowed time since early 2018.
Nowhere in the world any money can be returned in cancelled or stalled projects because so much is owed to architects, marketers, contractors, suppliers, banks, Govt etc. And everyone sues everyone and the buyer/investor ends up being the loser along with all the above named people. every crash worldwide has the same characteristics but what investors never factored in Dubai is that everyone is on a visa, their visa can be cancelled or banned or jail time for those who wont pay as per laws of UAE which are not there in any decent country any more and belong to the 10th century.
It is really going to get much worse publicly which is why they are trying to hide all real news and even comments of people who are living or investing in UAE.
Whoever didn't get out in 2018, will be unable to exit anymore because everything in real estate has come to a halt regardless of what the media and the Govt says because elephants are trying to leave and even they cannot.
Hence, Saudis saw their assets being confiscated while Qataris were banned like Iranians and Syrians overnight, money is not being returned to Kuwaitis.
So whoever is invested in UAE from any nationality if they think they can get their money out, sadly and unfortunately, it is and always was a big desert mirage and they won't see their money again.
Thank you and best wishes,
Hi Mr. Manoj, I would like to thank you for the great effort you put in writting these articles and sharing it with the public for free. Thanks for the detailed geopolitical, financial, and economical analysis that you write in your article and the commentsl section. I enjoy going through the comment section as your input is always helpful and informative. I would like to know your thoughts on Sweden if it's worth moving there from UAE (after spending 10 years in dxb) thank you,
ReplyDeleteHello Dear Sir,
DeleteThank you very much for your kind appreciation. Glad that you find the information useful.
Sweden was a nice country but now it is going downhill. Low jobs is a problem everywhere. With so many refugees, crime has risen a lot and the attitudes of people towards immigrants will certainly become worse over the coming years.
Having said that, it will be better than Dubai!
Sweden is a small population and thus far has been very homogenous, meaning same color, same religion people for centuries. But with a new mix arriving, no one knows how it will become in 5-10 years.
I would suggest to give it a try for Sweden or any country of your choice, live there a few months and see what life has in store for you.
Despite the struggles, we all have our unique skills, knowledge, social network and sector, some may do well in a new country for sure.
I am sure it will work out. However, you must have a Plan B which is what you are thinking and is the first and most important step.
All the best and hope this helps.
Regards,