Dubai has sold way more assets to Abu Dhabi after 2015 than they ever did in 2009.
This is just a sensational headline and has no material impact but it’s slightly negative since it proves that Dubai has not recovered at all since 2009 and is unable to pay back it’s historical commitments.
Dubai hasn’t paid back any loans of Nakheel and other giants and keeps “restructuring” since 2008.
Now we can add unpaid Abu Dhabi loan to it.
The debt, it’s interest and lawsuits keep rising.
In addition, Abu Dhabi itself is unable to pay back Etihad guaranteed bonds. Plus, Etihad is busy cutting employees.
Abu Dhabi’s Etihad to cut 50 pilots after big loss last year – sources
In Dec 2018, Air Berlin sued Etihad to get paid 2 billion Euros which Etihad is refusing to pay.
In Jan 2019, Etihad has sued Air Berlin back.
Because no one has any money.
Etihad begins legal proceedings against Air Berlin
No one is paying nobody from UAE and lawsuits are popping up like fire crackers!
The foreign banks should have sued Dubai a decade ago but they are all imbeciles so let’s see when they will wake up.
Even Russian developers and other global investors have never sued Dubai until today for their massive losses.
"Abu Dhabi is expected to roll over for the second time $20 billion of debt, due next month, that it extended to Dubai during its financial crisis a decade ago, three sources familiar with the matter said."
Exclusive: Abu Dhabi expected to extend bailout loan to Dubai, sources say
Well, those commentators can eat it now because everything has been confirmed now.
UAE firms tie up in three-way mega merger to create $114 billion banking giant
In Jan 2019, several banks laid off hundreds of bankers in UAE. All of it remains unreported by any media. We won't name any names because we have no media links and it's private information from sources.
We won't name all the cinemas and retailers who laid off in Jan 2019 since there is no media link. Restaurants keep shutting down and 2 media stations also shut.
We are hearing that Iranian hospital in Dubai (operational since 1972) has started firing employees and could shut down anytime. Iranian MP in Iran has already stated that Iranian Hospital, Dubai is closed but we believe that it's operational so far.
We are hearing that Iranian hospital in Dubai (operational since 1972) has started firing employees and could shut down anytime. Iranian MP in Iran has already stated that Iranian Hospital, Dubai is closed but we believe that it's operational so far.
In Feb 2019, over 1,000 bankers in UAE will be fired by these merging banks alone and could get reported any week now.
Most folks don’t want to accept that Middle East has run out of money, out of jobs and hence needs to eject expats.
Whoever has millions of dollars can still stay provided they keep spending and once they hit zero then they too will be ejected.
Emiratis are now working in hotels, banks, retail stores, super markets, gas stations, Govt offices, airport, police, hospitals, restaurants etc.
Not that it is wrong, it's their country but the point is that expats are not required any longer and economic crisis is reshaping the entire Middle East forever.
Now Emiratis will be driving taxis too.
For those who don’t believe it, they can rub their eyes and read it twice!
Because after reading, expats still need to be ejected from entire Middle East and must embrace it.
Uber's first Emirati drivers take to the road in Abu Dhabi
Most folks don’t want to accept that Middle East has run out of money, out of jobs and hence needs to eject expats.
Whoever has millions of dollars can still stay provided they keep spending and once they hit zero then they too will be ejected.
Emiratis are now working in hotels, banks, retail stores, super markets, gas stations, Govt offices, airport, police, hospitals, restaurants etc.
Not that it is wrong, it's their country but the point is that expats are not required any longer and economic crisis is reshaping the entire Middle East forever.
Now Emiratis will be driving taxis too.
For those who don’t believe it, they can rub their eyes and read it twice!
Because after reading, expats still need to be ejected from entire Middle East and must embrace it.
Uber's first Emirati drivers take to the road in Abu Dhabi
Lives of millions of expats (and locals) living in Middle East will be destroyed, fortunes lost and those who have dreams to work in the Middle East will be shattered, if they go to the Middle East looking for business or invest or work.
It is wise to not look to invest or do business or work in Middle East anymore but each is on their own, we guess.
But the worse is yet to come...
Surely the Iranian hospital closure is related to the Qatar Blockade, and in turn Iranian relations?
ReplyDeleteHello,
DeleteNot Qatar exactly.
American pressure is building and Abu Dhabi controls the show in UAE and there is no freedom for various emirates including Dubai any more since they are now all subservient to Abu Dhabi who has the only military force and controls immigration policies too very tightly.
You will hear strange things happening in the next few months n UAE which we cannot explain on this blog unless they become public.
US is putting pressure, Abu Dhabi doesn't want or like Iran, Iranians are literally banned for several years now, Iranian hospital's all insurance was cancelled by Govt and no Govt employee or Emirati is allowed to seek treatment there and they have now started firing employees due to which Iranian hospital is giving 50% off on all services.
This hospital could close any week now.
Qatar is a separate issue altogether and a British tourist was arrested and beaten in Abu Dhabi this week in the year of tolerance in UAE just because he wore a T shirt supporting Qatar. He is in jail now.
Both Iran and Qatar are separate problems, Iran is triggered more by USA and Israel while Qatar is not.
Dubai likes Iran but Abu Dhabi does not.
It's very complex and every incident has different and multiple factors due to which it is happening and everything is in turmoil and ever changing.
For example, Oman is very close to Iran but UAE is having military exercises this week with Oman despite UAE being anti Iran.
Hope this helps.
Thank you and best wishes,
Interesting insight, are the fired bankers from the ADCB merger? What level does it make sense to start buying RE and stocks in Dubai again?
ReplyDeleteHello,
DeleteThank you for visiting and for your comment.
Yes, over 1,000 bankers will be fired in the next few weeks due to the 3 way merger of ADCB, Al Hilal and UNB in the bottomless saga of bankers being fired since 2015.
This situation will continue on an every month basis until there are almost no expats in banks and total number of banks and bankers will keep shrivelling until they collapse like Investbank Sharjah.
Dubai stock market is in the 6th year of a continuos decline, if you have the courage, you may go ahead. I would say for the next 10 years the market will keep declining.
Same for real estate.
Actually, there won't be a 10th year, it is already frozen due to lack of sales except the fictional numbers published by the Govt or those that are severe distress sales.
It's not just negativity, everyone is banned or at war or unable to pay and then US is going to turn their focus to destroy more of ME any month now.
After 2019, no one will ever ask whether to invest in UAE in anything because almost no one will be ever able to sell anything unless it's for free.
Hope this sends a clear message what I think of Dubai stocks and real estate.
If you are the contrarian types, and do end up investing, please do update me after a year or two.
I would not touch anything in the ME with a bargepole unless that money can be considered a total loss from day one.
Thank you and best wishes,
Wow I didnt realize you think it will be that bad. I've been in UAE for some years now and while it seems to have slowed like 2009 I never thought it will go back to that kind of crisis you described. Since you think its so bad are you looking to leave? Which country would you relocate to?
DeleteHello,
DeleteThings never recovered after 2009.
One has to understand what is Dubai and how it has worked during it's short history?
Until 2000, Dubai worked on trade, trade finance and banking.
Between 2000 and 2008, it worked on real estate and construction, with trade and banking becoming secondary though still important since Iran was not open, Oman didn't have 2 major ports, China did not invest in ME, Pakistan was not rising in imports and investments so Dubai was the only choice in the region including Africa. All of it is the opposite now and Dubai doesn't have the shine it had just until 5 years ago.
Then post 2008, Dubai focused on tourism as a stop gap arrangement which unfortunately continues till this day.
Trade vanished, banking died, real estate collapsed as did construction and related sectors of which there were many.
Just tourism can take a country forward for a year or two, not for a decade or two.
Empty hotels, 75% decline in hotel and desert safari prices, hefty discounts in restaurants are bringing the economy down since all other sectors have also shut down.
After 2015, even oil revenue dried up, reserves started eroding, removing the cushion leading to non payments all around because Govt is a major player in every single sector, banks started leaving en masse and tourism carried on but can never go to the quality of tourists that came between 2000 to 2012.
What is the key difference in the crisis of 2009 and of 2015 onwards is that 2009 was partly global, partly macro at Govt level and trade, banking, tourism etc did not even see an impact so economy had a V shaped recovery by 2011.
From 2015 onwards, it's all about Iran, Qatar, Yemen, Libya, plus lack of oil revenues for 5 years in a row, longest in history, ISIS and others, bans and wars, currencies and poor tourists and lack of banking, accountants, lawyers as high spenders versus sales girls and drivers or mall workers of today.
No sales boy can ever match the spending of a banker or businessman of a decade ago.
So the population remains the same while spending has dropped magnificently which you can observe in crazy discounts on fruits and vegetables at super markets and various things in all malls.
Dubai used to have Shopping Festival since 1995 where sales were once a year, now every week is 90% sale. That alone shows that the market has collapsed.
Whatever I advise, I implement on myself first before I advise anyone. Like taking a passport or second citizenship or relocating.
Once I discovered Dubai is going to collapse in 2015, I left in 2016, after spending a quarter century there which is why I have such contacts in the region that are unbeatable and give me insights that the best of advisers or sham TV personalities or researchers or analysts can ever have.
Relocating depends on where you come from and what you do?
You cannot mix safety and security of family and stability with business. If a country offers opportunity it may or may not be safe, while if it is good for family then it may not have opportunity.
Hence, one needs to see own individual situation and what is possible with what money one has or what job one may get and get out of unsafe countries. Because if one has life then you may get another chance in future.
So it depends on each one where they may find a fit because even in home country there may be a possibility to do something or in a new country depends on how much money one has or what one can do to create income.
Hope this helps.
Thank you and best wishes,
Hi Mr. Manoj
ReplyDeleteI read your blog regularly and whatever you have written is in fact happening here in Dubai. Its a scary situation for many. Yes, restaurants and stores are closing down every single day. Lay offs have become very common. Salaries have reduced. People are stressed as they do not know what will happen to them. Still some people are holding on in Dubai, spending from their savings hoping for a new job or trying to start some business. Well, each to his own. But, there are still some people who have fantastic well paid jobs with the perks of housing, health, education etc. How long they will continue to get the same ,only time will tell.
I fully agree in one of your previous posts you had written the quality of people in UAE is not the same as in the 80s or 90s. Its such a lovely country to stay and raise kids but unfortunately all that is lost somewhere. Crime has increased, scams have increased. My heart sinks when people write negative about this lovely place. Some exaggerate, some like you give facts and my heart takes over my mind to say things will get better. What should people do when they do not have a plan B or cannot afford a plan B?
I sincerely hope the leadership is successful with whatever they are doing to salvage the situation.
Hello dear Sir,
DeleteGood morning and thank you for visiting and reading regularly and commenting.
How I wish things were different!
But Dubai Govt and UAE Govt has lost control of their economy. Nothing is in their hands.
I wish they could alter the future that is coming upon them due to their own mistakes.
They should have never made so many tallest this and biggest that. They always claimed that 3 billion live within 6 hours of Dubai. If that was the case, why have they themselves banned 70% of those people?
Best period of Dubai was in 1990's and early 2000's. It was clean, green and safe with some of the loveliest people and things were stable and growing.
Today, it is the opposite, cheating, crime, lack of general upkeep is all around. Malls are empty, buildings are empty. Good money spending tourists have been replaced with budget tourists and bankers/accountants/lawyers have been replaced with sales boys and drivers.
Whoever said that if we build they will come was totally wrong.
Most problems of Dubai are coming from outside: Weak currencies, lack of trade, animosity with brotherly nations, intervention in other nations, lack of reserves, lack of oil revenues, infighting among royal family members in Saudi and Fujairah and even AD, rise of terror groups like ISIS impacting business, missiles flying in Yemen, bankrupcty in all including ratings downgrade of Oman, Bahrain, Kuwait, Lebanon, Jordan etc, many new shipping ports leading to decline in Jebel Ali business, arrests and fines of UAE residents at super abnormal rates, VAT due to EXPO 2020, zero trade with Iran that has shifted to Oman and Qatar etc.
List of the problems of UAE is endless and hence unsolvable.
All above points must be turned around tonight (which is impossible) else UAE will just keep going downhill.
Whoever didn't make a Plan B or doesn't leave voluntarily now, will end up in jail or deported or lose their job or business or money or everything.
Please ask anyone who has been inside a jail of which there are many and they will explain to you what's happening inside the jails and courts.
One has to have the determination and courage to pack and leave else the hosts will eventually kick everyone out because all expats are guests and are on time limited visas. On top when the system will eject someone they will have to leave in a hurry and penniless.
Indians are now migrating to Georgia from Kuwait and Pakistanis born in UAE and Saudi who don't even speak Urdu are back in Pakistan, same is with Iranians and Syrians. It's a mass exodus but no one wants to see it and Govt doesn't wish to present any data.
I don't believe many people have fantastic salaries any more with benefits. Most of those people were bankers and most bank CEO's and top management are now Emiratis and they don't get air fare or what was called a hardship allowance etc.
Cost cutting has been ridiculous in the last few years including in Govt.
Top companies like Barclays, RBS, Lloyds, ABN AMRO, Lukoil, Yahoo etc have all shut and gone years ago.
Now pharma companies and 3M like companies are cutting seriously. IBM and Oracle also firing many people.
There is simply no business and bans plus wars have made Dubai a difficult place to conduct business from.
I do hope things turn around but chances are less than zero.
Sorry to be the bearer of bad news. But that's the reality.
Thank you and with best of luck,
Recently Pakistan got financial aid from Saudi of $6B - https://edition.cnn.com/2018/10/24/middleeast/pakistan-saudi-khashoggi-loan-intl/index.html and also they're going to invest some $15B in Pakistan - https://timesofislamabad.com/01-Jan-2019/pakistan-to-get-15-billion-investment-package-from-saudi-arabia-largest-ever-in-history-of-ksa
DeleteAlso UAE giving $3B aid to Pakistan - https://tribune.com.pk/story/1872107/2-uae-aid-pakistan-bridges-half-financing-gap/
Like you says both these countries have no money left, I wonder how they're able to give loan when they themselves have no money left.
Can you enlighten on this?
Thank you,
AbdulBasit
Hello Mr AbulBasit,
DeleteThank you for reading and for your comment and query.
There are a couple of things here.
China has invested over USD 56b in Pakistan plus Pakistan is a very important part of the future of China. I call it that Pakistan is like the heart of China because Pakistan has an oil pipeline on land going through it that will take oil to China which almost no public knows about. Similar one was also built in Myanmar that was activated in Dec 2015. This is very important to know.
Due to China's investing, Pakistan now wants to diversify it's investors due to change of Govt although this is not healthy if it's coming from UAE and Saudi.
Aside form political reasons, Saudi and UAE are under pressure to support Pakistan despite not having much cash because Pakistan (like Iraq and Syria) will also slip towards Iran which they don't want.
The money from Saudi and UAE is not exactly cash. It is a book entry and stays with Pakistan Central Bank. Half of the money is towards purchase of oil in the future from Saudi. Another investment package is for oil refinery which Iran is objecting to.
Saudi and UAE don't have cash unless it is needed in a crisis. They also borrow money but in political matters, guess they need to find some money from somewhere. They are at war with Yemen, Qatar, Iran etc so they cannot give to so many nations but Pakistan they have to because Pakistan also provides military support to them as in training etc.
There are strong rumors that Pakistan is also helping build a military site in Saudi which is a top secret.
So it is very very complicated to explain how they found the money for Pakistan.
Also please remember than Saudi and UAE are extremely good at marketing and creating headlines.
Like in Saudi and UAE, they keep announcing projects but half the projects never come to life. lol. Maybe this money is from the poor investors who invested in Palm Jebel Ali or Dubai Pearl or Universe or World Islands or Six Flags project cancelled this week. lol
So don't believe everything that you read.
Here is evidence for oil payments.
https://www.ndtv.com/world-news/pakistan-hopes-for-deferred-oil-payments-to-uae-on-top-of-3-billion-loan-1966282
Here is another article about politics of Saudi, Pakistan and China.
https://asia.nikkei.com/Politics/International-Relations/Saudi-investment-in-Pakistan-stokes-tensions-with-China
Hope this helps.
Thank you and best wishes.
Mr. Manoj,
DeleteThank you very much for your detailed response.
Looks quite interesting scenario considering Saudi and UAE doesn't have much cash left and still are forced to help Pakistan. I was just reading this news - https://www.geo.tv/latest/227923-pakistan-saudi-arabia-to-sign-20-billion-deals-during-crown-princes-visit which shows Saudi Arabia to sign 20 Billion deals during the crown prince two day visit on 16th February. It would be interesting to see what deals do they sign and exactly for how much amounts and realistically if they do any. lol
Just in love with your blog. Have asked all my friends to read your posts. You give a very detailed picture of all the happenings in ME.
ReplyDeleteIf there is an expat exodus then most buildings will be vacant as is now seen in Saudi Arabia. These buildings are all owned by locals who will be impacted the most. Expats can go back to their countries where will the locals go. Not many would want to leave.
Hello,
DeleteMany thanks for reading, following and sharing with your family and friends. Much appreciated.
Very happy to hear that you enjoy my perspectives.
Land and hose prices have plummeted across Saudi after the expat exodus due to lack of business (approx 3-4 million people have left in the last 3-4 years), war in Jizan, Najran and Eastern Saudi area with Yemen, dependency fees and hiking of water/electricity bills by hundreds of percent as some of the factors, not to mention bans on hiring and localization.
In addition, 2 years ago, Saudi imposed a 2% land tax on Saudis who were hoarding up all land and not building anything on it. This caused them all to sell at the same time leading to solid declines in land prices.
You may be surprised but locals already have Plan B. They are all leaving too just like expats.
Many are in jails for various reasons, some have left and some will leave. Many have alternate passports too. Which is why I recommend for anyone in Middle East to have a second passport.
One just doesn't know when they might need to leave and Govt will cancel their passport, but if they have a second passport, then they can still leave.
Currently, locals are very scared in Saudi and UAE because they cannot transfer money out freely.
If you ask a banker in private you will find out.
Saudi Govt is keeping a very close eye on all money movement and sometimes they stop money from leaving.
Whoever has money cannot show because if they show, then Govt may confiscate it.
Things are really wild and out of control and no news comes out whatsoever.
Empty buildings is the least of the problems for locals, their own lives, own wealth and own businesses, own families are a much larger problem and at risk.
I am just waiting for Saudi to accept yuan or Trump to take some action and then the fireworks will begin.
Until then, let's pray that all remains safe and it does not become more bad than it already is because there is absolutely no chance of business improvement or new expats having nice jobs or salaries ever again in the future in ME like the good old days of a decade or two ago.
Thank you and best wishes,
Similar bank losses and (hence) mergers happening in Saudi as well ...
ReplyDeletehttp://www.arabnews.com/node/1446566
Hello Mr Mikhail,
DeleteThank you for visiting and leaving a comment and a good link.
That is absolutely correct, all banks in entire Middle East are in turmoil.
Foreign banks can shut their branches and leave, but what will local banks do?
Interest rates have shot up so high due to distress in the last 6-12 months that what the banks and bond investors want is running into double digits of 10-20% pa whereas issuers can barely handle 5-10%.
Two top giants of UAE had to cancel their bond issuance, perhaps for the first time ever, in Jan end of 2019. Investors wanted 10-20% but they can barely pay 5-6%. So the bonds were withdrawn.
Bonds take between 3-4 months of preparation and the end result was that they cannot issue bonds to raise cash.
Just in UAE most major banks have to pay back bonds of USD 500m to USD 1b each in the next several months during 2019. Estimates are about USD 3-5b in all at the minimum.
If they cannot raise new funds, it is going to create chaos and defaults.
Let's see what happens in the months ahead.
This news wasn't shared much in the local media and domestic investors are not aware of it since this information only came to professionals working in the markets. It is a really serious matter.
Dubai property developers put bond plans on hold -sources
https://www.cnbc.com/2019/01/21/reuters-america-update-2-dubai-property-developers-put-bond-plans-on-hold-sources.html
Thank you and best wishes,