Saturday, March 2, 2019

Dubai : Major Article By Forbes Magazine Writer Suggesting That Dubai Will Sink; High Debt, Oil Crisis, Closing Businesses & Rapidly Dropping Property Prices will Sink the City, S&P Says Further Real Estate Price Drops Until 2021 Yet To Come

About 3.5 years ago, in June 2015, we had forecasted that Dubai will have a complete and total meltdown.

A few others have kind of agreed along the way since last year but no one has been as bold as us in their prediction and now the facts are all around us to verify our original prediction.

For the first time, a major global magazine has authored an article that entire city of Dubai could sink.

The below warning at the end of this must read article is quite ominous and correct.

"In other words, unless something changes to help Dubai's economy, the debt problems could sink the city."

Well, nothing new to us, since we predicted it first back in June of 2015.

""Dubai's GRE debt amounts to $60bn, equal to 50% of Dubai's GDP and around half of this is due to mature in the next three years," the Capital Economics report states.


In other words, the GRE's have a bill of around $30 billion coming due in the next 36 months."


Meanwhile, Etihad Airlines is broke and after cancelling the world's largest plane order a few days ago has now sold it's own HQ as well.

They have cancelled destinations, sold about 16 planes last year, cut passenger services, fired pilots and staff, shared hundreds of pilots with Emirates airline, been sued by Air Berlin for inability to support their own subsidiary and the same saga now going on with Jet Airways of India and now finally have sold their Etihad HQ and 2 other Etihad buildings in Abu Dhabi.

It appears that they are in a hurry to shut themselves by disposing off their staff and assets both.


Like clockwork businesses keep shutting down in Dubai, 4 Indian radio stations have shut in the past 2 years, one every 6 months. 

Keralites are the majority among India diaspora across the Middle East so they have always had very old and multiple radio channels and now one by one they are closing as the business has collapsed.


Tomorrow on March 3, 2019, another top club in 5 star hotel - Fairmont Dubai - will shut down in Dubai, in case anyone wanted to go have a free drink!

"The news of this nightclub shutting down comes a few months after Mahiki in Jumeirah Beach Hotel closed in September last year followed by Dubai Marina nightclub XL shutting down in November."


Steel sector is also facing slowdown.


We have predicted for years that Dubai real estate will collapse like nowhere else in the world.

Now we are seeing the data confirming our predictions.

According to this article, not 1 not 10, not 100, but 486 real estate related companies did not even bother to renew their licences.

A record 486 property companies and real estate brokerages that were in business in 2017 have failed to renew their licenses for 2018. Now, a total of 3,680 brokerages stand strong in a market that is consolidating and refining its talents and offerings.


Meanwhile, in Saudi Arabia, USA has dramatically reduced buying their oil and is buying the lowest in history which can only mean one thing.

USA has no interest in Middle East any longer and can take any crazy action at anytime. Because when a crazy person leaves from anywhere, he destroys the place before he leaves, so be very aware.

Saudi themselves had cut oil supplies to USA last year in order to get the price of oil to rise on top of USA not buying as much over the last decade and now US has stopped much more in the last few months.

Oil supplies to USA by Saudi are now at a decade low. Which is why Saudi needs to sell oil to China who is also the largest buyer in the world.

"Saudi Arabia sliced its crude supply to plants located on the U.S. Gulf Coast, the world’s largest refining center, by more than half from a year ago. And shipments may grind to a complete halt soon."

"Government data showed Wednesday that total Saudi crude imports to the U.S dropped to 346,000 barrels a day last week, the lowest in data going back to 2010."


Everyone is now suggesting that Dubai property prices will keep dropping for years to come.

This is what we said in 2015!

Beginning with S&P, Forbes etc, all should get recognition for reading our blog. A Big Thank you!

Even Gulf News is now out of control of the Govt's hands because the facts are in front of everyone whereby billions have been lost over the last decade and they need to report the news.


We have advised on multiple occasions on this blog that Dubai prices will never recover from the decline that started in 2015.


S&P has once again agreed with us and said now in Feb 2019 that Dubai property prices will keep declining until 2021, which is 3 years from now. So the Dubai property decline is confirmed beginning in 2015 until at least 2021 (7 years and counting).


19 Feb 2019: No upturn in sight for Dubai real estate by 2021- S&P


Further, things have become so bad that a Mexican expat who left Dubai is asking in newspapers what to do with a tiny USD 13,000 dollar debt and are fearing police will come after them, which they eventually will, since it's a crime in UAE to not repay debts.

The answers are pretty useless from all 3 responders. This person will be hounded in whichever country he lives by any means. Whether debt collection agents in home countries (who acquire bad debt files from banks after a few years) or an arrest warrant on planes that land in UAE/GCC, he will be pursued. If he ever enters UAE he will arrested and thrown into a jail. That is how the law of the UAE and how banking works in UAE.

But these "fearless" expats working in UAE who are answering the queries are not permitted to write the truth in a local newspaper so they keep saying it's the person's fault which it is not because he had a family tragedy (that can happen to any expat).

Even if we don't believe him, he left and doesn't have a job which means he was either laid off or simply is unemployable at the moment and his bad luck is that he took a credit card or a loan in UAE and not in any of the 200 other countries around the world.

Had he taken it in any country outside of the Middle East, he would not be fearing much and would have no one chasing him with the threat of jail.

He could declare bankruptcy and live thereafter in peace with his mother or negotiate with the banks and pay it off slowly, in any other country.

But remember you cannot negotiate much with the banks in UAE.

As the size of the outstanding amount keeps rising, so does the fear and they actually put everyone in jail, if a loan cannot be paid. Because that is the law.

The rule in Dubai regarding the fine against people who have unpaid amounts below 200,000 dirhams is very funny and strange.

So the person does not have 150,000 dirhams to pay and now he has another 5k-10k fine to pay ordered by the court.

Who could have thought of such a law? 

Would't it be better to put him in jail instead of asking a bankrupt person to pay even more!?

It's a merry go round in the Middle East until one ends up in jail because now this person will have 2 non payments. LOL

Lucky are those who were able to leave including this Mexican expat.


Not only for individuals or companies there are debt problems, IMF has warned recently that all the Arab world Govt's are under serious debt pressures.

Many folks don't know that both UAE (3m barrels and less) and Saudi oil production (10m barrels and less) has been stagnant since 2012 until this year while prices have dropped from 50% to 75%.

As any businessman knows, once the items you are selling, if the volume remains the same but the selling price drops by more than 50%, then you are basically on a death watch especially in the 6th year.

Aside from downgrades or negative watch lists, inability to raise new bonds for cash flow financing, higher rates of interest, absconding loan customers, massive decline in business, only budget tourists arriving, bans on so many countries etc means that Govt's don't have much revenue either and in order to keep their citizens happy they need to borrow or decimate their reserves or pray for higher oil prices as well sales.

However, we have mentioned that after 2018, Middle East countries won't be able to borrow much while revenues and reserves will continue to shrink at an unprecedented speed and this will lead to further distress.

Now IMF has issued a warning to the same effect.


Bloomberg also reported on a looming crisis.

"Saudi Arabia is catching hell internationally right now, with JASTA, NOPEC, 4  the Khashoggi murder, the humanitarian catastrophe in Yemen, and now the US nuclear revelations. I doubt Saudi policymakers want to further inflame a tough situation by antagonizing citizens."

"Yes, it’s really hot there, but Krane found that residents of similarly hot Arizona use about half as much electricity as foreign nationals living in Abu Dhabi, the largest of the United Arab Emirates, and one-fifth as much as Abu Dhabi nationals do. 

Not coincidentally, Arizonans pay twice the rate per kilowatt-hour of electricity that Abu Dhabi expats do and seven times as much as Abu Dhabi nationals. Among the consequences of cheap electricity in the Gulf are uninsulated dwellings and electricity-hogging lifestyles."


In addition, UAE and Saudi have lower volumes to export (aside from drastically lower prices) which is why they are hiking domestic oil prices and removing subsidies, as seen in this chart to the left.


Our ending tagline since 2015 has been that the worst is yet to come.


We are happy to see that Gulf Times has also now "copied" our ending tag line. :)


19 Feb 2019: Worst yet to come for Dubai real estate: S&P


We will say it again, the worst is yet to come....

4 comments:

  1. What are the consequences of this article

    https://www.bloomberg.com/news/articles/2019-03-12/u-a-e-9-other-jurisdictions-added-to-eu-tax-haven-blacklist

    ReplyDelete
    Replies
    1. Hello,

      Thank you for visiting and for your comment.

      There will be no impact due to this because it will be reversed.

      This is perhaps the 3rd time UAE's name has been placed on such a list and every time it gets reversed.

      I have no doubt that it will be reversed again.

      Last month, Saudi name was placed by EU on a similar money laundering list and guess what, it was reversed. lol

      The picture of money in this article should tell you what happens behind the scenes and why it will be reversed.

      EU states block blacklisting Saudi, Panama over dirty money

      https://www.reuters.com/article/us-eu-saudi-moneylaundering/eu-states-block-blacklisting-saudi-panama-over-dirty-money-idUSKCN1QO15M

      Thank you and best wishes,

      Delete
  2. Do middle east debt absconders still have to worry about interpol or only GCC? Is there a certain amount or threshold where these countries have more pull to go after someone outside the Gcc?

    ReplyDelete
    Replies
    1. Hello,

      Thank you for visiting and for your comment.

      There is no threshold per se but it's extremely rare to get someone back due to the LLC laws and limited power they have overseas and no court believes that check bouncing should be a jailable offence.

      France cancelled jailing due to check bouncing back in 1975.

      Only a few Shariah states do that today. Because of the ancient Kafala system.

      They have no pull whatsoever anywhere except fear mongering and doing it outside the laws.

      That is why I call people who escape Dubai or ME as lucky!

      Thank you and best wishes,

      Delete

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