Let Us Talk

February 23, 2009

Jobs in Dubai Desert Dries Up And Foreign Workers Flee!

palm-island-dubai 

If it can happen in Dubai, it can happen anywhere.  It’s a confirmation that international finances are horrendous when Dubai’s economy dries up!  

Dubai is one of the seven emirates and the most populous city of the United Arab Emirates (UAE). It is located along the southern coast of the Persian Gulf on the Arabian Peninsula.

Ian, a foreign worker, is a 38-year-old Englishman who moved to Dubai 2 years ago to take a job as an engineer. He lived in Dubai and became very confident that Dubai’s fast-growing economy would continue for at least a decade so he purchased a condominium for almost $300,000 with a 15-year mortgage.

90 percent of the Dubai population is made up of foreign workers.  Management teams were recruited with big salaries and with promises of an extraordinary financial future and guaranteed jobs.  Ian was laid off 2 weeks ago and is desperately searching for a job since he doesn’t know what else to do because he owns property there. If he can’t pay off his mortgage he could end up in debtors’ prison.

With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have left maxed-out credit cards inside the cars with notes of apology taped to the windshield.

The main problem is that the jobless in Dubai lose their work visas and then must leave the country within a month. That in turn reduces spending, creates housing vacancies and lowers real estate prices – a downward spiral that has left parts of Dubai once hailed as the economic superpower of the Middle East looking like a ghost town. Tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled.

Last month local newspapers reported that Dubai was canceling 1,500 work visas every day. Real estate prices, which rose dramatically during Dubai’s six-year boom, have dropped 30 percent or more over the past two or three months in some parts of the city. Many used luxury cars are for sale, sometimes being sold for 40 percent less than the asking price two months ago according to car dealers. Dubai’s roads, usually congested with traffic this time of year are now mostly traffic free.

Dubai at first seemed to be a refuge, relatively insulated from the panic that began hitting the rest of the world last fall. The Gulf is cushioned by vast oil and gas wealth so some who lost jobs in New York and London began applying and accepting jobs there.

But Dubai, unlike Abu Dhabi or nearby Qatar and Saudi Arabia does not have its own oil.  Dubai built its reputation on real estate, finance and tourism. Now many expatriates are talking about Dubai as though it has been a con game all along. Sensational rumors have been spreading that Palm Jumeira (Palm Island) – the artificial island that is one of this city’s trademark developments is sinking.

Ian says he doesn’t know what to believe anymore and he is becoming a little panicked as he continues looking for a job, hoping that he finds one before his 30 days runs out.

It was reported earlier today by the Dubai Department of Finance that The Central Bank has pledge the first US$10 billion of what will eventually be a US$20 billion bond program to help Dubai meet its financial obligations so that the government can continue with its development plans. This will provide the Dubai Government with the necessary liquidity to substitute the funds that have dried up globally in the last 12 months and help them to meet all their upcoming financial obligations.

Dubai’s government and government-owned corporations have an estimated US $80 billion in combined bonds and other outstanding loans to help finance the breakneck growth and economic diversification that have made it a developmental model for the Middle East.

 

 

Advertisements

2 Comments »

  1. I did not get in on that one. A pity eh?!

    Comment by DDT. — February 23, 2009 @ 9:16 pm | Reply

  2. Well done. I’m not sure how much we Americans know not only how much a world economy life is today, but also that the economic crisis is global – not isolated in the USA. Job loss, bank bailouts, and government stimulus are happening across the globe.

    For readers, here’s a good site for a more worldly view … http://www.realclearworld.com/.

    And for Paulette … Happy Birthday today with hopes of many more ahead!

    Comment by afrankangle — February 24, 2009 @ 8:04 am | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: