The fall of Dubai World

Iceberg

Active Member
#1
DUBAI -- As financial crisis roiled much of the world in October 2008, the head of Dubai's biggest state-owned developer unveiled his latest megaproject: a $38 billion development that would include a tower nearly two-thirds of a mile tall.

"I'm sure most of you are asking why we're launching this, and you'd be mad not to question it," said the executive, Chris O'Donnell, at a news conference. Though there would be economic ups and downs in the years needed to build the tower, he told listeners, demand would continue to outstrip supply.

"The fundamentals in the market are too strong," he said. "There won't be a crash."

Since then, residential real-estate prices in Dubai have slumped by almost 50%. Developers have slashed jobs and scrapped projects. Groundbreaking on the tower was long ago put on hold. The yearlong retrenchment culminated in last week's surprise announcement that Dubai would seek to restructure $26 billion of debts owed by Dubai World, the holding company for many of the government's port, infrastructure and real-estate businesses.

Behind this jolt was one of the world's most concentrated property bubbles. Some $430 billion worth of construction projects have been scrapped across the United Arab Emirates, a desert country with a population of just 4.5 million and an area smaller than South Carolina. The majority were slated for the emirate of Dubai, according to estimates by the Middle East Economic Digest, a regional projects tracker.

The boom was fueled by easy credit, a poorly regulated market overrun by speculators, and cheerleading from Dubai officials -- including the hereditary ruler, Sheik Mohammed bin Rashid Al Maktoum.

His vision for the city -- a tolerant, modern metropolis open to the world, its many faiths and some of its excesses -- has long rankled conservative Arab neighbors, including some officials in Abu Dhabi, the buttoned-down capital of the U.A.E. But for others, Dubai became a symbol of what a modern Arab state might achieve if it embraced the West and its financial system. President Barack Obama, in a June speech to the Muslim world in Cairo, singled out Dubai as a place where economic development worked.

Dubai's soaring skyline is a symbol of pride here. At a National Day parade this week, men dressed in traditional Arab garb pushed floats consisting of scale models of the city's iconic buildings. There were models of the Burj Dubai -- the world's tallest skyscraper, due to open next month -- as well as the sail-shaped Burj Al Arab hotel and the Mall of the Emirates, which houses an indoor ski slope.

"Our leaders have been able to achieve all of this," said Ahmed Al Hammadi, watching the parade. As for the current debt crisis, "we will come out of it stronger," he said.

Officials and developers justified the breakneck pace at which these were built by touting Dubai's proximity to both Asia and Europe, its tax-free and tolerant way of life and its position as the region's business hub. Foreign executives, architects and real-estate brokers flocked here for the seemingly limitless scope to pursue big projects. International debt and property investors bought into the dream, too, until global financial markets seized up and much of the world plunged into recession. Then, buyers began to bail out, employers shed staff and companies put expansion on hold.

The result is a jaw-dropping real-estate overhang. "To Let" signboards adorn the facades of dozens of recently finished buildings along Sheikh Zayed Road, the superhighway that cuts through the city's canyon of skyscrapers. Office vacancies in new buildings run at 41%, according to international property agency Colliers International.

After taking markets by surprise last week with a request to delay debt payments at Dubai World by six months or more, the government here said early Tuesday it would begin a multiphase restructuring effort aimed at the company's debt, including $6 billion related to lending by the state-owned property developer, Nakheel. It said the restructuring would include the assessment of "deleveraging options," including asset sales. Dubai World said it had started discussions with its banks and these were proceeding on a "constructive basis."

International securities markets recovered their poise after a scare, but the effects aren't just financial. The debt announcement appeared to open a fresh rift between Dubai and U.A.E. capital Abu Dhabi. Federal officials there were livid at being left in the dark by Dubai's decision to seek a debt standstill, say people familiar with the situation. The rift has the potential to unsettle an important U.S. ally in the Persian Gulf, because Dubai, as a re-export hub and offshore financial center for Iranian businesses, is seen as key to U.S. efforts to isolate Iran.

Dubai and Abu Dhabi officials have underscored unity in recent days. But while the U.A.E. federal government orchestrated a $10 billion bailout earlier this year for Dubai companies, it hasn't stepped in to offer assistance to Dubai World.

Dubai's growth began in the early 1980s when Sheik Mohammed and his father pushed to diversify the economy in the face of dwindling oil. Dubai built luxury beachside hotels to lure wealthy visitors from India, Asia and the Middle East, plus package tours from Europe and Russia. In 2002, Sheik Mohammed opened the door to foreign ownership of property in certain developments. With little more than a brochure and a floor plan, buyers began to slap down deposits on townhouses, apartments and villas that wouldn't be ready for years.

Aarti Chana was living in the U.K. in 2004 when Nakheel pitched a project called Palm Jebel Ali to prospective buyers. As the second piece of a spectacular development jutting out in the sea in the shape of a palm tree, Palm Jebel Ali would include homes built on stilts, forming a 7.5-mile chain spelling out an Arabic poem written by Sheik Mohammed. "It takes a man of great vision to write on water," the poem reads in part.

Many units would be ready for occupancy by December 2009, Nakheel said. Ms. Chana, now 38 years old, put 10% down on a $780,000 five-bedroom beachfront villa and, making plans to settle here, sold her house near London. "I believed in the Dubai story," she says.

In 2006, Sheik Mohammed consolidated a handful of government businesses into the Dubai World holding company, with Sultan Ahmed bin Sulayem as its leader. To head Nakheel, Mr. Sulayem, in turn, plucked Mr. O'Donnell from Australia, where he headed a fast-growing property fund.

Messrs. Sulayem and O'Donnell declined to comment for this article. A spokesman for Nakheel didn't respond to emailed questions, nor did a spokesman for Dubai's ruler.

Nakheel was on a roll, preparing to open the first of the palm developments, Palm Jumeirah, and planning the next two. In September 2006, at a separate, 914-acre residential community called Jumeirah Park, villas starting at $654,000 sold out in a day. International banks and local lenders offered loans for up to 97% of the purchase price.

To help finance all this construction, Mr. O'Donnell turned to the bond markets. An investor presentation in November 2006 called Dubai a "vantage access point" that would draw in businessmen from a wide swath of the greater Middle East, from India to Egypt. It projected that Dubai's population, then just under 1.2 million, would grow by two million in 14 years.

Investors rushed to buy a piece of Nakheel's Islamic bond, known as a sukuk. Swamped by demand, the borrower increased the issue's size to $3.5 billion.

That year, Dubai's real-estate sector raised $4.9 billion through bonds and syndicated loans, according to data provided by Thomson Reuters. Real-estate borrowing soared in 2008 to $30.4 billion.

In 2007, a Dubai World affiliate bought the Queen Elizabeth 2, unveiling plans to moor the ocean liner at the Palm Jumeirah and turn it into a luxury hotel.

By then, cracks in the real-estate market were forming. Officials had put few regulations on development that might limit the speculation. Now, concerned that the market had grown overheated, they did so. And in early 2008, authorities embarked on a series of high-profile corruption investigations at some big real-estate and finance firms.

But police, courts and the companies themselves disclosed little about the probes. As a result of the lack of transparency, the crackdown on corruption, instead of comforting investors, spooked them.

"There is a complete distrust by investors in the system," said Michael Diaz, a Miami-based attorney with offices in Dubai. Dubai and U.A.E. officials say they have made efforts to improve the legal system.

In April 2008, police detained the Lebanese-American chief executive of one of Dubai's top developers. The company didn't disclose the arrest until after it was reported in the press. He denied wrongdoing

A string of other detentions followed at some of Dubai's biggest companies, including Nakheel. A Nakheel spokesman didn't answer emailed questions about the probe.

Typical was the case of British developer Arthur Fitzwilliam, an affable 58-year-old polo fan from London. He had lived in Dubai for two decades, dabbling in real estate and other ventures. In 2004, he inked a deal to develop a 14.5 million-square-foot plot of desert acquired from a government-controlled company.

The Plantation Equestrian and Polo Club would have air-conditioned stables for 800 horses, four polo fields, facilities to host horse shows and a five-star hotel. Mr. Fitzwilliam sought partners to help finance the project. A British banker agreed to provide financing, in exchange for a 30% stake, Mr. Fitzwilliam said in an interview.

But in June 2008, authorities detained Mr. Fitzwilliam, the banker and one other. Then in September, Dubai Islamic Bank, or DIB, foreclosed on the land for the project. It also seized more than 100 polo ponies, Mr. Fitzwilliam said. For almost a year, he sat in jail before charges were filed. In March 2009, authorities charged seven men with scheming to defraud DIB, according to a bill of indictment filed by Dubai's public prosecutors. Mr. Fitzwilliam was accused of aiding the scheme.

Last month, he was transferred to a Dubai hospital to undergo tests for cancer. Four Dubai police officers stood guard outside his room.

Mr. Fitzwilliam denied any wrongdoing, as did the British banker he was working with. "I want a fair trial, and I'm prepared to go with the system," he says, shackled to his hospital bed. "Anyone who knows the case knows I'm not guilty."

A spokesman for the Dubai prosecutor's office didn't respond to requests for comment.

Amid the uncertainty surrounding the arrests, the crisis roiling the rest of the world was catching up with Dubai. When global credit markets froze up in late 2008, international investors stopped buying Dubai property. Some who had already bought stopped making installment payments. Nakheel and others shed staff and scrapped or delayed dozens of projects.

Last February, the troubles touched Ms. Chana's plan for a new home in Dubai. Nakheel halted work on the Palm Jebel Ali. Though dredging had been done, little construction had.

Ms. Chana says she has sunk about $550,000 into her still-unfinished home. Earlier this year, she flew to Dubai to try to salvage the investment. She is living in a hotel-apartment with her daughter, helping to organize other investors and petition Nakheel for rebates. "I just won't let this drop," she says. "It's become my obsession."

In October, Nakheel proposed that Jebel Ali investors transfer their contracts to property elsewhere that is already finished or close to it.

Simon Murphy bought a $240,000 ground-floor apartment in the Palm Jumeirah in 2002 and moved in five years later. He is now a "resident representative" to Nakheel, like being part of a homeowners board. He says that in recent weeks, Nakheel has cut back on maintenance, including tree trimming.

Since Dubai's debt-standstill announcement, Mr. Murphy says, many apartment residents have stopped paying management fees, typically around $700 a month. Nakheel declined to comment. "Most people fear that their money will go into the bottomless pit of Nakheel debt," Mr. Murphy says.

Source: WSJ
 
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  • Iceberg

    Active Member
    #2
    UK banks owed $5bn by Dubai World

    UK banks have an aggregate exposure to Dubai World of about $5bn, the Financial Times has learnt, confirming them as the biggest creditor group at the crisis-hit emirate holding company.

    A week on from the emergence of Dubai’s financial turmoil, banks and their advisers are still scrambling to pin down exactly how much they are on the hook for, but last night it became clear that Royal Bank of Scotland was the most exposed of the UK banks, ahead of HSBC, Standard Chartered and Lloyds Banking Group.

    Of the $40bn of total Dubai World debt, bankers close to the situation said RBS had between $1bn and $2bn (£3.3bn) of exposure, compared with about $1bn apiece for the other UK institutions. One senior banker with knowledge of the debt portfolio said Emirates National Bank of Dubai was the biggest single creditor with outstanding lending of about $3bn.

    The UK banks are understood to have much of their lending focused on the still-performing parts of Dubai World, however, including DP World and Jebel Ali Free Zone. According to people close to the situation, that reduces the exposure to the $26bn of Dubai World debt that is being restructured to about $700m for RBS, and $350m for StanChart, for example – far smaller tallies than many had feared. The banks all declined to comment.

    Other top 15 creditors include international banks such as BNP Paribas, Société Générale and Calyon.

    The $26bn of debt that is being restructured comprises $5.5bn of syndicated debt and close to $6bn of sukuk bond debt, with all of the latter issued by Nakheel. The balance is made up of bilateral lending deals between Dubai World companies and individual lenders, on which no data is published.

    The bookrunners for the $5.5bn syndicated issue, arranged in June 2008, were HSBC, ING, Lloyds, Mashreq Bank, RBS, Sumitomo Mitsui, Calyon and Tokyo Mistubishi, according to Bloomberg data. Typically, bookrunners retain 10-20 per cent of loans, syndicating the rest to third-party lenders.

    Anger has been mounting in recent days, particularly among bond investors, who complain that they were duped by assurances given this year from Dubai’s rulers as to the emirate’s creditworthiness.

    After an announcement by Sheikh Mohammed bin Rashid al-Maktoum on September 8 that he was “not worried” about Dubai’s debt position, international investors piled into Nakheel bonds.

    Analysts said at the time that the announcement was a significant fillip to confidence in Dubai and its state-backed enterprises. “This is the first time that we are hearing from the ruler on Dubai’s debt issue. This has boosted market confidence dramatically,” said Nish Popat, the head of fixed income at ING in Dubai in a note to clients on September 9.

    Although local authorities insist they were referring to the state’s sovereign obligations, investors say the emirate had long cultivated the notion of a quasi-sovereign “Dubai Inc” family that was central to the state’s development and would be supported in the event of difficulties.

    “Nakheel is one of the most leveraged companies I’ve seen in my entire career,” said one hedge fund manager. “People bought it because they’d assumed there was some kind of state guarantee, which there wasn’t.”

    Ashmore, the emerging markets fund manager, was a substantial buyer of Nakheel bonds this year. It increased its holdings in debt issued by the property developer by as much as 25 per cent, according to people familiar with the fund.

    Other large institutional money-managers thought to be involved include Blackrock, Julius Baer and Bank of America Merrill Lynch.

    The first of the Nakheel sukuks, a $3.52bn issue, is due to be redeemed on December 14. The holders of this bond are unclear but the holders are in the process of forming a group, accounting for more than a quarter of investors, to represent their interests. Ashmore and hedge fund QVT are understood to be among the leading bondholders, though neither would comment.

    Source: FT
     

    Iceberg

    Active Member
    #3
    Dubai Stocks Drop Most in World on Concern About Debt Problems

    Dec. 7 (Bloomberg) -- Dubai shares are poised for their lowest close since July, led by Emaar Properties PJSC and Emirates NBD, as investors price in the emirate’s debt burden.

    Emaar, the United Arab Emirates’ biggest real-estate developer, slumped 10 percent. Union Properties PJSC is headed for the lowest close since April 2. Emirates NBD retreated to the lowest since September. The DFM General Index slid 5.5 percent, the biggest fluctuation among global benchmarks tracked by Bloomberg, to 1,750.8 at 12:02 p.m. in the emirate, heading for the lowest close since July 22.

    Dubai World last week began talks with banks to restructure $26 billion of debt, including a $3.52 billion Islamic bond of property unit Nakheel PJSC, and said the remainder of its liabilities are on “a stable financial footing.” The emirate on Nov. 25 said it was seeking a “standstill” agreement on Dubai World’s debt, the holding company with $59 billion in liabilities. Dubai’s benchmark index has declined 16 percent since the announcement.

    “We just need time to digest some of the recent developments,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “Volatility will be here in the short term. We are lacking specific news and that explains the weakness today.”

    Emaar fell to 3.15 dirhams. Union Properties tumbled 8 percent to 0.69 dirham. The developer hired Ernst & Young LLP to raise 1.2 billion dirhams ($327 million) to finance the construction of its Formula One theme park in Dubai, The National reported.

    Emirates NBD, the region’s biggest publicly traded bank by assets, lost 4.8 percent to 3.77 dirhams, heading for its lowest close since Sept. 14.

    Source: Bloomberg
     

    ecce homo

    Well-Known Member
    #4
    Dubai's finance chief says indebted Dubai World, not state, may sell assets for cash

    By Adam Schreck, THE ASSOCIATED PRESS

    DUBAI, United Arab Emirates - Dubai World, the indebted conglomerate at the heart of this sheikdom's credit problems, may sell off assets it acquired during a multiyear building and buying spree to raise cash, according to a senior government official.

    Dubai Finance Department Director-General Abdul Rahman al-Saleh did not say which pieces of the company are for sale in an interview posted on al-Jazeera's Web site Monday. However, he emphasized that the assets in question would be the company's, and not those held by the government of Dubai.

    The finance chief said the primary aim of restructuring the state-backed company is to ensure it remains viable for years to come.

    "It is premature to announce any plans now, but the main goal is that Dubai World will continue in the future as a company with a new framework to face challenges," al-Saleh said. He did not elaborate.

    The sale of any major Dubai World assets would mark a shift for the conglomerate, which repeatedly downplayed questions it would need to unload pieces of its global empire even as Dubai's financial concerns grew more acute over the past year.

    That perception began to shift last week, when the company said tersely that its restructuring would include an assesment of options to reduce its debt load, "including asset sales."

    Al-Saleh's latest comments are the clearest sign so far that Dubai's leadership is growing more comfortable with the idea of selling off pieces of the company.

    Over the past years, Dubai World relied heavily on borrowed money to carve out markets far beyond the tiny emirate's shores. Its slogan boasts: "The sun never sets on Dubai World."

    The company runs the world's fourth-biggest seaport operator, DP World, with operations on six continents. Its wide-ranging investment portfolio includes luxury retailer Barney's New York, a stable of high-end U.S. hotels, and stakes in Las Vegas casino operator MGM Mirage and Cirque du Soleil.

    At home in Dubai, the company's property arm Nakheel built man-made islands in the shape of palm trees and a map of the world. The iconic British cruise liner Queen Elizabeth 2 sits in a downtown Dubai port awaiting renovations to turn it into a floating hotel.

    Many lenders at home and abroad lent Dubai World money on the assumption that, as a company controlled by the government, it had implicit state backing.

    Al-Saleh, however, reiterated the Dubai government's position that there is no state guarantee in Dubai World.

    The company has some $60 billion of outstanding debts. Late last month, it surprised markets by requesting a delay in paying billions of dollars of debt coming due this month.

    "Banks believed the Dubai government ... would not want to risk its reputation, but (the) government effectively called their bluff" when it asked for new repayment terms, said Jan Randolph, director of sovereign risk at IHS Global Insight.

    Al-Saleh said Dubai World's problems stemmed from a reliance on previously easy-to-get, short-term loans that were used to finance long-term projects like luxury high rises and even more manmade islands.

    "Most of Dubai World loans range from three to five years, whereas the projects that were financed range from 25 to 30 years," he said. "The difference between the finance terms and carrying out the projects led to this crisis."
     

    Venom

    Legendary Member
    #5
    From the archive

    Golden Dubai
    Jun 6th 1970
    From The Economist print edition

    1970: Dubai is in strange and welcome contrast to anywhere else on the Gulf

    If the accident of oil had not brought such wealth to Abu Dhabi, Sheikh Zayed, remarkable a man as he is, would not have been the unchallenged leader among the Trucial states' rulers. His neighbour, Sheikh Rashed bin Said al Maktum, a shrewd, cunning and hard-working merchant who has ruled Dubai since 1958, would have been as likely a candidate. And Dubai, which in effect is a town straddling a 6-mile long creek (although there are 1,500 square miles of desert too) has for centuries been the main port and trading post serving the Trucial states and the interior of Oman. Sheikh Rashed intends that it shall remain so.

    With a thriving and well-established trading community of some 60,000 people, a frantically active waterway running through its heart, with lighters and dhows being loaded and unloaded 24 hours a day at its centre, Dubai is in strange and welcome contrast to anywhere else on the Gulf. The difference is not only physical. The tolerant and broadminded attitude of Sheikh Rashed (what other Arab ruler would lay the foundation stone of a Protestant church?) infects the life of his state. There are almost no restrictions on anyone opening businesses; the foreign community (Iranians alone number 11,000) is treated as equal to the indigenous, and no eyebrows are raised if young Arabs take to the dance-floor.

    The tolerance extends to trade. It is no secret that a large proportion of the wealth accumulated by Dubai merchants comes from smuggling gold bullion (mostly from Britain), Swiss watches and Japanese cloth into Pakistan and India and tea into Iran. Between 15 and 20 tons of gold (at £600,000 a ton) arrive by air in Dubai each month. It is taken to India, often in fast, modern launches, and by the time the agents are paid off, and the rupees converted into hard currency the organising syndicate can expect a profit of between 18 and 22 per cent on a consignment. This adequately covers the losses on consignments that are caught by Indian or Pakistani customs patrols, or which have to be dumped into the Indian Ocean if arrest seems imminent. Import statistics show that Dubai is the second largest importer of Swiss watches in the world—£7 million worth arrived in 1968.

    The state's main source of income has been its 4.625 per cent custom duty on imports, but in 1967 oil was discovered in commercial quantities off-shore and shipments began last year. This year Sheikh Rashed's income could reach £10 million and next year £14 million. In anticipation Rashed has embarked on one of the major development projects on the Trucial coast—a 15 berth deep-water harbour, which is being constructed by Costain at a cost of £24 million. It is a brave venture, for Qatar, Abu Dhabi and Sharjah are in the process of building their own, more modest ports, and if Dubai's is to prove worth its cost, it will have to attract the merchandise destined for the other states as well. This is not just the Sheikh's wild dream, for by the time his harbour is finished, the whole Trucial coast from Doha to Ras-el-Khaimah will be joined by asphalted roads. He is also confident that the experience and standing of the Dubai merchants will justify his investment.

    Rashed understands the economic advantages that will follow a federation of the states, but he does not hesitate to tell his brother rulers and his visitors that no one is going to interfere in the running of his state. It is very much a family affair. One son heads the municipal council of appointed merchants which runs the town; another, the Crown Prince, heads the Land Registration Committee; and a third is in charge of the police. But Rashed has his own eyes and ears and little escapes his notice. He drives around the town, fishing his pipe tobacco out of an old aspirin bottle, and if he notices anything amiss or new he stops to find out for himself what is afoot.

    His next-door neighbour, Sheikh Khalid of Sharjah, whose state boundary is just a few miles down the road, is another able, hard-working ruler with a business background. In the five years since he took over he has also trasformed his small domain from a run-down fishing village into a small active trading town with water and electricity supplies. He is indebted to Sheikh Zayed for the road to the agricultural centre of Dhaid and to the Trucial States Development Fund for aid in developing the fishing industry in Sharjah's enclave on the Indian Ocean coast. The long jetty built at great cost by his predecessor to give the state a deep-water harbour is doomed to be a white elephant as the prevailing winds and tides deter captains from tying up alongside, but Sheikh Kahlid has started work on dredging the silted-up creek and this, he hopes, will bring trade back to Sharjah. He has recently granted oil exploration concessions to two groups on favourable terms and this income will more than compensate him for the loss of revenue from the British base, when it disappears.

    Oil concessions have also brightened the outlook for the next two small states along the Gulf coast, Ajman and Umm al-Qaiwain, both little more than primitive villages. Ajman, however, sports a large cinema that could take more than its whole population, and both now have water and electricity and are trying to develop their dried fish industries. The youngest state, Fujairah, which was only recognised in 1952, lies on the Batinah coast of the Indian Ocean. It, too, is poor and its working population ekes out a living by farming and fishing. Both industries could be developed considerably were the money and the expertise available. Finally, there is Ras-al-Khaimah and its wily old ruler, Sheikh Saqr. A simple, stubborn, fighting man, Sheikh Saqr rules his 10,000 subjects without much outside aid. He keeps his fingers crossed that one of the two oil groups prospecting on and off shore will strike oil in commercial quantities. If they do, he may well insist on building his own international airport—a useless project—but he has plans as well for a cement factory and agriculture and fishery developments, while a power station will be in action in 1971. Saqr has been insisting that the defence headquarters of the proposed federal force should be in his capital—an impossible idea—but the motive behind this and his plan for an airport is his fear of Zayed of Abu Dhabi. In the conferences up to date, he has aligned himself with Ahmed of Qatar and Rashed of Dubai and it is noticeable that the Iranians have taken trouble to fête him on his visits there. He owns the two small Tumbs islets which the Shah wants for himself, and if Saqr plays his cards right, he could get a handsome cash payment for them. But so unpredictable are the alliances and feuds on the Trucial coast, that the recent news that Sheikh Saqr and his son have been visiting Sheikh Zayed comes as no surprise.
     

    Venom

    Legendary Member
    #6
    Moody's further cuts ratings of all 6 government related entities; On Review for further downgrades These rating cuts now reflect standalone ratings for all entities expect 1 notch uplift for DIFC Investments and DEWA
    * DP World cut 2 notches to Ba1 from Baa2.
    * Dubai Electricity and Water Authority cut 3 notches to Ba2 from Baa2.
    * DIFC Investments cut 4 notches to B2 from Ba1
    * Jebel Ali Free Zone cut 3 notches to B1 from Ba1
    * Dubai Holding Commercial Operations Group cut 2 notches to B1 from Ba2.
    * Emaar Properties cut 2 notches to B1 from Ba2.
    * We think apart from DP World, Jebel Ali Free Zone and Dubai Electricity and Water Authority there is a high likelihood that the other entities can go into some form of debt restructuring.
     

    HannaTheCrusader

    Legendary Member
    Orange Room Supporter
    #8
    BAI, United Arab Emirates – The world's tallest skyscraper has unexpectedly closed to the public a month after its lavish opening, disappointing tourists headed for the observation deck and casting doubt over plans to welcome its first permanent occupants in the coming weeks.

    Electrical problems are at least partly to blame for the closure of the Burj Khalifa's viewing platform — the only part of the half-mile high tower open yet. But a lack of information from the spire's owner left it unclear whether the rest of the largely empty building — including dozens of elevators meant to whisk visitors to the tower's more than 160 floors — was affected by the shutdown.

    The indefinite closure, which began Sunday, comes as Dubai struggles to revive its international image as a cutting-edge Arab metropolis amid nagging questions about its financial health.

    The Persian Gulf city-state had hoped the 2,717-foot (828-meter) Burj Khalifa would be a major tourist draw. Dubai has promoted itself by wowing visitors with over-the-top attractions such as the Burj, which juts like a silvery needle out of the desert and can be seen from miles around.

    In recent weeks, thousands of tourists have lined up for the chance to buy tickets for viewing times often days in advance that cost more than $27 apiece. Now many of those would-be visitors, such as Wayne Boyes, a tourist from near Manchester, England, must get back in line for refunds.

    "It's just very disappointing," said Boyes, 40, who showed up at the Burj's entrance Monday with a ticket for an afternoon time slot only to be told the viewing platform was closed. "The tower was one of my main reasons for coming here," he said.

    The precise cause of the $1.5 billion Dubai skyscraper's temporary shutdown remained unclear.

    In a brief statement responding to questions, building owner Emaar Properties blamed the closure on "unexpected high traffic," but then suggested that electrical problems were also at fault.

    "Technical issues with the power supply are being worked on by the main and subcontractors and the public will be informed upon completion," the company said, adding that it is "committed to the highest quality standards at Burj Khalifa."

    Despite repeated requests, a spokeswoman for Emaar was unable to provide further details or rule out the possibility of foul play. Greg Sang, Emaar's director of projects and the man charged with coordinating the tower's construction, could not be reached. Construction workers at the base of the tower said they were unaware of any problems.

    Power was reaching some parts of the building. Strobe lights warning aircraft flashed and a handful of floors were illuminated after nightfall.

    Emaar did not say when the observation deck would reopen. Ticket sales agents were accepting bookings starting on Valentine's Day this Sunday, though one reached by The Associated Press could not confirm the building would reopen then.

    Tourists affected by the closure are being offered the chance to rebook or receive refunds.

    The shutdown comes at a sensitive time for Dubai. The city-state is facing a slump in tourism — which accounts for nearly a fifth of the local economy — while fending off negative publicity caused by more than $80 billion in debt it is struggling to repay.

    Ervin Hladnik-Milharcic, 55, a Slovenian writer planning to visit the city for the first time this month, said he hoped the Burj would reopen soon.

    "It was the one thing I really wanted to see," he said. "The tower was projected as a metaphor for Dubai. So the metaphor should work. There are no excuses."

    Dubai opened the skyscraper on Jan. 4 in a blaze of fireworks televised around the world. The building had been known as the Burj Dubai during more than half a decade of construction, but the name was suddenly changed on opening night to honor the ruler of neighboring Abu Dhabi.

    Dubai and Abu Dhabi are two of seven small sheikdoms that comprise the United Arab Emirates. Abu Dhabi hosts the federation's capital and holds most of the country's vast oil reserves. It has provided Dubai with $20 billion in emergency cash to help cover its debts.

    Questions were raised about the building's readiness in the months leading up to the January opening.

    The opening date had originally been expected in September, but was then pushed back until sometime before the end of 2009. The eventual opening date just after New Year's was meant to coincide with the anniversary of the Dubai ruler's ascent to power.

    There were signs even that target was ambitious. The final metal and glass panels cladding the building's exterior were installed only in late September. Early visitors to the observation deck had to peer through floor-to-ceiling windows caked with dust — a sign that cleaning crews had not yet had a chance to scrub them clean.

    Work is still ongoing on many of the building's other floors, including those that will house the first hotel designed by Giorgio Armani that is due to open in March. The building's base remains largely a construction zone, with entrance restricted to the viewing platform lobby in an adjacent shopping mall.

    The first of some 12,000 residential tenants and office workers are supposed to move in to the building this month.

    The Burj Khalifa boasts more than 160 stories. The exact number is not known.

    The observation deck, which is mostly enclosed but includes an outdoor terrace bordered by guard rails, is located about two-thirds of the way up on the 124th floor. Adult tickets bought in advance cost 100 dirhams, or about $27. Visitors wanting to enter immediately can jump to the front of the line by paying 400 dirhams — about $110 apiece.

    World's tallest tower closed a month after opening - Yahoo! News
     

    HannaTheCrusader

    Legendary Member
    Orange Room Supporter
    #9
    تطرقت "فايننشال تايمز" إلى ظاهرة هروب الوافدين الأجانب المثقلين بأعباء الديون من دبي خوفا من مواجهة عقوبة الحبس وذلك بعدما عصف الانكماش الاقتصادي بالإمارة نتيجة هبوط أسعار النفط.

    وفي مقال نشرته الصحيفة البريطانية، قالت "فايننشال تايمز" إن هبوط أسعار النفط أجبر حكومات دول الخليج، التي تعتمد ميزانياتها على عائدات النفط، على تقليص الإنفاق وتأجيل بعض المشروعات، في وقت تقوم فيه بعض الشركات الخاصة بإنهاء عقود عمالها، وفي حالات أخرى تغلقها.

    وأشارت في مقالها إلى السيارات التي يتركها الأجانب الهاربون من دبي في موقف للسيارات في مطار دبي، والذين قرروا مغادرة المدينة خوفا من الحبس بسبب عجزهم عن سداد الديون التي أثقلت كاهلهم.

    وعزا سيمون ويليامز، كبير الاقتصاديين في منطقة الشرق الأوسط في بنك "HSBC" هذه الظاهرة بشكل جزئي لأسعار النفط المنخفضة، حيث قال: "إن أسعار النفط المتدنية جزء من المشكلة، ربما لا تكون دبي منتجة للنفط، لكنها تصدر خدماتها لبقية مناطق الخليج، والتي تشهد تراجعا في الطلب".

    وأضافت "فايننشال تايمز" أن ظاهرة السيارات المهجورة كانت رمزا لأزمة دبي في عام 2009، حينها اضطرت الإمارة للجوء إلى أبوظبي، عاصمة دولة الإمارات، للحصول حزمة إنقاذ مالي تبلغ 20 مليار دولار، في إشارة إلى تكرر هذه الظاهرة مرة أخرى.

    ولفتت الصحيفة البريطانية إلى أن تباطؤ النمو الاقتصادي في العام الحالي لم يصل بعد إلى المستويات التي شهدتها دبي خلال أزمة عام 2009، مشيرة إلى أن الإمارة أقل تأثرا بأزمة أسعار النفط الحالية مقارنة بنظيراتها اللاتي يعتمدن على عائدات الذهب الأسود مثل قطر أو أبوظبي، لكن الإمارة تعاني من ديون تصل إلى 140% من حجم الناتج المحلي الإجمالي، حيث يتوجب عليها سداد قروض وسندات في عام 2018 بقيمة 22 مليار دولار.

    ووفقًا لشركة "كوفاس"، المعنية بتقديم خدمات التأمين علـى القروض والتي تراقب التعاملات الائتمانية لنحو 20 ألف شركة في الإمارات، فإن الصعوبات التي تواجهها الحكومة انعكست سلبا على شركات القطاع الخاص، دافعة بعض الشركات للتقاعس عن سداد التزاماتها المالية.

    وقال مدير تنفيذي في شركة "كوفاس" إن حالات الهروب تضاعفت لمقدار ثلاث مرات عن المستويات التي اعتدنا عليها، منوها إلى أن قطاعي صناعة المعادن والإنشاءات هما الأكثر تضررا، لكن حالات الإفلاس استقرت بعدما أعلنت الشركات الضعيفة إغلاقها.

    كما أشارت الصحيفة إلى أن نفقات المعيشة المرتفعة تدفع العائلات إلى مغادرة دبي، وذلك في ظل تباطؤ النمو الاقتصادي في الإمارة.

    وكان صندوق النقد الدولي حث في وقت سابق حكومات دول الخليج على اتخاذ تدابير لتعزيز مصادر الدخل غير النفطي، محذرا من أن موجة أسعار النفط المتدنية ستبقى على الأرجح لفترة طويلة.

    وقالت كريستين لاغارد مديرة صندوق النقد الدولي في فبراير/شباط الماضي، إن على دول الخليج إعادة هندسة أنظمتها الضريبية من خلال خفض اعتمادها على النفط وتعزيز مصادر الدخل غير النفطي




    whats going on?
    recession again ?
     

    JeanH

    Well-Known Member
    Orange Room Supporter
    #11
    تطرقت "فايننشال تايمز" إلى ظاهرة هروب الوافدين الأجانب المثقلين بأعباء الديون من دبي خوفا من مواجهة عقوبة الحبس وذلك بعدما عصف الانكماش الاقتصادي بالإمارة نتيجة هبوط أسعار النفط.

    وفي مقال نشرته الصحيفة البريطانية، قالت "فايننشال تايمز" إن هبوط أسعار النفط أجبر حكومات دول الخليج، التي تعتمد ميزانياتها على عائدات النفط، على تقليص الإنفاق وتأجيل بعض المشروعات، في وقت تقوم فيه بعض الشركات الخاصة بإنهاء عقود عمالها، وفي حالات أخرى تغلقها.

    وأشارت في مقالها إلى السيارات التي يتركها الأجانب الهاربون من دبي في موقف للسيارات في مطار دبي، والذين قرروا مغادرة المدينة خوفا من الحبس بسبب عجزهم عن سداد الديون التي أثقلت كاهلهم.

    وعزا سيمون ويليامز، كبير الاقتصاديين في منطقة الشرق الأوسط في بنك "HSBC" هذه الظاهرة بشكل جزئي لأسعار النفط المنخفضة، حيث قال: "إن أسعار النفط المتدنية جزء من المشكلة، ربما لا تكون دبي منتجة للنفط، لكنها تصدر خدماتها لبقية مناطق الخليج، والتي تشهد تراجعا في الطلب".

    وأضافت "فايننشال تايمز" أن ظاهرة السيارات المهجورة كانت رمزا لأزمة دبي في عام 2009، حينها اضطرت الإمارة للجوء إلى أبوظبي، عاصمة دولة الإمارات، للحصول حزمة إنقاذ مالي تبلغ 20 مليار دولار، في إشارة إلى تكرر هذه الظاهرة مرة أخرى.

    ولفتت الصحيفة البريطانية إلى أن تباطؤ النمو الاقتصادي في العام الحالي لم يصل بعد إلى المستويات التي شهدتها دبي خلال أزمة عام 2009، مشيرة إلى أن الإمارة أقل تأثرا بأزمة أسعار النفط الحالية مقارنة بنظيراتها اللاتي يعتمدن على عائدات الذهب الأسود مثل قطر أو أبوظبي، لكن الإمارة تعاني من ديون تصل إلى 140% من حجم الناتج المحلي الإجمالي، حيث يتوجب عليها سداد قروض وسندات في عام 2018 بقيمة 22 مليار دولار.

    ووفقًا لشركة "كوفاس"، المعنية بتقديم خدمات التأمين علـى القروض والتي تراقب التعاملات الائتمانية لنحو 20 ألف شركة في الإمارات، فإن الصعوبات التي تواجهها الحكومة انعكست سلبا على شركات القطاع الخاص، دافعة بعض الشركات للتقاعس عن سداد التزاماتها المالية.

    وقال مدير تنفيذي في شركة "كوفاس" إن حالات الهروب تضاعفت لمقدار ثلاث مرات عن المستويات التي اعتدنا عليها، منوها إلى أن قطاعي صناعة المعادن والإنشاءات هما الأكثر تضررا، لكن حالات الإفلاس استقرت بعدما أعلنت الشركات الضعيفة إغلاقها.

    كما أشارت الصحيفة إلى أن نفقات المعيشة المرتفعة تدفع العائلات إلى مغادرة دبي، وذلك في ظل تباطؤ النمو الاقتصادي في الإمارة.

    وكان صندوق النقد الدولي حث في وقت سابق حكومات دول الخليج على اتخاذ تدابير لتعزيز مصادر الدخل غير النفطي، محذرا من أن موجة أسعار النفط المتدنية ستبقى على الأرجح لفترة طويلة.

    وقالت كريستين لاغارد مديرة صندوق النقد الدولي في فبراير/شباط الماضي، إن على دول الخليج إعادة هندسة أنظمتها الضريبية من خلال خفض اعتمادها على النفط وتعزيز مصادر الدخل غير النفطي



    whats going on?
    recession again ?
    what the hell is this policy of putting people in jail if they default on their loan, no declaring bankruptcy no asset liquidation no loan restructuring just straight to jail , i amazes me how investors did business there
     

    Jo

    Administrator
    Master Penguin
    #12
    Dubai’s Economy is melting like a Glacier in the Desert

    Exactly on December 12, 2016, I wrote an article predicting that Dubai is going to see its economic fall. I even gave the dates that it may happen by 2018. Here we are in 2018 and Dubai’s economy has started to melt like an ice cone in a hot summer day near Jumeirah beach.

    Let’s examine how? Dubai is a city where I have lived for several years. Established and ran businesses in. I understand the economic environment and its financial structure. The financial structure is connected to its economic structure in the strangest manner, a phenomenon not found in many cities of the world. The phenomenon of “I OWE YOU and will pay you later”.

    And this comes in the form of a “Post Dated Cheque”. Nobody asks you before gladly receiving that cheque from you, what would happen 8 months from today if your business has collapsed or sees a cash crunch. How will you honor your cheque. You are not dealing with a bank that you have given the cheques to, with a huge ability of financial sustenance.

    Your cheques are mostly to other businessmen who write cheques to their creditors based on your postdated cheques. I owe you on top of I owe you multiplied by the umpteenth factor. No economy can develop and sustain on this principle. Simple as that. One business man in the chain defaults, the entire chains is broken. The biggest of the companies can face a downturn and their cheques can bounce. And the strangest thing is that if your cheque bounces you are not given a chance to even negotiate the payment with a little more time. A complaint is lodged and the businessman arrested. Or to avoid the arrest, the businessman flees Dubai leaving the entire business to collapse and not a single chance of recovery for the receivers of the cheques.

    Abraaj Capital had a $48 million dollar cheque bounce two weeks ago.

    You think that’s was a big cheque. Wait till you read this. From January 2018 to the end of May 2018, 26 billion dirhams worth of cheques have been bounced. 1.2 million cheques in total. Or 39.3% of the total number of cheques issued in 2017 which were to come due in 2018. They came due and they bounced. 39.3% is not an amount to be taken lightly, neither is the number of checks that is 1.2 million nor the amount of 26 billion dirhams, that’s $7 billion dollars in just 6 months of 2018. In the coming months of 2018 from July to December this can become the trigger for a disaster in the making to be dealt by the authorities with no recourse. And the reason I said no recourse is because you need to see by researching other related clues in order to establish if the people who have written the cheques are still in Dubai or most of them have fled the city.

    You need to look at two things if you want to do related research to establish the above point if the people have fled Dubai or not. First, if their phones connections are cancelled. And Second, if they have fled with their families. Best thing to look at to see the second part is to see as to how many children have been withdrawn from their schools. Let’s look at the biggest phone carrier of Dubai, Etisalat and its data. 32,000 phone connections were cancelled between March and April of 2018. Just in 38 days in total. 28,000 children were withdrawn from schools without registering themselves for the end of summer sessions. Meaning those families do not plan to come back.

    I wish it ended here. I wish the signs were not as obvious. But they are. Dubai property that used to be sold at 2300 dirhams per square foot is selling at less than 600 dirhams per square foot. Or in simple words, it’s selling at 25% of its value.

    Gold Souk has empty stores for the first time in 35 years. You could not find a single empty store to rent or buy earlier. Arabian Center, Sunset Mall and Al Ghurair have stores shutting down every week. Emirates Towers with the most chic restaurants is witnessing a closure upon closure of restaurants. Hotels have cut their average price to 30% of what they used to charge and last month alone 18 hotels shut down including Savoy, Ramada, Richmond, Crest, Jarmond and the list goes on. Lamcy plaza, one of the busiest malls had a fire and was supposed to be opened in August 2017 and it’s still closed down. Bur Juman and Wafi Mall have the highest vacancy rates of shops. The list can go on and on and I can pen down more signs of an economic meltdown than you can read.

    Abraaj Capitals’ collapse is a nail in the financial system coffin of Dubai. The biggest confidence eroding incident ever to have taken place in the history of Dubai’s financial system.

    The point is not to sit and laugh at what has happened. That is cruel and arrogant. Livelihoods have been lost and families have been ruined. The point is for other counties in the GCC to stop this postdated cheque based economic model immediately before they face the same fate. And for the businessmen the lesson is to develop a sustainable business model where your freedom is not hinged upon one bounced cheque. Because anybody’s cheques can bounce unintentionally and based on unforeseen circumstances. With the OECD restrictions, Anti-Money Laundering initiatives around the world. FATF watching. Counter Terrorism financing watchdogs sifting through every transaction. The biggest appeal of Dubai will be dead as well. The appeal of having unquestioned transactions for the world’s corruptly earned funds.

    This is a bad cycle that Dubai is going through and in my humble opinion we have yet to see its bottom. What is happening right now is only a glimpse of what is yet to come. With media censorship and controlled release of any and all news, you will not even hear these stories in Dubai. Unless you want to be a journalist who loves jail food.

    Source: https://moderndiplomacy.eu/2018/07/07/dubais-economy-is-melting-like-a-glacier-in-the-desert/
     

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