Interpreting Middle East Economic News and Analyzing Market Trends

Category: UAE

IMF getting nervous on Dubai property market

http://www.constructionweekonline.com/pictures/Aldar/One%20offs/Burj%20Vista.jpg

Rendering of yet-to-be-built Burj Vista development, which sold out within hours of being offered to the public. Source: Construction Week Online

Dubai’s property market seems to have done a 180 degree turn since the beginning of this year.  Prices are up, demand is brisk and new off-plan developments are selling like hot falafel again (see photo above).  Also see our earlier post on this crazy phenomenon.  Whatever is causing this is making the IMF nervous…

 

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Dubai World urged to sell more assets to pay creditors

Dubai World, the Dubai government’s prized possession, is not out of the woods yet.  The company which owns DP World, the global ports operator, renegotiated debts and set a new repayment schedule in 2011 after the company ran into liquidity issues.  The company has an upcoming payment of $4.5 billion, which is not due for another two years.  However, some of its creditors are getting nervous at the speed the company is moving at selling assets to be able to meet this payment on time.

 

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Trump plans on building a golf course in Dubai after failed attempt at building a hotel in 2008

Donald Trump is taking another stab at building something in Dubai, this time it’s a golf course.  His previous attempt at building a 62-story hotel on Dubai’s Palm Jumeirah ran into delays (among other issues) until finally being cancelled in 2011.  Will he be more successful this time?

 

Luxury developer Damac has announced plans to develop an 18-hole PGA Championship Golf Course in its latest project in Dubailand.

Construction of the 7,205-yard, par 71 course, to be named Trump International Golf Club, Dubai is already underway and the course will be ready for play next year.

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Here’s another sign of the unsustainable welfare system in the GCC

The welfare systems in the GCC are well-known for their generous benefits and subsidies offered to their citizens and expats alike.  In addition to offering a tax-free environment, they offer subsidizes on a wide range of staples including gas and utilities.  For their citizens, they also offer free education through university, free healthcare, subsidized housing (in many cases, free housing or land), a guaranteed public sector job and a generous pension.

 

Citizens of these countries assume this welfare system can go on forever, and expect it to do so.  However, high birth rates over the past few decades are causing severe strain on governments’ budgets.  This cannot go on forever and sooner or later, citizens will have to adjust (it will be painful).  Cracks are already emerging to reveal that this system is unsustainable, albeit small cracks, so governments are working on the painless adjustments first… targeting the expats and having them pay higher rates than citizens.

 

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DFM hits 4-year high outperforming S&P 500 by more than double since the beginning of the year

 

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