# Recession?



## babylon (Oct 4, 2008)

Just interested to know peoples opinion who currently live in the UAE;

With the current strong dollar, and the imminent rise in inflation due to the US & european bank bail outs;

Is there a possibility of the Dirham losing some of its value and pushing up prices further, especially in housing.

Are companies continuing to spend / borrow in Dubai or is the so called global downturn starting to bite?


My company is laying off staff big time in the UK right now.


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## bubble_boy (May 28, 2008)

The dirham is linked to the dollar afaik. It always remains 3.67 dhm for 1 dollar. 

I am not into finances. I have heard that budgets have been cut for the next year in our industry. But I think it may mainly be because of the clients we have in the UAE are branches of big international firms who are struggling. Maybe I am naieve, but i believe that the middle east will be pretty shielded from the recession. Maybe it's more to do with hope that naivety.


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## babylon (Oct 4, 2008)

Many people have the opinion that Dubai and the middle east have stockpiles of cash to spend, but I don't believe that is necessarily the case, especially for the large number of multinationals who like the rest of the western world, finance their projects with borrowed money.


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## Pasanada (Feb 5, 2008)

Having lived in 3 countries this year (Spain, UAE & UK) I would say the Middle East is getting off quite lightly from the current world economic crisis. The Arab stock markets have been hit recently but not to the same extent as the rest of the world. The Middle East will ride through this storm with relative ease, IMO.


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## qwert97 (Jun 2, 2008)

I was just speaking to a real estate agent last evening. He was saying that buyers for properties have dried up since nobody is ready to commit big bucks at this time. This has resulted in increase in the number of properties that are on sale in the market. Since the prices for properties are tightly controlled they have not come down yet but its a matter of time.


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## babylon (Oct 4, 2008)

qwert97 said:


> I was just speaking to a real estate agent last evening. He was saying that buyers for properties have dried up since nobody is ready to commit big bucks at this time. This has resulted in increase in the number of properties that are on sale in the market. Since the prices for properties are tightly controlled they have not come down yet but its a matter of time.


That would indicate a possible downturn, not just in housing, but the whole economy, since the two are proportionate to each other. 

Accommodation does appear like it requires a correction in prices (probably due to over speculation), together with stagnant growth in the short term, it should bring investors back down to reality. 

I would hate to see a bust happen after the boom though.

In your industry, are you noticing an increase or decrease in staffing levels?


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## Andy Capp (Oct 5, 2008)

Did you see the HSBC report, came out earlier this week, makes very interesting reading. Tried to upload it but its 700k and too big.


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## babylon (Oct 4, 2008)

I didn't see it, do you have a web link?


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## Andy Capp (Oct 5, 2008)

Issuer of report
HSBC Bank Middle East Ltd
PO Box 4604
Dubai UAE
Telephone: +97 14 5077333
Fax: +97 14 3535079
Website: www.research.hsbc.com

Probably here, I got it e-mailed to me.


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## Maz25 (Jul 6, 2008)

I agree with Pasanada. I work in construction and developers are complaining that instead of taking a day to sell off a building, it now takes a week!!! Duh!! Buildings are still selling like hot cakes here - it just takes 5 days longer than usual to shift them! As someone who works in construction, I would say that the industry is as strong as ever and it would take something major to change that! There is far too much money in this place for what is happening in the US to have any major impacts here!The most likely victims will be normal people here who have invested their savings in stocks - the big boys do not really care, they have too much money as it is already!


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## babylon (Oct 4, 2008)

Regarding housing;

If there are apparently so many unsold / unleased apartments, then why arethe asking prices being maintained so high?

Surely it is possible to put in a bid lower than the asking price and then wait to see how despeate the seller/landlord is.


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## Maz25 (Jul 6, 2008)

babylon said:


> Regarding housing;
> 
> If there are apparently so many unsold / unleased apartments, then why arethe asking prices being maintained so high?
> 
> Surely it is possible to put in a bid lower than the asking price and then wait to see how despeate the seller/landlord is.


The bad news is that there is no such thing as a desperate seller here! The real estate market is controlled entirely by investors and by leaving apartments empty, they maintain the high property values. If you can afford to buy a couple of floors in one building, you can afford to keep it empty. A lot of criminals also own property; they have no need to sell or rent their buildings. In this case, it is simply a way to wash dirty money!!! Renting would attract unwanted attention even!


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## Andy Capp (Oct 5, 2008)

Maz25 said:


> * A lot of criminals also own property;* they have no need to sell or rent their buildings. In this case, it is simply a way to wash dirty money!!! Renting would attract unwanted attention even!


Allegedly Maz, allegedly...


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## babylon (Oct 4, 2008)

If this is true, then at some point presumably these criminals will wish to sell the properties. Theres no benefit in paying for an investment if you don't want a return on it. 

Even if they were bought with so called dirty money, and intermediaries e.t.c. were used to wash the money, the factis that these people will still want the money back. 

It was probably considered also a way of increasing that dirty money in the rising value of property, but i suspect that they would still take a hit or attempt to break even just to get their ill gotten gains changed to CASH.

The result is that there is / will be empty properties just waiting for money to be made on through sales commissions or rent revenues.


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## Pasanada (Feb 5, 2008)

Andy Capp said:


> Allegedly Maz, allegedly...


Not allegedly......I concur with Maz 100%.

The housing construction currently going on in the UAE and Dubai in particular, reminds me of the boom days in Spain approx 5 years ago. When I was in Doha, Qatar, again, there was frantic building going on there too.

The Middle East is THE place to be right now despite it's unstable status. Oil is what keeps this region stable financially. Western powers could not afford to allow this region to become financially unsettled, they have too much to lose.


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## Andy Capp (Oct 5, 2008)

Surely if they can afford their own countries to be financially crippled they wouldn't care too much for Dubai....

I think that Dubai will get into all sorts of problems over the next couple of years, and then Sheikh Nayhan will bale the Macs out, and take over the emirate.

Seriously


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## Pasanada (Feb 5, 2008)

You must research the links between the Americans, or should I say the Bush family and the House of Saud. No way on this earth will either family allow a financial crisis to happen in the Middle East; we're talking about obscene amounts of money invested in the oil industry.

This is a complicated history and after 7 years of studying this Middle Eastern region and the influences of the West, I'm still learning new things!!! I would, based on my experiences and research, put money on the Middle East coming out of the current economic crisis relatively unharmed.


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## babylon (Oct 4, 2008)

So what you're saying is that Dubai is America's *****.

What I'm concerned about is that the dollar is currently (IMO) overly strong against other currencies, and since the dirham is pegged to it, what is likely to happen to the value of the Dirham in the next few years.

It is a risk that if the American and European economies implodes, then it will also take down a stable economy like the UAE.


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## Pasanada (Feb 5, 2008)

Sorry, didn't understand your first sentence, Babylon.

Lets just say I strongly suspect the Middle East will NOT suffer in the same way as the West. IF and thats a big IF, the Middle East suffers, I'll be buying the drinks!!


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## Andy Capp (Oct 5, 2008)

So we've all got to pray for a recession here so you can buy the beers? PMSL


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## Pasanada (Feb 5, 2008)

Andy Capp said:


> So we've all got to pray for a recession here so you can buy the beers? PMSL


PMSL Andy, I'm so confident that a recession won't happen in the ME that I know I won't be buying the beers....trust me, I'm a woman!


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## qwert97 (Jun 2, 2008)

We have discussed this issue a few times and every time we steer in the direction that this economy is immune. My only advise to anyone who is planning to buy an apartment/villa is to stay on the fence and see how the events unfolds. Don't jump into this market unless you are ready to absorb huge shocks. NO economy is immune to recession and the economists say that ups and downs is good for the economy. Pasanda don't forget me when ordering the drinks


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## Pasanada (Feb 5, 2008)

Qwert, I won't forget you but believe me, I won't be buying the drinks!  lol

I own property in Spain, before the current economic crisis, I would safely say it was worth close to 500,000 euros. Now, I'd be lucky if I got a few peanuts as people are not willing to part with their money until the situation improves. I cannot say the situation in the UAE is the same as Spain or indeed Europe as a whole. I would also safely say that Qatar, in particular, Doha, is an up and coming country which I would be quite happy to invest in right now.


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## Andy Capp (Oct 5, 2008)

Pasanada said:


> PMSL Andy, I'm so confident that a recession won't happen in the ME that I know I won't be buying the beers....*trust me, I'm a woman*!


Well that's an oxymoron if ever I've heard one!


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## babylon (Oct 4, 2008)

qwert97 said:


> We have discussed this issue a few times and every time we steer in the direction that this economy is immune. My only advise to anyone who is planning to buy an apartment/villa is to stay on the fence and see how the events unfolds. Don't jump into this market unless you are ready to absorb huge shocks. NO economy is immune to recession and the economists say that ups and downs is good for the economy. Pasanda don't forget me when ordering the drinks


OK we've discussed the housing price trend and likelyhood of recession, but TBH what concerns me is if inflation remains at the estimated 10% or even gets higher, regardless of the supply and demand of housing, there will be an upward pressure on prices.
'IF' a recession or even if the economy stagnates, then we would require salaries (and accommodation allowances) to go up by that same 10% every year just to remain viable.


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## Pasanada (Feb 5, 2008)

Andy Capp said:


> Well that's an oxymoron if ever I've heard one!


It was intentional  But also, us women have a 6th sense, something you men will never posess 

The housing market in Dubai WILL have to slow down at some stage, and prices will need to come down. I saw the exact same thing happening in Spain and predicted the bubble to burst, as it now has. The same will happen in the UAE but I don't believe it will have quite as devestating effects.


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## Andy Capp (Oct 5, 2008)

Actually, because the gov basically run the housing market here (through Emaar, nakheel etc.) and can hold back the release of units, I would tend to agree with you. That said there's no way I'd buy off plan now, there's too much risk - not only of losing money but also in it ever getting built!

So if you predicted the spanish crash, why didn't you sell with the benefit of your sixth sense, or did you try and were unable to? Just curious that's all.


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## Pasanada (Feb 5, 2008)

My villa is an investment for the future. I have a Civil Service (UK) pension but it's buttons so by investing all my money into 1 property, I'm speculating that I'll get a good return one day. Also, the villa wasn't completed until 2 years ago, by then, the property market in Spain had already started to stagnate coupled with the fact the Spaniards had built like you wouldn't believe thus saturating the market.

As for buying off plan, never again! Been there, done that and had to fight with Spanish red tape to get it legalised! I have looked into buying in Dubai, if I do, it would have to be a resale for me now.


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## Elphaba (Jan 24, 2008)

Just a couple of factors that several of you have not considered in your comments.

1. The UAE is not a democracy - it is owned by a handful of familiies who can really do pretty much as they wish. They do not have to be transparent in their business dealings or answer to anyone for their actions.

2. Have you any idea of the size of the sovereign wealth funds? The AD one runs into trillions of Dollars.


The UAE is not immune to global recession, but different powers are at work here. The rulers will not allow the country to 'fail' - no matter what it takes.

And far from Dubai being an American puppet - the UAE has great influence in the US. Sheik Mo forward sold Dubai oil to the Americans in return for US treasury bonds. If he went to cash them all in at any time, the US would have a massive financial problem.

-


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## Andy Capp (Oct 5, 2008)

You Elph, I feel like I've just had my hands slapped!


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## Elphaba (Jan 24, 2008)

Andy Capp said:


> You Elph, I feel like I've just had my hands slapped!



But you love it! 

-


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## Pasanada (Feb 5, 2008)

Elphaba said:


> Just a couple of factors that several of you have not considered in your comments.
> 
> 1. The UAE is not a democracy - it is owned by a handful of familiies who can really do pretty much as they wish. They do not have to be transparent in their business dealings or answer to anyone for their actions.
> 
> ...


Elphaba,

You have worded what I meant better than I! Hence why I seriously believe the current financial crisis will not have a detrimental effect on the UAE.

PS Can we leave the slapping at the hands.....anywhere else will cause me to blush.....


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## crazymazy1980 (Aug 2, 2008)

Pasanada said:


> Elphaba,
> 
> You have worded what I meant better than I! Hence why I seriously believe the current financial crisis will not have a detrimental effect on the UAE.
> 
> PS Can we leave the slapping at the hands.....anywhere else will cause me to blush.....


I think some people need to get a better TV package


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## Pasanada (Feb 5, 2008)

crazymazy1980 said:


> I think some people need to get a better TV package


Ahem.....you haven't seen what I can watch on Spanish TV.....it'll make your toes curl!


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## crazymazy1980 (Aug 2, 2008)

Pasanada said:


> Ahem.....you haven't seen what I can watch on Spanish TV.....it'll make your toes curl!


I didn't know you also liked watching wildlife documentaries


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## Pasanada (Feb 5, 2008)

crazymazy1980 said:


> I didn't know you also liked watching wildlife documentaries


I like to take an "active" interest.


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## crazymazy1980 (Aug 2, 2008)

Pasanada said:


> I like to take an "active" interest.


You are so very very bad!!


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## Pasanada (Feb 5, 2008)

crazymazy1980 said:


> You are so very very bad!!


I'm angelic, you have a mind that lives in the pits of a sewer...


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## crazymazy1980 (Aug 2, 2008)

Pasanada said:


> I'm angelic, you have a mind that lives in the pits of a sewer...


No idea what you mean, I'm completely angelic


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## Maz25 (Jul 6, 2008)

Pasanada said:


> I'm angelic, you have a mind that lives in the pits of a sewer...


Lol! Looks like your secret is out, crazy! I must admit your pic is quite angelic, until you notice the horns sticking out either side of your head!


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## Pasanada (Feb 5, 2008)

crazymazy1980 said:


> No idea what you mean, I'm completely angelic


Ahem.....moving swiftly back to the original thread......  LOL


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## Andy Capp (Oct 5, 2008)

Maz25 said:


> until you notice the horns sticking out either side of your head!


Horny as well then. Hmmm


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## Pasanada (Feb 5, 2008)

Anyway.....back to the recession!!!! LMAO


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## Andy Capp (Oct 5, 2008)

There's no recession in Dubai, didn't you not know....


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## Pasanada (Feb 5, 2008)

Andy Capp said:


> There's no recession in Dubai, didn't you not know....


You know which buttons to push to make me laugh!! LOL


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## flossie (Jun 9, 2008)

Andy Capp said:


> There's no recession in Dubai, didn't you not know....


And even there was, you probably wouldn't hear about it.

Gulfnews: Gulf media needs quality Emirati journalists

This is why you shouldn't believe everything you read about in the local press. (Or actually presume they're telling you everything.)


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## Andy Capp (Oct 5, 2008)

Pasanada said:


> You know which buttons to push to make me laugh!! LOL


........


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## Pasanada (Feb 5, 2008)

flossie said:


> And even there was, you probably wouldn't hear about it.
> 
> Gulfnews: Gulf media needs quality Emirati journalists
> 
> This is why you shouldn't believe everything you read about in the local press. (Or actually presume they're telling you everything.)


Northern Ireland's Troubles taught me alot about the press......for me, it's like reading the Beano now! LOL


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