Thread: Laid-Off Foreigners Flee as Dubai Spirals Down

Laid-Off Foreigners Flee as Dubai Spirals Down
By ROBERT F. WORTH
Published: February 11, 2009


A prospective bidder examined a car on Wednesday at a Dubai auction. Debt-ridden foreigners are selling or abandoning cars.

DUBAI, United Arab Emirates — Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.

Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.

“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I 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 maxed-out credit cards inside and notes of apology taped to the windshield.

The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here 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, in a downward spiral that has left parts of Dubai — once hailed as the economic superpower of the Middle East — looking like a ghost town.

No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled. But with the government unwilling to provide data, rumors are bound to flourish, damaging confidence and further undermining the economy.

Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.

Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.

“At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”

Some things are clear: 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. Last week, Moody’s Investor’s Service announced that it might downgrade its ratings on six of Dubai’s most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai’s roads, usually thick with traffic at this time of year, are now mostly clear.

Some analysts say the crisis is likely to have long-lasting effects on the seven-member emirates federation, where Dubai has long played rebellious younger brother to oil-rich and more conservative Abu Dhabi. Dubai officials, swallowing their pride, have made clear that they would be open to a bailout, but so far Abu Dhabi has offered assistance only to its own banks.

“Why is Abu Dhabi allowing its neighbor to have its international reputation trashed, when it could bail out Dubai’s banks and restore confidence?” said Christopher M. Davidson, who predicted the current crisis in “Dubai: The Vulnerability of Success,” a book published last year. “Perhaps the plan is to centralize the U.A.E.” under Abu Dhabi’s control, he mused, in a move that would sharply curtail Dubai’s independence and perhaps change its signature freewheeling style.

For many foreigners, Dubai had seemed at first to be a refuge, relatively insulated from the panic that began hitting the rest of the world last autumn. The Persian Gulf is cushioned by vast oil and gas wealth, and some who lost jobs in New York and London began applying here.

But Dubai, unlike Abu Dhabi or nearby Qatar and Saudi Arabia, does not have its own oil, and had built its reputation on real estate, finance and tourism. Now, many expatriates here talk about Dubai as though it were a con game all along. Lurid rumors spread quickly: the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.

“Is it going to get better? They tell you that, but I don’t know what to believe anymore,” said Sofia, who still hopes to find a job before her time runs out. “People are really panicking quickly.”

Hamza Thiab, a 27-year-old Iraqi who moved here from Baghdad in 2005, lost his job with an engineering firm six weeks ago. He has until the end of February to find a job, or he must leave. “I’ve been looking for a new job for three months, and I’ve only had two interviews,” he said. “Before, you used to open up the papers here and see dozens of jobs. The minimum for a civil engineer with four years’ experience used to be 15,000 dirhams a month. Now, the maximum you’ll get is 8,000,” or about $2,000.

Mr. Thiab was sitting in a Costa Coffee Shop in the Ibn Battuta mall, where most of the customers seemed to be single men sitting alone, dolefully drinking coffee at midday. If he fails to find a job, he will have to go to Jordan, where he has family members — Iraq is still too dangerous, he says — though the situation is no better there. Before that, he will have to borrow money from his father to pay off the more than $12,000 he still owes on a bank loan for his Honda Civic. Iraqi friends bought fancier cars and are now, with no job, struggling to sell them.

“Before, so many of us were living a good life here,” Mr. Thiab said. “Now we cannot pay our loans. We are all just sleeping, smoking, drinking coffee and having headaches because of the situation.”

nytimes.com

Originally Posted by Mid

We are all just sleeping, smoking, drinking coffee and having headaches because of the situation.”

sounds quite the Arab/Asian way....

Palm island sinking...no water...cockroaches out of the taps......wonder the 'the world' development is going

I'm a bit of a prick sometimes, sitting here with a smug grin in Switzerland while the rest of the world goes down.
Swiss retailers expect rising sales 2009 - survey - Forbes.com

Ain't that just to fucking bad,, poor bastards, and they ain't got any oil either, but what the shit, I see it was selling for $35 a Bbl for sweet crude the other day on NY.
Sure hope it goes down to the former figure of $8.00

"The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here lose their work visas and then must leave the country within a month".

I wonder how long it will be before one read report of Condo's on Sukumwit and car at Suwanabhumi being abandoned? In Thailand an expat has to leave within 7 days of a contract being cancelled...

^^ "Greed is Good" Not.

There is an even bigger problem for Oil Rich Middle East namely when they estimate oil reserves they are greater than when Aramco gave years ago, strange when you work out how much has been extracted in the last 40 years,
Somebody is telling porkies! those reserves are a blatant lie

Originally Posted by plorf

I'm a bit of a prick sometimes, sitting here with a smug grin in Switzerland while the rest of the world goes down.

Your country has quite a knack of capitalising on other's misfortune hasn't it Plorf?

Beckham invested a few million into Dubai did he not?

Yep Beckham has a place on the original Palm not Palm Jumeirah. I wonder when they are going to start Palm Deira?
I have seen the plans for the three palms and the world. I always had concerns about the weather in the Arabian Sea? and whether the houses on the outer fringes of the palms would be safe or not. I am not sure though how realyy safe these places are!!!

Originally Posted by robuzo

faucets

Taps!

I was of the impression the ME oil barons were on a nice little bonus over the past years. According to one source (I think AP), Iran made an extra $45-50bn on their oil just in the first half of last year.

Multiply that by a few times to cover the ME for the past several years and it's not just a haul but a significant contribution towards the Western and then global economic crisis, though we shouldn't expect any politicians to say that.

Anyway, can't bring any tears to flow for them.

Originally Posted by EmperorTud

Originally Posted by plorf

I'm a bit of a prick sometimes, sitting here with a smug grin in Switzerland while the rest of the world goes down.

Your country has quite a knack of capitalising on other's misfortune hasn't it Plorf?

Indeed yes, rumours have it in the past bout 60 years ago the kids got golden teeth instead of coins at birthdays, as they were more readily available at that time.

Nah, kidding, I've just got a bit of a black humour, but I'm sure you know as well as me that Switzerland isn't profiting from this or any other financial crisis at all, since our banks were so greedy they hired thousands of american capital investor wankers in the US who then wasted a few billion dollars in no time at all, heavily indebting all swiss pension funds. And Switzerland is extremely relying on luxury and high quality exports, which aren't exactly flourishing at the moment. But consumers are just spending like hell, because currently there is little incentive to put it on your savings account and little has changed job-wise for most swiss people.
That may change in the future of course when more and more manufacturies and banks are laying off staff, if we were clever of course we'd just deport all those unloved yugoslavion and turkish assholes we got here to take off the pressure on the lower qualified job market, but unfortunately we aren't, we are harmony-loving socialist idiots. (rant over.)

Originally Posted by EmperorTud

Originally Posted by plorf

I'm a bit of a prick sometimes, sitting here with a smug grin in Switzerland while the rest of the world goes down.

Your country has quite a knack of capitalising on other's misfortune hasn't it Plorf?

OECD predicts shrinking Swiss economy

The Organisation for Economic Cooperation and Development (OECD) has drastically cut its economic forecast for Switzerland.

Instead of growing by 1.4 per cent in 2009 as previously predicted, Swiss gross domestic product (GDP) will now contract by 0.2 per cent, the organisation said in its biannual Economic Outlook on Tuesday.
In addition, the OECD reckons unemployment in Switzerland will grow next year from 3.5 per cent to 3.9 per cent, and exports will grow by only 2.1 per cent, considerably less than in 2008.
Also on Tuesday a survey revealed that the Swiss, despite considering the global economic crisis a threat, were nevertheless more confident for the future than people in Germany, France, Greece, Italy, Austria, Russia, Hungary and the United States.
More than 10,000 people were questioned in those countries, with 54 per cent of Swiss respondents finding the economic situation "good" or "quite good". This compared with 29 per cent in Germany, 17 per cent in the US and a mere four per cent in Hungary.
Four out of five Swiss were satisfied with their personal situation.









It's just the Swiss way if things change they wont believe it

With all them foreigners running off you'd think they would be encouraging some to come in by relaxing visa restrictions. I know of at least one Israeli tennis player who would like to get in.

Dont forget that "foreigners" also includes all the hired help in the now static construction indusrty there, many of which are from Thailand. Some have returned home already, according to the missus who works in a local employment office.

^^larvidchr: true enough, but I prefer that solid, stubborn "oh we'll be fine" to that hysteric german whining I am subjected to constantly. They were even complaining all the time when their economy was running.. and now.. fuck me, I can't read german newspapers anymore.

Originally Posted by plorf

^^larvidchr: true enough, but I prefer that solid, stubborn "oh we'll be fine" to that hysteric german whining I am subjected to constantly. They were even complaining all the time when their economy was running.. and now.. fuck me, I can't read german newspapers anymore.

Can't quite see why Switzerland would be feeling too smug at the moment, given this:
More job cuts as UBS makes biggest loss in history of Swiss business - Times Online
UBS reported the biggest annual corporate loss in Swiss history yesterday, as it outlined plans to cut a further 2,000 staff at its troubled investment bank.


And then there is the meltdown in Eastern Europe; Austria is about to go under, and Switzerland is taking a hit, too- and it looks like this was entirely without US help, except maybe for what European banks learned from geniuses in the US:


Failure to save East Europe will lead to worldwide meltdown - Telegraph


In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).

^There is no question robuzo, that Switzerland will be affected by this crisis, indeed we are one of the first to have taken serious damage in form of the UBS and Credit Suisse, our 2 biggest banks. But instead of whining and complaining people generally just go on with their lifes. And a lot of the capital that has been withdrawn from those 2 banks just ended up at regional banks which in turn hired more people. Again, I am not saying at all that we're unaffected, just so far we're still doing ok and nobody is panicking, which I despise. Denial ? Perhabs a bit, but personally I don't think so, just pragmatism instead of hysterical whining and blaming.

I doubt all Swiss are in denial, but the retailers sound like they are. The value disappearing from the banks books is not heading to anyone's accounts except those smart enough to short their stocks at the right moment.

A country like Switzerland is not likely to panic, because in the end its core strengths are intact. If unemployment becomes too widespread it can respond by booting out foreign workers. Dubai doesn't have any core strengths to fall back on. All it ever had going for it was that its rulers were more clever than most other Arabs, and just as unscrupulous as heads of certain Swiss banks.

Originally Posted by plorf

That may change in the future of course when more and more manufacturies and banks are laying off staff, if we were clever of course we'd just deport all those unloved yugoslavion and turkish assholes we got here to take off the pressure on the lower qualified job market, but unfortunately we aren't, we are harmony-loving socialist idiots. (rant over.)

That would be clever. So who would do the low qualified work then?

Originally Posted by Fabian

So who would do the low qualified work then?

Germans?