From the study conducted, I aim to measure the impact of the current economic crisis on exiles and Dubai itself. For the intent of the survey experiences from the exiles shall be taken.
This subject is of involvement to me because it helps me to understand the impact of the current crisis on Dubai economic system and besides on the expatriate communities. Exiles are people who have built Dubai to the “ branded ” metropolis it has become today.
Exiles came to Dubai being promised on a revenue enhancement free occupations and cheery life manner. But the crisis has taken a toll on the exile community.
There were a figure of facets discovered during the interviews conducted with the forces of the oil company. During the procedure of interview, the interviewees recognized the crisis have left them with of import challenges such as occupation uncertainness, lowered disposable income, decreased nest eggs and hazard of greater chance cost. The interviewees explained that these are the challenges which they have experienced with the impact of the crisis.
A study released in “ Gulf News ” by Yousef, June 2010 a intelligence paper in Dubai, reported that “ important parts of the Middle East are sing an addition in utmost poorness as the planetary economic lag increased unemployment and hungriness spikes in the part, harmonizing to the 2010 United Nations Millennium Development Goals ( MDG ) Report released. The figure of people in the part populating on $ 1.25 or less a twenty-four hours increased from 8 per cent to 12 per cent between 1998 and 2009, the UN said.
The study notes that before the crisis the employment ratio declined from 47 per cent to 44 per cent in the part. As the crisis crippled economic systems, reduced endeavor capacities and forced 1000000s of people out of work, more people resorted to “ vulnerable ” employment. This is defined as the amount of own-account workers and lending household workers who are non typically bound by formal work agreements and hence lack employment benefits ” .
Below is a graph that shows the proportion of people populating on less than $ 1.25 a twenty-four hours.
hypertext transfer protocol: //gulfnews.com/polopoly_fs/proportion-of-people-living-on-less-than-1990-and-2005-percentage-1.645452 % 21image/2507825375.jpg_gen/derivatives/box_475/2507825375.jpg
The above study besides substantiates the study carried out on the exiles ‘ employees of the oil company.
In a study by Gulf News Staff reporter Fenton studies “ Around 3,200 people, among a work force of more than a million, have lost occupations in Dubai during the last three months as the impact of the planetary fiscal crisis bites deeper into the UAE economic system ”
Nakheel is said to be puting off more people as it shelves a figure of undertakings, unifying squads.
“ In maintaining with our concern aim of fiting supply and demand in the most effectual manner, we have today announced the meeting of assorted undertaking squads under one direction construction. This action has non resulted in any redundancies, ” a Nakheel interpreter told Gulf News yesterday.
Job Cuts ( Reported )
Number
Damac
200
Nakheel
500
Omniyat
69
RMJM Middle East
38
Better Homes
50
Dubai Properties
600
McDermott
120
Sama Dubai-EC Harris
500
Al Shafar
1,000
Shuaa Capital
21
Jebel Ali building house
30
Al Masood Bergum ( building )
47
Morgan Stanley
11
Tameer Retentions
180
Finance Warehouse
4
Entire Job cuts announced
3,370
Thousands of work forces are now of out of work. They are the foreign labourers that were among the ground forces of work forces who toiled twenty-four hours and dark to construct Dubai when the economic system was at its extremum. Unfortunately these work forces who are out of work can non even travel back place as the employers are keeping their passport or their terminal of service colonies are non given to them.
4.1.1 Survey Analysis:
The below subdivision provides the findings and analysis for the information which has been collected through the interviews.
Q1. Please state me how long have you been populating in Dubai?
The graph above shows the figure of old ages the respondents have stayed in Dubai who have been targeted in this research. 45 % of the respondents are those who have experience of more than 10 old ages. However, 40 % of the respondents are those who have experience of more than 15-20 old ages as they can supply better facts on Dubai as a turning metropolis.
Q2. Please state me if you aware of the GDP growing rate of Dubai since the crisis?
Fig 4.2 Declining growing rate of Dubai
The graph above shows the diminution in growing rate of Dubai since the crisis in 2009.
Harmonizing to an article by Franklin in AME Info on November 25 “ The planetary fiscal crisis has caused terrible harm to the existent economic system with a barbarous circle between deteriorating fiscal conditions hitting economic activity and a weakening economic system taking to higher defaults and thereby undermining fiscal conditions. Despite enterprises by authoritiess across the Earth, analysts at the EIU believe that any new dazes will still take to impermanent outbursts, but should non take to a farther deterioration of fiscal conditions on a planetary graduated table. However, a full standardization of fiscal conditions is non expected until 2010 at the earliest ”
Q3. Please state me the diminution in oil monetary values since the crisis?
Fig 4.3 shows the diminishing of oil monetary values in 2009.
The diminution in oil monetary value from its extremum in 2008 from an norm of US $ 141 per barrel was the most steep that anyone has yet seen. The oil demand is still falling downwards as the universe economic system weakens. Several states were acquiring used to high oil monetary values and are now fighting to equilibrate their budgets since the diminution of the oil monetary value.
Q4. Do you believe Dubai will last this crisis?
Fig 4.4 shows the response of the respondents.
Although 45 % of the respondents replied optimistically that the market will better by 2011, 15 % were still cynic that Dubai Market will retrieve that rapidly.
Q5. Are you cognizant of the diminution in lodging rents since 2009?
Fig 4.5 shows the diminishing of rental monetary values in 2009.
Table below gives an indicant of past extremum rents and current commercial request rents.
Asking rents per annum ( in AED/sq foot )
Location
September 2008 ( extremum )
August 2009
December 2009
Emaar Square
650
170 – 200
170 – 200
TECOM
250 – 275
130 – 175
75 – 120
SZR
350 – 450
120 – 250
90 – 250
Business Bay
N/A
140 – 160
90 – 120
JLT
250 – 275
55 – 120
55 – 85
DIFC
500
250 -300
250 -300
Beginning: Cluttons Consulting and Research
There were several flats and Villas vacant, due to exiles losing their occupations or traveling to better chances, The above graph shows the diminution in rental rates since the crisis.
Q6. Please state me if belongings monetary values or existent estate have declined in the last old ages?
Fig 4.6 shows the Decline in belongings monetary values
Beginning: Report in Bloomberg by Packard,2009
A study in Bloomberg by Packard – September 10, 2009. hypertext transfer protocol: //www.bloomberg.com/apps/news? pid=newsarchive & A ; sid=aU.I.vUJkPJo
House monetary values in Dubai plummeted 47 per centum in the 2nd one-fourth from a twelvemonth earlier, the steepest bead of any market, harmonizing to Knight Frank LLC, as speculators left the Persian Gulf concern hub.
Q7. Are you cognizant of the grounds for the Dubai Crisis?
Fig 4.9 Growth
The graph shows that per centum of people who were cognizant of the grounds for the Dubai crisis. A moderate figure of employees were cognizant of the grounds for the crisis, chiefly due to Nakheel and Dubai World debt inquiring its creditors for a six-month deadlock on its debts. Although, there were a few employees who were cognizant of the crisis but non the extent of it.
4.1.1.1 Real Estate:
Difficult grounds of Dubai ‘s existent estate rectification has emerged with Colliers International describing an overall diminution of 8 per cent in the last one-fourth of 2008. The consultancy ‘s house monetary value index, which has collated mortgage minutess on belongingss unfastened to foreign ownership since the start of 2007, recorded its first diminution from the 3rd to 4th quarters on a 45 per cent slack in minutess as the planetary fiscal crisis contributed to fastening liquidness and negative sentiment towards belongings.
The mean value of flats fell by 11 per cent and Villas by 3 per cent, but townhouses rose in value by 1 per cent, the study says.
Properties in the Burj Dubai development have been hardest hit as they were the chief focal point of guess before the belongings bubble explosion.
Asteco, a existent estate bureau, besides says Burj Dubai saw diminutions of 28 per cent from the 3rd to 4th quarters.
4.1.1.2 Banking Sector:
During the last several old ages, bank were going more dependent on foreign funding purchase increasing their purchase to back up recognition growing – although the domestic sedimentations funded more of the recognition growing in GCC. Finally, the banking sector become more susceptible to plus reversals monetary values, to economic activity decelerate down and to the handiness and cost of foreign funding
Dubai ‘s dependance on funding from foreign Bankss was due to the turning liberalisation of the GCC economic systems. There were two signifier of foreign funding that came to Dubai – direct adoption by bank to back up the recognition growing which came from external markets and the second was the “ hot money ” that flowed in anterior to the crisis. Due to the rising prices speed up of hot money – bad capital – get downing acquiring into Bankss in outlook of a reappraisal of the domestic currencies. Due to the planetary crisis, this did non go on as inflationary force per unit areas started to chase away. Therefore, it becomes obvious that GCC economic systems would non appreciate and aliens rapidly started drawing out their money from Dubai. These short term capital influxs were already used by bank to impart long term and for local demand. Therefore they became liquidness stripped. UAE and Bahrain were the states most severely affected.
4.1.1.3 Debt trap:
Dubai borrowed immense amounts of money which was beyond its agencies. To lucubrate, big loans were taken by companies from fiscal establishments to finance several undertakings during the period from 2005-2008. This was a high extremum period for existent estate/construction and the companies wanted to guarantee they get maximal advantage from this roar in the market. Although they took immense loans, they did non hold any endorse up program for refund. The planetary crisis which started in US along with diminution in oil monetary values, production and liquidness deficits in planetary fiscal markets hit difficult. Dubai had gathered a debt of $ 80 billion from enlargement in assorted subdivisions such as existent estate, banking and transit before the crisis occurred and the fiscal market were hit by the planetary crisis. Out of the $ 80 billion debt, $ 59 billion were Dubai World ‘s liabilities and there was no money to refund this debt. Due to this Dubai ‘s belongings market crashed and it saw the steepest slack as place monetary values declined by 50 per centum from their peak period.
4.2 Impact of crisis:
Oil monetary values tumbled and recognition tighten and as the planetary recessions set in, Dubai was in crisis. Undertakings were delayed, dropped or prolonged as Dubai World had tie ups with difference states around the universe. Several employees were retrenched and unemployment jobs arose in Dubai. Several in-migrations had to go forth the state due to the crisis. It was expected that foreign institutional investors who had traffics with Dubai World would confront immense losingss.
Another anticipation was that the universe, which might be merely get downing to retrieve from the planetary economic crisis, Dubai ‘s fiscal crisis may force it back to the same place.
The pandemonium had spread and the Gulf was hit by its ain liquidness squeezing – chiefly because the outlook of reappraisal of local currencies did non take topographic point and foreign financess pulled out all of a sudden one time the fiscal crisis occurred.
There was deep dip by the stock markets which lost about half of their value since the start of the twelvemonth. There was a crisp decrease of staff, particularly by western bank and existent estate companies, largely in Dubai which was considered the fiscal and concern hub. The banking subdivision required speedy liquidness which was infused by the Regional authorities
The inordinate liquidness that had spread across the part in the past five old ages provided an impossible roar in the private sector activity, disappeared as oil monetary values crashed and loaning by Bankss froze.
The on-going negative consequences for the planetary economic system have pushed consumer and concern assurance in several countries, which started a prostration of existent estate markets in several Gulf economic sciences. Dubai had to do some tough determinations to avoid default over the following few old ages.
