Friday, November 27, 2009


Dubai is all over the news today!

Dubai's debt funded real estate expansion, continues to haunt the U.A.E.

Palm islands, a world map and many other developments all funded by a mountain of debt.

An investor driven Dubai real estate market, has continued to struggle even as the world has announced that ''the recession'' is now behind us.
Actual users are outnumbered by speculators and house ''flippers''.
Everyone is in the market to 'make something for nothing'

Here's my post on August 5, 2009.

Dubai Financial Support Fund : DUBAI RECOVERY ?

If investors think that the credit crisis is finally behind us....well they have another thing coming.

The Dubai debt deferment announcement has taught us, that not much has changed since the dark days of the collapse of Lehman Brothers.
  • Debt levels continue to stay alarmingly high.
  • Real estate companies in the U.S.A are refusing to stall new projects even as the current ' property glut' continues to drag down prices. (yes they did stall projects after the March 2009 meltdown, but subsequently, companies are building inventory once again)
  • Asset prices continue to be propped up by bailout packages and ''questionable'' accounting practices.
  • It's quite obvious that unrealistically high property prices need to come down to more realistic levels. The longer that market forces are suppressed, the longer the eventual recovery will take.
  • For the record, Dubai isn't bankrupt yet, but it is facing a ''liquidity crunch''. They must rollover their debt until they can bring their real estate inventory down to a more sustainable level....and avoid a property fire sale! That's going to be a mega task!
  • The main problem they face, is that their ''frightened'' lenders must accept a delay and some uncertainty in the near term.
  • Lastly, it's not just Dubai! Governments all over the world are pushing debt funded stimulus packages to boost or support real estate prices and keep consumer consumption from falling off the cliff! While these tactics may delay the eventual collapse of an unstable system, they are not a long term solution

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