As a dodo dead.
Crossing Maktoum bridge in the middle of the afternoon in 2 mins dead.
The airport is EMPTY. I was there last week and no-one was around except a lot of bored staff. It was spooky. Normally Dubai airport is like the space port in Star Wars. Full of every nationality under the sun and a few from nearby planets. (Think Men in Black for my younger readers).
But now....
Retail sales were already waaay down in November, and tourism and business travel globally have collapsed...
Dubai is in the shit. Construction and a booming global future was the whole reason d'etre of the economy. Even Abu Dhabi must be starting to balk at the liability on the downside.
This will undoubtedly have some knock on effect here, both in reduced buying of construction materials like aggregate, to less fish and transit goods, even overflight fees must be down. And less side-stepping tourists to nip across the border.
But all things considered, HE Mackie can rightly feel pretty good right now. Moodys have just given us a good sovereign rating and said some very nice things. The banks were not heavily into CDOs. And our currency link to the dollar has assisted greatly. The fiscal maintenance plus credit loosening is working. All local investor construction projects in and around Muscat are going ahead, and taking advantage of the cheap prices for cement and steel.
[Aside: although I'm reliably informed that work on the Minister of Tourism's new house extension in Qurm has been in suspension for some time. Strange. ]
Oman is definitely a great place to weather the storm. But hold on tight. A cold wind is howling, and the savings and low borrowing will only last so long. HE still needs an oil price uptick to >$60 by end 2010.
Yep.
ReplyDeleteWas there a couple of days ago.
Completely change in mood, and traffic!
JD
This financial crisis will get to everyone evenually.... some will fight back for sometime but the envitable collapse and second great depression is coming to grocery near you soon.
ReplyDeleteWas there last weekend. Traffic is a breeze. Parking galore. Love it!
ReplyDeletewhere
ReplyDeleteIt seems the recession isn't affecting some people:
ReplyDeletehttp://www.highland.gov.uk/NR/rdonlyres/B2E0A27D-B106-47B3-A08A-5E5C68075AE5/0/Item67PLR00709.pdf
The local council have approved the building, despite the planning department's concern. The big question is why do you need a 16 bedroom house, for use an average of 10 days per year ??
The higher they fly.....
ReplyDeleteDubai should have seen it coming, but sometimes you are blinded by your success.
Some of the things that I noticed when i was there (speaking to local friends):
1. Shops started asking if you are paying cash or credit (some shops already had cash only counters which were empty), which is a simple sign of cash flow problems.
2. Aweer the used (new) car complex was nothing more than a ghost town. The cars were stacked up, people were selling these new cars for far less than dealers.
3. Hotel lobby was basically empty, went down for breakfast and felt pampered with no competition for service.
4. Some construction sites showed no sign of activity at all (day & night) a simple look at the property magazine (which went on diet) showed how bad the real estate industry was doing.
5. The locals I spoke to were very nervous and kinda lost, they were not sure about what's happening and they are no longer believing the government.
6. Bank officers were talking about big accounts drying up as more foreigners consolidate their positions back home by taking back money from Dubai.
7. One of the major building materials company in Dubai that i visited had a credit officer from HSBC coming over every day and staying all day to collect all the cheques and cash they collect. A very bad sign of distrust between companies and bankers.
8. Some of the locals that worked in the government backed real estate development companies (Nakheel, Emaar) spoke of growing problems between the developers and construction companies over due payments. As developers delay payments to conserve much needed cash while contractors press for payments to ease their cash flow.
I think that Dubai has built its economy (bubble) mainly on the service and real estate industries by heavily borrowing and it was a gamble that paid off for sometime, but as the financial crisis took a big bite into Dubai government and financial institutions ability to borrow and lend the ball stopped rolling and cracks started appearing. At the end it was just too big for Dubai to contain the problem.
I once asked a person who worked for a local developer "can you please explain to me how can an economy of roughly 50 billion have real estate projects worth 500 billion under way in the next 5 years?? how Could that much money be absorbed by Dubai economy???"
His reply was "this is Dubai!!!!"
As the story keeps unfolding Dubai should be more worried about deflation hitting their economy, that would be just a catastrophe. Good luck.
I'll jump in too. Maybe UD gets paid by the number on comments to his blog. Was in Dubai airport couple of days ago- one word to describe it- deserted. So few passengers coming out of Arrivals door. So many cars in parking lot covered with dust. In Dubai city, on the way back to Oman, so little traffic and so little- really none- activity on the construction projects. I am pretty sure Dubai will recover, but in what form- that's the question.
ReplyDeleteAnd as UD says, we should be thankful for the prudent Omani government policies that have pretty well shielded us from the economic 'storm.' Lets hope the oil price goes up some and we can pump a few more barrels per day.
Their port will continue to be fine, but real estate is finished. Might be a chance for wealthy expats to come in and buy something cheap, especially if you are from the subcontinent or East asia and you transit regularly in Dubai. Might be worth spending a few days in Dubai and then going to your destination.
ReplyDeleteIn Dubai, there is loads of underworld stuff going on. Russians, Indians, Pakistani mafia's etc etc. They might pitch in, in some way to help shore up some projects.
Dubai won't be as big as it once planned to be or until debt becomes easy to get ahold of.
On a different subject.
ReplyDeleteControversial Irish free energy technology company - Steorn www.steorn.com are in town to give a lecture to engineering students at Sultan Qaboos University on the 25th.
No blogs are covering this, so perhaps someone there in the Muscat blogosphere could find out what happens and report on it.
There is a suggestion that they will "unveil" their free energy technology 'Orbo'.
let's hope no one decides to invest in this miraculous technology http://en.wikipedia.org/wiki/Steorn
ReplyDeletedespite massive losses they seem to pay their staff very well.
Can I interest anyone in my car engine that runs on water/air, everlasting light bulb, time machine, etc...
I just went to the Steorn page on Wikipedia. It is a must read for anyone going to the lecture. Is this lecture promoted and approved by SQU?
ReplyDeleteso..i sort of wanna buy a Mercedes ML 350 - the 2009 one. should i go shopping in Dubai/airport?
ReplyDeleteEven The New York Times is covering this...
ReplyDeletehttp://www.nytimes.com/2009/02/12/world/middleeast/12dubai.html?pagewanted=1&_r=2
Sure the economy has gone "tits up".
ReplyDeleteThey have got a life line of 10 Billion. See the following link in FT.
http://www.ft.com/cms/s/0/c6befbbc-00ff-11de-8f6e-000077b07658.html?nclick_check=1
3 years in dubai, seen it comming locals sure didnt care seems they still get there money just hire and fire more cheeaper slaves from other countries. what goes around comes around
ReplyDeleteheart_of _stone