By biswajeet indiasyndicate
Debt spread across emirate and state owned companies, Dubai World owes $50.2bn
Dubai and its state owned companies carry at least $129.3bn of debt, of which $50.2bn is owed by Dubai World, the company that completed a loan restructuring in September, Credit Suisse Group said.
The second largest debt, $28.9bn, is owed by the government itself, the bank said in a research report emailed on Thursday. Investment Corporation of Dubai and Dubai Holding, two other holding companies, as well as other government related firms, account for the remaining $50.2bn, it said.
The number “comprises publicly disclosed debt of $111.1bn and debt on which disclosure is limited,” London-based analysts Mohamad Hawa and Anton Rozanov said in the research report. “The debt burden could be much higher than our final numbers owing to the lack of full disclosure.”
Dubai, the second biggest of the seven states in the UAE, had to seek a bailout from neighbouring Abu Dhabi after the global financial crisis pushed property prices down by more than half, and frozen credit markets forced some state owned companies to delay loan payments. Dubai World agreed with creditors in October to restructure $24.9bn of debt.
The emirate and its state owned companies have $17.5bn of debt falling due this year, $17bn in 2012, $9.7bn in 2013 and $26bn in 2014, according to the report. Another $12.8bn matures in 2015.
These numbers might be more realastic/accurate , but am sure the real estate market by year 2013 will heal and the prices will increase slowly in which will increase the government income and will make it easier to pay these debts specially they already introduced bonds and Abudhabi the capital is behind dubai's am sure they will pay a big share from the total amount.
God bless Dubai and UAE rulers
@Khalid I think you should check the maths here. With a population of 2M people, roughly over 80% of them expats that means that the debt for each Emirati man, woman and child in Dubai is $431,000.
If you want to pay this debt out of property taxes as you seem to imply, even assuming 1M properties (how many of these 2M inhabitants are laborers?) you are talking about collecting $130,000 from each property. Do you think this is realistic?
More to the point, does anyone really think the property market can return to some kind of profitable balance by 2013? Aside from the huge surplus of stock which is still being added to, what about the reputation of the industry?
There are thousands of people who have paid for properties they never received (or that bear no relation to the plans of what was promised)... and who now find they have no legal remedy to recover anything. And the very same developers that took the money and failed to deliver are still in business trying to sell more promises to others.
Will anyone ever believe 'pay your money and just trust us' again?
Khalid, i see two problems with your comments.
Firstly, the Dubai property market will not be back anywhere near 2013 due to oversupply and lack of demand. In addition to this, given all the money that people have lost on property in Dubai I doubt it will ever be deemed as a good investment again.
Secondly, Abu Dhabi is now faced with having to help out Aldar etc financially, with this in mind how keen and able will they be to assist Dubai.....even if they are it wont be anywhere near the amounts that Dubai needs.
The overseas media is largely ignoring the UAE these days as there are no actual facts coming out and Dubai's debt mountain isn't going to budge in a hurry. There is no reliable information about the property market, what is or isn't being sold or delivered and it has become clear overseas investors have gone elsewhere.
The debt amount is significant for sure. However, I believe that a key step to solve the problem would be to transfer, as much as possible, short term debt to long term.
Yes, there is over supply in real stat, but if the other economic sectors, which faired relatively good in 2010, can generate enough returns to secure refinancing - not to repay the debt - then we could be on a much better footing.
I think besides some bad investment that were made, the reliance on short term debt for long term projects caught Dubai by surprise. Looking at the bigger picture, a lot of countries around the world were/are in bad debt situations, but thatâ€™s never the end as some would suggest. I believe Dubai can get over this and learn a lot of valuable lessons at the same time.
Khalid...unfortunately you have adopted the 'in two years time' psychological 'comfort' language without actually recognising the economic factors that would need to be in place for the 'two years time' recovery you extoll.
Dubai's average GDP in a little over US$ 8Bln (last estimate I could find). Dubai owes in excess of US$ 126Bln. Dubai is in the same situation as Europe and the USA. Dubai relies on International funds to support its economy...especially tourism and Real Estate. If the supporters of Dubai's economy have no money...they will spend less here. Hence Dubai can not recover unless the rest of the world does. It is as simple as that.
Dubai can not recover and repay its debt burden within the next 10yrs...maybe 15-20yrs. Thats not to say, on the ground in Dubai, business will not recover. It will recover and it will feel like a recovery of sorts...just nowhere near the measure required to repay Dubai's debt burden.
Abu Dhabi NEVER gifted Dubai money. It was a loan.
Its not only Real Estate debt and if Dubai had gone for Concession type infrastructure projects with experts determining the need and size of the projects financed through a typical concession tenure, it would have been in much better shape now.
Going back to what Khalid had mentioned about the healing of the market by 2013, I believe it will only be reaching the bottom by then. It's too early to talk about the rising prices again in 2013. At the end of the day we are in a really globalised market and Dubai is heavily dependent on situations and countries outside Dubai. Almost every country is experiencing a heavy debt and someone will be magically bailing all these countries out, but how and when thats the question.