By Rob Corder
Swiss bank predicts real estate lay-offs in Dubai will cancel out Abu Dhabi growth.
Up to eight percent of Dubai’s population could move away from the city in 2009, the majority of them lay-offs from the construction industry, a new report has predicted.
Swiss bank UBS research claimed that up to half of Dubai’s population, 90 percent of which is expatriates, is employed in the troubled real estate and construction sectors.
It believes up to 20 percent of workers in these sectors could lose their jobs over the next 12 months.
The report concedes that its findings are based on “anecdotal evidence,” but suggests 30-40 percent of new infrastructure project launches in the UAE have been either delayed or cancelled.
The majority of suspended projects are residential and commercial real estate, but infrastructure works such as roads, bridges and utilities are expected to remain on track thanks to a budgeted 42 percent increase in government spending in 2009.
UBS predicts that while Dubai’s population will fall, other emirates will continue to see growth. When Abu Dhabi’s growth is added, the population for the whole of the UAE is expected to remain flat this year, and grow two percent in 2010.
The UAE Ministry of Economy is currently predicting 6 percent population growth in 2008 and 2009 for the country as a whole.
Arabian Business contacted the Ministry of Labour who would not provide statistics on the number of work visas that have been cancelled over recent months.
He declined to comment on a report in Saudi Arabian daily newspaper Arab News that estimated an average of 1,500 visas were being cancelled per day.
The international media has been speculating about Dubai too much. Lets get to the facts, the crisis experience in Dubai is related to global crisis, not a crisis created by Dubai. When the world recovers and investors return to the market, Dubai should continue growth but maybe not as it was before. But Dubai although dominated by Real Estate sector, there are other sectors in growth such as the healthcare, media, IT, finance etc. The UAE as a whole should also boom now that Abu Dhabi is concentrating on different sectors not tapped by Dubai or other GCC states yet. It would beneficial if federal also injects cash to other emirate such as Ajman and RAK infrastructure development so they can create their own economy for self sufficiency.
We had our run in Dubai but now it is just time to move on. Pack the tents, roundup the hoard and get in the gear. We had nice jobs, a diving resort right in front of the door, an amazing view on the 40h floor to all the record breaking sitesin the water and on land. What others heard and dreamed off we had everyday. But now it is time to quite and finde something new becuase honestlz it is getting a bit boring here ...
Please let's not kid ourselves saying that crisis in Dubai is a result of global crisis. There were far more serious fundemental issues (which were obvious to even average people) in the unsustainable economic boom fuelled by real estate sector. Yes, the global credit crisis did trigger the correction! But that does not mean that Dubai is going to fall flat; it will come down to it's real economic self, and would re-start growth. But personally I don't think we will ever see the madness on 2007/08, it would be slow but sustainable growth.
The report says that half the Dubai population in engaged real estate sector. I don't think this is true.
Ok we could all agree wt happening in Dubai is part of the global crisis but dubai is different than most of the world......if ppl lost there job say in UK they will look to another job even small one like waiter or in MacDonald....not the best job but something to keep them a life...even if there were no job its there home and they can get help from family & friends. But in Dubai everyone is expat ..ppl like in "temporary work" condition with sponsor ..very restricted law in every thing..hiked cost of living..no secured jobs...so when ppl lose there job and cant get new one they have no choice just 2 leave!
What about the tourist industry? Hotel occupancy rates are falling as UK and European tourists are priced out (and suffering their own economic problems). What about retail and services like restaurants? Fewer people and more financial concerns for those who remain means less spending in the shops. Ports will see reduced business as global trade slumps. The oil industry will no longer be able to hire people on top dollar wages with oil in the 30-40 dollar range. This report is the first I have seen that starts to address the impact of a real estate pop on the wider economy. But it fails to address all the other industries that are also suffering. I would have though an 8% reduction in population is at the lower end of the scale. It could be much higher. Don't forget, expats who lose their jobs won't stick around paying 2000 GBP per month in rent for a one bed apartment. The problem is that even if the world wants to come to Dubai (as some fanboys still believe) they simply cannot get a job here, or afford to live here if they did.
The global recession is only a reason that caused to reveal the trouble in Dubai. Mainly that of the real estate madness. Buying and selling thin AIR was what was happening. The buildings were built years later. It was as bad and as mad as gambling. When the source of money were reduced, no one could sell the AIR at their unreasonable target prices. This has affected the completed buildings as well. So all the poor people working in this sector and related industries are now packing their belongings to leave to home country. This is the fact.
The only Dubai can grow is by allowing people come in with ease, like the people from Indian Subcontinent who can show proof of spending money in Dubai should be allowed to come and stay in Dubai for 1 or 2 months giving the facility of visa at the entry point. This will allow many people to come in and boost the hotels, shopping malls, residences, and will have opportunity to buy or sell housing units or rent them. This will allow the need for more real estate developments and Dubai can go back to the similar track again as it was in 2007..
Blieve me I am so happy these days as less cars and jams on the roads , people feel relief these days and do not want to go back and wish to continue the recession for another 2 to 3 years in order to live in peace !
This for the guy who commented that people from subcontinent to be allowed only after showing proof of spending. How silly. The whole world has suffered due to overspending by individuals beyond their means. It is true that Indians spend less. Because a professional from India earns less than half of a European Porter who works as a manager here. So whats the point? Spending the money which they are not worth earning or saving the hard earned money after spending a quarter of our life for education?