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Dubai – The Deserted Kingdom
July 9, 2009Article by Ray Withers
Dubai property is teetering on the brink of a massive disaster as investors wait with bated breath to see what happens during this week – end of school term.Traditionally, this is a time for expats working in Dubai to return home for the summer holidays with their families.At best, it is a cue for a huge exodus that will leave swathes of properties empty across the desert kingdom.
Property prices have already been cut in half this year, and the city resembles a huge building site with block after block of unfinished buildings.With the collapse in prices came the scandals and resignations of executives at banks and developers.But the vultures are circling because as property prices rose over recent years, locals and expats moved in to rented properties and now they are mostly on the way home – with an estimate 20% or so of the population leaving – no one quite knows what will happen in Dubai.
The problem is the emirate has two linked problems –
1) Plummeting property prices
2) A shrinking population
The apocalypse scenario is the fantastic plans to make Dubai a playground for celebrities and the wealthy has failed and the foundations of the new buildings were built on shifting desert sands.It’s difficult to see another resolution. The economy is slowing up because of recession, so building has stopped. Thousands have lost their jobs and are going home – and that means thousands of properties will stand empty and without rent to pay the mortgages.Only a property investor in denial can see anything but further property price falls in Dubai until the royal family controlled government injects some kind of confidence back in to the economy.
Just how they propose to do that in one of the worst performing property markets in the world behind Latvia and as the stock market crashes to a new low.Dubai is now a city in mothballs. Most development has stopped and soon the traffic and streets will be emptied of traffic and people.