How Wall Street’s Bust Threatens Dubai’s Boom
Saif Ahmed began living the Dubai dream five years ago. The University of Toronto business school grad moved to the Gulf city-state and quickly co-founded property developer Universal Canlink Inc. By 2006, the firm was turning over $15 million a year as its brochures lured foreign investors with tales of “meteoric” growth in the Dubai real estate market. Lately, as the global credit crisis spirals from Wall Street to the Middle East, Ahmed has been coming back down to earth. There’s still interest, he explains, but the buying frenzy in Dubai is gone. “Before, people were buying blindly, without asking much about the details,” says Ahmed, a Canadian. “Now such risk takers have disappeared from the market.”
Among the harbingers of the changing mood: Nakheel, the developer of Dubai’s proposed kilometer-high skyscraper near Jebel Ali airport, recently announced that it is reassessing its overall staffing needs in line with “predictions of a downturn in the global economy.” Boardrooms and coffee shops alike are buzzing with talk about the coming fall. The Cairo-based investment bank EFG-Hermes recently predicted that Dubai property values could tumble as much as 20% in the next three years. Share prices of Emaar, a public Dubai company that has become one of the biggest real estate developers in the world, have fallen by two-thirds since January.
To be sure, nobody’s calling it a bust — not yet, anyway. Mid-sized builders like Ahmed are still open for business. And a record 70,000 visitors attending Dubai’s annual Cityscape property show this month, where mega-projects worth a total of some $180 billion were unveiled.
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