Credit Crisis Hits UAE

We were almost getting into it but now it is too late to realize that we are already a part of it. Yes, global crises are definitely impacting all the countries in the world and UAE is no exception. The property boom is no longer there. I have come to know from my friends who work in the property industry that their sales figures are certainly down and targets are difficult to achieve. Many speculators are finding it difficult to put up their property for sale as there are no buyers in the market. The Financial and Property sector fears job losses. Some of the facts and rumors taking rounds in the market: -

1) Dubai based Damac Property has laid of more than 200+ staff
2) Lloyds has stopped loans for purchase of apartments and dropped its LTV ratio on villas in the UAE to 50 per cent.
3) HSBC has doubled its minimum salary requirement for a personal loan from Dh 10,000 to Dh20,000.
4) Most of the brokers and property developers are planning to lay off hundreds of staff as part of their cost cutting measures
5) Tatweer has had several job cuts
6) Emirates NBD has suspended retail credit to expatriate employees of few real estate firms
7) Most of the banks have frozen their recruitment drive
8) Most of the property developers have rescheduled their upcoming projects
9) Property prices may fall rock bottom
10) There is a speculation that most of the westerners who are loosing jobs may rush to the Middle East for job search; which will lead to further competition for the existing jobs.

Irrespective of these crises I believe UAE economy is strong and the government has taken measures to contain the crises. The impact is due to global recession and not due to the weak economy of UAE. UAE government has committed Dh 120 billion in liquidity to the banking system to ease the liquidity situation. Due to lack of transparency we don’t know if any bank has utilized these funds. Once again I believe it’s a mental game; if we all feel that nothing is going to go wrong and continue to live a normal life, we’ll successfully pass this phase.