Once Booming Dubai Goes Bust

CBS Evening News: Following Wave Of Speculation, Real Estate Collapses In Middle East's Capital Of The Ultra-Rich

(CBS)  Over the years, booming oil prices helped turn Dubai into a land of opportunity and playground for the ultra rich.

But that was then and this is now. And as CBS News correspondent Sheila MacVicar reports, even Dubai is feeling the pinch of the worldwide economic crisis.

The gulf city state's property prices went up as fast and as high as the towering buildings. But reality has suddenly intruded.

One investor said it was as if someone had thrown a switch, as the global credit crunch slammed a city that was, in effect, the world's biggest construction site

It took just 20 years for Dubai to go from a desert outpost with a handful of office towers to a world metropolis, where one fifth of the world's cranes operate, and property became a very hot commodity, with some people playing real estate the way others play poker.

"People were buying and flipping properties on a launch basis," says Manesh Khadri of Century 21 Real Estate. "You launch a property and you flip it within the same day."

Before an apartment was even built you could away with tens, or even hundreds of thousands of dollars.

Developers promised: Pay $140,000 for an unbuilt apartment, and within six months, reap a $46,000 profit. So as fast as the city expanded, investors snapped up the real estate, taking on big debt.

American Internet entrepreneur Mahmood Panjwani understands the risk of building a business

But, "I really did not know what risk was until I came here," Panjwani says. "I mean Dubai is like Silicon Valley on steroids from a risk perspective."

Buying real estate with little money down and lots of debt is risky indeed. Panjwani saw trouble coming and got his cash out of the market.

"There's a lot of fear," he said. "How low can it go down? How long will it stay down?"

Left: The Burj Dubai tower rises in Sheik Zayed highway in Dubai, United Arab Emirates, in this September, 2007 file photo. The world's tallest building is still under construction, but prices there tumbled 50 percent as Dubai's once booming economy and real estate market have gone bust.

Take the world's tallest building, the Burj Dubai, which remains under construction. In the last month prices there dropped at least 50 percent.

House prices on the man-made Palm - the iconic frond-shaped island colony - down 40 percent.

A seven bedroom villa? $10 million last year, under $6 million now.

Banks aren't lending. Projects are shelved. And the normally secretive government has had to acknowledge it has one of the highest levels of per-capita debt in the world -- and not enough oil to pay for it.

"The worst is still yet to come in the sense of people losing properties" Khadri says. "That will happen."

Of course, Dubai will come back eventually, many say, perhaps without the speculators and the insane price increases. So while the fizz might be gone, they insist, the water still sparkles.

[spinproof]

What goes up must come down, Ad nauseam!

[gce65]

I was there almost 20 years ago for the first Gulf War, before the construction boom and overbuilding and glitz and glamour.
I liked it better then.

[barbaraf4]

It is difficult to feel sympathy for the ultra-wealthy people who are caught in the squeeze in Dubai. They are victims of their own greed.

I''ll save my sympathy for the lower to middle income families who have lost their homes elsewhere.

[georgew1956]

i went to a high school basketball game tonite and feel good, it says dubai is broke sorry to here, i took my wife and kids and feel like i sold one of those buildings . rich people need a shot of reality some times. go to a game.

[rudy6543]

Their greed has landed them where they deserve to be.

[runningralph]

Dubai should have spent money to develop a sustainable way of life in the desert. I don''t know how to do that, but solar power plants, fishing fleet, desalinization plants, cultivating desert plants come to mind. The price of oil will go back up or if it doesn''t they will just have to adjust like everyone else.

[legacyabq]

Dubai?

Bwaaaaahahahaahhahahahahahahahahahahahahahahahahahahahahahhaahahahahhhahahahahahhahahahahahhaahahhaahhahhahaahahahhahahahaahahahahahahahhahha!!!!

Oh,my

[cbsblogger]

Hopefully the ultra rich worthless jet scum have collapsed along with Dubai. 1% of the USA has 90% of the wealth.

[cbsblogger]

Dubai should have spent money to develop a sustainable way of life in the desert. I don''''t know how to do that, but solar power plants, fishing fleet, desalinization plants, cultivating desert plants come to mind. The price of oil will go back up or if it doesn''''t they will just have to adjust like everyone else.

Posted by runningralph at 09:34 PM : Jan 02, 2009

===========================

Good idea but the USA should have done the same when we were a creditor nation and before we went broke and bankrupt.

[bozworth4]

The kings, with their 24-ct gold faucets on their custom made Boeing jets, are feeling the squeeze? Well, h*ll, let''''s bail them out too!

Posted by b4ucmyI


This is why gas tax will go up. Our communist government can''t stand that we might have ten dollars left after a tank of gas, to spend elsewhere. Let the games begin!! No democrats or republicans, only politicians that have sold us and our country out, And would pimp their mothers and daughters for a euro, ruble, or dollar.

[robert7562]

Can I get a hellllllllll yeah!!!!

[robert7562]

Apologies for the last one. It''s just that now, in addition to lower fuel cost for us, there will be a lot less cash slid under the table to the extremists that just want to kill everybody.

[atozee1]

Dubai still has plenty of fizz and will bounce back. As prices of property dropped, an opportunity has been created for those who missed out the first time around. At around $1,000 per sqft, Burj Dubai is a bargain. I think there is no better place to put your money. Even banks there are giving 6% on fixed term.

[whitemale08]

So much for Darth Cheney''s get-away.

[impeach_o]

USE YOUR BIKE AND SEE THESE PEOPLE GO BACK TO HERDING GOATS..

[walt1944-2009]

I remember seeing a "60 Minutes" skit on Dubai where the "big shot" developer of Dubai was boasting about everything he planned on doing, from building the tallest building anywhere, to completely enclosing AND air conditioning an ENTIRE BEACH!

It ticked me off that here we were sending this country money for oil and they were able to totally build up their infrastructure catering for the mega-rich while we didn''t have the cash to rebuild a lousy bridge here!

Now, with oil prices and demand for oil going thru the floor, a "Green-minded" Obama marching into the White House, and the DEPRESSION caused by the Great Emperor Bush II finally catching up to them, it appears they won''t be enclosing and air-conditioning that beach after all!

And to think that Halliburton and KBR moved their corporate offices there!!!

How SWEET!!!

What goes around, COMES AROUND!!!!!

SIG HEIL, I''M MOVING TO DALLAS SO I CAN BE CLOSE TO MY LIBRARY AND KEEP AN EYE ON IT!!!, BUSH!!!

[debinok1]

When we have focused enough on the economic situation overseas can we please focus on the US and what is going on here. Like the fact that yellowstone is still experiencing earthquakes and they are getting stronger.

[smurfcrusher]

Hard to believe they have more per-capita debt than our country.

[debinok1]

They reaped what they sowed, it''s their problem not ours. We need to focus on the things happening right here at home. Our economy, our growing homeless population, our jobless population and the growing hunger problem. Lets get back to focusing on the US.

Seem to be getting quite a few stories lately about how the luxury market is craxhing and burning.
Try as hard as I can, I just CANNOT come up with any sympathy.

[debinok1]

Nope no sympathy what so ever. For any of them. They all thought they were to rich to fail. They thought they were due. They sunk themselves.

Try as hard as I can, I just CANNOT come up with any sympathy.
Posted by hadenough43 at 10:50 PM : Jan 02, 2009

Vengance is mine, sayeth the Lord.

Posted by txgrouch2008
-------------------------
As we have discussed before, that lord of yours sayeth a whole lot of things.

Nope no sympathy what so ever. For any of them. They all thought they were to rich to fail. They thought they were due. They sunk themselves.

Posted by DebinOK1
------------------------------
Just a teeny tiny little preview of whats gonna happen when the oil finally does run out.
Or, we wise up and decide we''ve burned enough of it.

[luvcomments]

I have to laugh. Just reading the comments, it''s so pathetically clear that we just love to see others hurting because our own stupidity and greed caused many of us to hurt. It''s all nothing more or less than the unavoidable consequencies of greed and irresponsibility on the part of many amongst us, no matter where it happens.

that lord of yours sayeth a whole lot of things.
Posted by hadenough43 at 10:59 PM : Jan 02, 2009

But it looks like this one is COMING TRUE.

Posted by txgrouch2008
------------------

Ok, ONE .. in two thousand and nine years, helluva battin'' average...

[debinok1]

Just a teeny tiny little preview of whats gonna happen when the oil finally does run out.
Or, we wise up and decide we''''ve burned enough of it.
Posted by hadenough43
****************
I agree we need to find a realistic alternative to oil. But not because of the GW horse manure. Because eventually we are going to be screwed if we dont.

[downtowner97]

I am not going to laugh about this. Go to Google Earth and look at the other oil-producing nations of the Middle East. There''s little there. At least the Sultan of Dubai chose to reinvest his nation''s oil money into creating a shining city to attract tourists from around the world.

The biggest hurdle Dubai faced since the beginning is the oppressive heat of the place. It can be 122 degrees during the day.

Just a teeny tiny little preview of whats gonna happen when the oil finally does run out.
Or, we wise up and decide we''''''''ve burned enough of it.
Posted by hadenough43
****************
I agree we need to find a realistic alternative to oil. But not because of the GW horse manure. Because eventually we are going to be screwed if we dont.

Posted by DebinOK1
-------------------

"GW"...sorry, that one escapes me...

[debinok1]

GW"...sorry, that one escapes me...

Posted by hadenough43
*****************

Global Warming

GW"...sorry, that one escapes me...

Posted by hadenough43
*****************

Global Warming

Posted by DebinOK1
-------------------------------
Thank you, You may be interested to know that you are probably the first person I have encountered on these boards that I can disagree with on an issue, and do so with respect.
But I do think that "GW" is real. Just too much evidence for me to ignore.

[debinok1]

I have spent the majority of my 42 years in a state where the motto is "if you dont like the weather wait a minute", I have seen it rain in the back yard while the sun shined in the front, I have seen tornadoes play hopscotch where it takes one house and leaves one, I have seen it snow one day and be 70 the next, we gauge the size of hail by the size of ball it equals(golfball, baseball, softball). Weather is nature and nature is fickle.

[debinok1]

Thank you, You may be interested to know that you are probably the first person I have encountered on these boards that I can disagree with on an issue, and do so with respect.
But I do think that "GW" is real. Just too much evidence for me to ignore.

Posted by hadenough43
*********************
Thank you, I try to not be offensive or down right rude. So we have a different opinion everyone does at some point.

[dbstevens]

This story comes as no surprise to me. It''s common sense that this sort of thing could not be sustained, and would eventually fail (and fall). DUH!

Greed certainly causes people to act blind and foolish.

[shanev137]

Greedy rich people have killed the world.

[debinok1]

This story comes as no surprise to me. It''''s common sense that this sort of thing could not be sustained, and would eventually fail (and fall). DUH!

Greed certainly causes people to act blind and foolish.

Posted by brucestevens
************************
Yes it does. Perfect example of that are our McMansions, people wanting more than they need or can afford and sunk themselves into a pile of debt it will take them years to dig out from.

Thank you, You may be interested to know that you are probably the first person I have encountered on these boards that I can disagree with on an issue, and do so with respect.
But I do think that "GW" is real. Just too much evidence for me to ignore.

Posted by hadenough43
*********************
Thank you, I try to not be offensive or down right rude. So we have a different opinion everyone does at some point.

Posted by DebinOK1
---------------------------
For myself, I also live in a place where the weather can change in a heartbeat, but we don''t get tornados much.
We moved here in 1959, over Christmas vacation. I was just a kid. I''ll never forget it - one of the local small lakes froze over so hard, kids were out ice skating on it. I had never seen ice skaters before That has not happened since.
We also used to have the local river freeze over to the extent that cars could cross over, but that was way before 1959 - only my Dad and his sisters remember that. They are sure that things have warmed up, over the long haul.
My Grandmother used to remark about how the trees would sometime explode in the wintertime. I never could figure that one out until I learned how much water cottonwood trees store in their trunks. Then it made sense.
Something is happening...

[debinok1]

I agree that the planet is warming, but like grouch I question the validity of it being man made. There are to many other possible explanations that make as much if not more sense. I also think the hole in the ozone is real but I think there are other possible explanations for it, like the fact that we keep sending flaming shuttles through it. We know that the ozone is flammable so why send something through it thats on fire. Just my opinion but hey I am entitled to it.

[debinok1]

My Grandmother used to remark about how the trees would sometime explode in the wintertime. I never could figure that one out until I learned how much water cottonwood trees store in their trunks. Then it made sense.
Something is happening...

Posted by hadenough43
*******************
Very much so. I do not argue that at all. Just the fact that it is all man made. And the tree thing I have seen that is wicked.

[artorus]

Glad to hear it. What a grotesque display of elite decadence that was. Maybe a tidal wave will wash over it next. Ahh.. one can only hope.

[downtowner97]

Spend your next vacation at 122 degrees! It''s where Cheney and Bush will prepare themselves for He11.

[iamhungry68]

Let''s give it the old "Do I feel bad about this story" check:


1...
2...
3...



Negative - I couldn''t care less.



Hey Dubai - how do YOU like it?

[jsutaguy]

Yes, the worldwide "personal" evidence is unanimous: Global warming is very real. Remember those old Hans Christian Anderson stories about people skating all over Holland on the frozen canals? That no longer happens. Insects never seen in Northern Europe are seen regularly; migrating North as the continent warms.
Ice climbers have watched very old and famous routes disappear, and never reappear again in the winter. The north face of the Eiger is now an unclimbable death wall; a continuous cascade of rockfall as the ice holding the mountain together disintegrates. The Great Barrier reef is dying at a massively increasing rate due to CO2 being dissolved in the ocean, acidifying it.

The popular picture of global warming as a sci-fi flood that only affects the coast is completely wrong. It is changing everything, quickly, and the biggest beneficiaries are insects, bacteria, molds, and microbes. The biggest losers are all the higher forms of life on the planet.

I truly pity the next generation. The planet''s climate is now rolling down a hill. We will be dead before it reaches the bottom, but our descendants won''t.

They will curse our names.

txgrouch, keep kidding yourself and we''ll all roast in hell. When scientists from all over the world continue to issue warnings which they have been doing since the ''80''s and I see their predictions borne out with ice melting everywhere, even the permafrost melting, I become concerned. I''ve seen the data and it convinces me, but people who care more about raping the rest of us by polluting our water and smothering us with bad air so they can make a buck are not going to be convinced. Greed is a terrible thing...and deadly!

[kaffirboetie]

Most of the posters here are under the mistaken impression that Dubai is a major oil producer. It isn''t! It produces a miserable 30,000 barrels a day if that. The government of Dubai is therefore financially incapable of stabilising this inevitable real estate crash.
It is Abu Dhabi that is the major oil producer in the United Arab Emirates and they can only be relied on to bail out their "Abu Dhabi" nationals who account for only a small fraction of the real estate speculators in Dubai

[notso9]

I truly pity the next generation. The planet''''s climate is now rolling down a hill. We will be dead before it reaches the bottom, but our descendants won''''t.

They will curse our names.
Posted by justaguy11

What about the evidence of farming in Greenland in areas that were once thought to have always been frozen? It is all a natural cycle that will change itself in a matter of time, then you will be hollering about global cooling.

[notso9]

txgrouch, keep kidding yourself and we''''ll all roast in hell. When scientists from all over the world continue to issue warnings which they have been doing since the ''''80''''s and I see their predictions borne out with ice melting everywhere, even the permafrost melting, I become concerned. I''''ve seen the data and it convinces me, but people who care more about raping the rest of us by polluting our water and smothering us with bad air so they can make a buck are not going to be convinced. Greed is a terrible thing...and deadly!

Posted by sesanders1

Wrong! In the 80''s these same scientists were warnign of the next ice age and global cooling. It''s the flavor of the day.

[papabc]

The world changes and the climate get colder then warms up. Some of the hottest days in recorded time was in the late 1800s and early 1900s.

I remember that, not less that 20 years ago, the pipes in my central coast home were freezing. Tje next Ice Age was upon us. Now we fear global warming.

Shortly it will be the Ice Age again.

[fairplayer1]

http://www.raisethehammer.org/index.asp?id=781

As a UAE national with PhD in law I have to admit that Sheikh Mohamed has failed to put in place a transparent judiciary and has concentrated more on self PR by anouncing unrealistic projects and reading clever lines which secures his own ego problem. His family members treat the society like animals%u2026 they steal from foreign businessmen, threaten them, and some times using the famous state security even arrests them to reach their commercial goals.
it s sad that sheikh mohammed%u2019 s brother in law sheikh hasher maktoum has stolen a multi billin dollar bussiness from a foreign investor just because he is related to sheikh mohammed. We have no human rights here, the judiciary is as corrupt as real estate, finance, immigration%u2026. dubai is crashing

[fairplayer1]

http://7starsdubai.wordpress.com/2008/11/20/president-al-fajer-properties-sheikh-maktoum-bin-hasher-juma-maktoum-al-maktoum/

The laws broken by sheikh maktoum hasher (winner of world scam award 2008) to elevate himself from a poor sheikh to be recognised as a real sheikh:
1. Misrepresentation/ False promotional campaign (showing photos of construction of JBC1,2,3,4,5 for the sales of Ebony Ivory project) while there is no contractoron site, no building permit%u2026. this is a criminal offense under uae law. (But RERA & SHEIKH MOHAMMED HIS UNCLE R SLEEPING!!!)
2. dynasty zarooni who is a real estate broker has been collecting money into their own account this is 100% illegal%u2026 infact in some cases they have even sold properties with 100% down payment, imagine the poor buyers when they realise te photos shown in gulfnews were lies!!!
3. ofcourse no escrow/trust account%u2026 No construction%u2026
4. Threatening investors and staff of al fajer properties. Investors in JBC1 are forced to move to another building s that sheikh maktoum hasher the wanna be poor sheikh can make a few millions through his friends who will sell the property to new buyers.
5. There is no immunity for sheikh maktoum hasher or his father sheikh hasher maktoum, sheikh mohammed is just too busy counting the money he has lost so he is a bit distracted now. he pretends as if he is above the law, but in reality he is a coward who can only threaten drivers and junior staff in al fajer properties

[twistedsister1959]

If I didn''t think this was going to come at a cost to the US taxpayer I would laugh. Save an Arab from themselves: Turn off a light.