DUBAI RECESSION

MEANING OF RECESSION

A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters. A recession is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. A recession is generally considered less severe than a depression, and if a recession continues long enough it is often then classified as a depression. There is no one obvious cause of a recession, although overall blame generally falls on the federal leadership, often either the President himself, the head of the Federal Reserve, or the entire administration.

WE WOULD LIKE TO SPEAK ON RECESSION WHICH TOOK PLACE IN DUBAI

REASON
 The Burj Dubai now being completed and

officially the world's tallest skyscraper,the developer Emaar, announced that it might be shelving plans to continued with the Downtown Burj Dubai project.

 The super-skyscraper, Burj Dubai development

scheme which would include 30,000 homes, nine hotels including the Burj Dubai Lake Hotel, 7.4 acres of parkland, 19 residential skyscrapers, a shopping mall and a man-made 30 acre lake. However, Emaar had stated that investors had transferred payments earmarked for the residential high-rise buildings to other projects after sales dried up

 Like many other construction projects, the

Downtown Burj Dubai development has been hit hard by the economic downturn, which in turn has forced Emaar and other developers to put certain projects on hold, allowing investors to may have already paid deposits to transfer them to developments that are set to go ahead.

EFFECTS

BANKS
 The four banks affected are:  Emirates Bank International PJSC

(EBI),  National Bank of Dubai (NBD), Mashreq bank (Mashreq) Dubai Islamic Bank (DIB)

HOLLYWOOD
 Plans to roll out a film- incentive were on hold  Hollywood involvement in ventures including

Dubailand & planned film partnership did not proceed , as their was uncertainty of plans coming in action  The credit crunch was wrecking Dubai s plans to become a major Hollywood player .

STOCK MARKET
 Markets in Dubai ,part of the United Arab

Emirates had fallen gradually  Some major securities ,including the construction &Banking shares ,fell to almost 10%  The Dubai government had indicated that they were not willing to take responsibility for Dubai World's debt

LAYOFFS
 It was a law that expats were fired from

the jobs in Dubai  Dubai employees fired Indian migrant workers through texts  The real estate, architecture , design engineering & market sectors were the hardest hit  Massive job cuts in Dubai's hospitality and tourism industry

REAL ESTATES
 Layoffs in real estates have out numbered

all other jobs in the areas in Dubai  Property prices in the emirate had fallen 50% from their peak  Credit has become scarce in Dubai and projects have been halted in mid-spire

FINANCIAL CRISIS
 The Dubai government had indicated that it was not

willing to take responsibility for Dubai World's debt. International investors are furious as they had paid high prices for the bonds with the belief that they had the backing of the Dubai government. However the government had announced that it had no intention of selling off any of its own assets to help out the struggling Dubai World.

 The troubles stem from the fact that Dubai

World and its subsidiaries had made use of short-term loans to finance their long-term building projects. The repayment periods were now coming up and the companies were not in a position to meet their obligations at this stage

DUBAI RECEIVES FUNDING FROM NEXT DOOR NEIGHBOUR
 Trouble hit Dubai has a savior in the form of their close neighbors, the country of Abu Dhabi.  The Arab state has given Dubai the sum of $10 billion to help keep things running until April 2010.  More than $4 billion is expected to be used to pay off a debt .

 The world went a little into shock when there was talk that Dubai could have financial issues.  Currencies have fluctuated all over the world which has had an adverse effect on everything from living to travel.  In Dubai, $3.52 billion of Islamic bonds fell to a record low 45 cents.

BENEFITS & INSIGHTS BY TONY BURY
 Construction sites were being either shut down or normal   

working hours Property development companies had cut their advertising budgets Real estate agents had seen sales plummet causing them to lay off up to 75% of their brokers Significant Dubai based companies had not only suspended their recruitment programmes but had actually laid off their HR departments!!! Rumors had been circulating that property developers would likely had to default and the construction companies may had to withdraw from sites due to lack of payment. Debtor days had increased substantially

What has been the impact of Dubai crisis on the industry ?
 The Dubai government sought six

month payment delay for its loans .  The crisis will become an insolvency issue, which means if Dubai shows that it is going bankrupt. Then it would have dramatic impact globally.  Yet there has been no impact on INDIAN industry which means it is not a case of sovereign solvency change.

THANK YOU

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