Non-performing loans are expected to swell almost 50 per cent to nearly Dh65 billion (US$17.69bn) this year as the global economic downturn and sagging property prices take a further toll on the country’s lenders.
The rise is likely to force lenders to set aside more reserves to protect themselves.
“Non-performing loans are already at a reasonable level,” Sultan Nasser al Suwaidi, the Central Bank Governor, said yesterday.
“If you take into account write-offs, non-performing loans would be higher.”…SOURCE
Non-performing loans were expected to rise to 6.5 per cent of bank lending this year from 4.4 per cent last year, he said. The total value of loans and advances in the UAE is Dh1 trillion, according to Central Bank statistics.
Banks’ loan books have been adversely affected by exposure to a severe correction in the country’s property sector, with estimated price declines of up to 50 per cent in Dubai and 40 per cent in Abu Dhabi.
Hundreds of employees of etislalat’s 181 directory service are not under the company’s sponsorship, Gulf News has learnt.
The call centre employees, who are based in Ajman, say they have never been issued with employment visas or labour cards. They told Gulf News they are paid Dh16 per hour but have no contract. Many of them have been working there for more than five or six years.
“I was sponsored by my father,” said a 25-year-old Arab employee, who has been at the centre for five years. “I was able to obtain a visa from a company in Dubai and am working at etisalat,” he said.
Another employee, who has been working there for three years, said he was sponsored by his father. His sponsorship is going to expire in three months, he added.
A woman employee said she worked for the call centre for one and a half years but has stopped working for them now.
“I was on the sponsorship of my father,” she said…SOURCE
The Roads and Transport Authority (RTA) is considering installing a Salik gate on Emirates Road, Arabic daily Al Bayan reported on Monday.
The report said indicators of the general budget for Dubai for 2010 expect the RTA to increase Salik revenues by introducing a new Salik gate on Emirates Road…SOURCE
Dubai today unveiled a sweeping US$10 billion (Dh36.7bn) rescue package from the Abu Dhabi Government that will allow Dubai World to deal with a slew of immediate financial obligations, including a $3.5bn Islamic bond that is due today.
Will the Palms Ever Be Completed?
The move ends months of speculation about how Nakheel, a developer owned by Dubai World, would pay off the sukuk amid declining property values and a slowdown in sales that left it virtually bereft of revenues.
It also represents by far the most direct and explicit support of Dubai to date by the Abu Dhabi Government in the wake of the financial crisis. The crisis battered property values in Dubai and slowed its ambitious growth plans as it struggled to find a solution to a crippling debt load that has been estimated at $85bn, a total greater than Dubai’s annual GDP…MORE
…Meanwhile, bondholders of the Nakheel sukuk that is due to be redeemed on Monday took part in a conference call organised by Deutsche Bank yesterday. Deutsche Bank, which is trustee to the sukuk, said it was seeking clarity from the issuer about its plans to restructure debt, according to two investors who participated in the conference call. Bloomberg reported that the call finished without any discussion of adopting specific recommendations, said the investors, who declined to be identified because the discussion was private.
One New York hedge fund manager said: “It was a ‘listen-only’ call that repeated all the public statements by the Dubai Government. There was absolutely no news or new information. It was a total waste of time.”
A letter from Ashurst, the London law firm hired by the non-Gulf bondholders, has been sent to Nakheel rejecting the call for a standstill on the sukuk repayment and seeking repayment in full on the due date.
A bondholder said: “We will make it clear that we are not afraid to push the nuclear button.”
“We will make it as difficult as possible for Dubai to borrow money at good rates again and try to embarrass them that way. We are enforcing our rights and expecting payment.”…MORE
The Palm Jumeirah is not sinking into the sea, contrary to speculation in recent days, a Nakheel executive says.
“The proof is in the pudding,” said Shaun Lenehan, the head of Nakheel’s environment department. “The Palm is intact. If there were subsidence, you would see cracks in the buildings, windows popping out. We have no evidence of that happening.”
But the US$12 billion (Dh44.07) island has settled slightly since it was created, in line with all artificially created land masses, Mr Lenehan and other engineers said.
Is Atlantis Destined to Sink?
He was responding to claims from a landscape surveyor speaking at a conference in Qatar, who was quoted as saying that the Palm Jumeirah was sinking by an average of 5mm a year and might flood in the future if ocean levels rose. The engineer cited satellite images of the island taken periodically over the past few years…MORE
The engine of the black Corvette revved to a gasket-popping roar. Its driver leant out of his window. He was dressed in traditional Arab robes but wore a rubber wizard’s mask. He held an aerosol aloft and directed a jet of party foam into the air. Four-wheel drives plastered in pictures of Dubai’s Royal Family roared their engines back in approval. The cacophony was deafening.
On the opposite carriageway smoke billowed from the spinning back wheels of a new Land Cruiser as the driver pressed the brakes and floored the accelerator. This was the favourite way for many of the fervently patriotic and car crazy Emiratis to mark National Day in Dubai this week, the 38th anniversary of the founding of the United Arab Emirates, and one of the biggest celebrations of the year.
A mile away at the new Marina Yacht Club, Western expats were also working their way into a party mood. Deferential Filipino staff served a foamy lobster broth as an amuse bouche between courses. Beer and cocktails loosened tongues and a knot of dancers formed in front of the band. Tens of millions of pounds worth of powerboats bobbed at their moorings beneath the revelry on the terrace. Behind the boats a dozen skyscrapers framed the view, a few of the lights in their thousands of flats were on. “It’s so beautiful here,” said a pretty young Anglo-Indian woman clutching a large glass of chilled white wine and taking in the scene.
Welcome to the modern equivalent of the last days of Rome. The failure of Dubai World, one of the Emirate’s flagship companies, to honour a debt due last month has rocked this city state to its foundations. By any conventional logic Dubai is now a busted flush…MORE
Just ask yourself, why would you buy when the charges may be as high as 100k per year for maintenance…
Homeowners in The Cove development in Ras al Khaimah could each face service bills of more than Dh100,000 (US$27,226) a year because the developer must rely on generators to provide power to the luxury resort.
That is more than the average cost of renting a villa in the emirate, which has been beset by acute electricity shortages.
“If they are running the airconditioning during the month, they are having a bill of Dh3000 to Dh4000 a month,” said Ashraf al Agamawy, the manager of the project, which includes a five-star Rotana Hotel.
“We don’t get electricity from the Government and are running over eight diesel generators, which is very expensive.
The Cove in Ras Al Khaimah
It costs me about Dh2.5 million per month.”
The Cove was launched in April 2005 by Orascom Hotels and Development, one of Egypt’s largest developers. It comprises 78 apartments and 188 villas, 75 of which were sold under a form of timeshare agreement with the Rotana Hotel.
Under timeshare agreements, owners are allowed to use their villas for a maximum of four weeks a year…SOURCE
For seven long months, driven by want and hunger, these unpaid industrial workers have been surviving on fish they catch each day.
More than 50 workers of Asian descent employed in a Sharjah dhow and shipbuilding firm say they have been driven to the desperate act as they have not received salaries for seven months.
They gathered in protest at Al Buhaira Corniche near the Millennium Hotel in Sharjah on Thursday afternoon. They told Khaleej Times they were not provided with food, forcing them to catch fish every day, which they grilled to ward off hunger.
Police officials at the protest site refused to talk to the Press. However, they asked the protesters to nominate three representatives to present their charter of demands to the company. The rest were sent back.
Arshad, one of the protesters, said the company based in Al Hamriya Free Zone specialised in making yachts, dhows and ships. Salaries in the range of Dh1,500 to Dh3,000, depending on the type of work, remained unpaid… “We are suffering from lack of food and have no money to send back to our families waiting for us,” Arshad said. “We only just want our salary due and the company can send us back home. We eat sea fish and drink dirty water. What a life it is! It’s better to go back home than being humiliated this way,” he added… SOURCE
Nakheel has offered investors in the stalled Palm Jebel Ali development alternative homes on other projects, casting further uncertainty over the future of the vast reclaimed island.
Some Dubai developers have encouraged home buyers on struggling projects to transfer their deposits to other developments that are nearer completion.
People who bought waterfront villas on Palm Jebel Ali, where prices have tumbled by about 45 per cent from their peak in the third quarter of last year, are now being asked to transfer their investments to projects that include Al Furjan and Jumeirah Heights, which are both under construction.
But the move has been criticised by investors, who expected to move into their new homes last year.
“Nakheel has called investors and given them this option,” said Saqib Iqbal, who bought a villa in the development in 2006.
“But most investors would like them to complete Palm Jebel Ali. People have paid premiums on top of what they paid originally, it’s a disaster to be asked to move somewhere else.”
Palm Jebel Ali was the second artificial island project to be launched by Nakheel and was designed to accommodate up to 250,000 people… The global financial crisis, which hit Dubai in October last year, was a further blow to the development as speculators withdrew from the market. Other Nakheel projects, including Trump International Hotel and Tower, the Nakheel Harbour and Tower development, have also been put on hold.
Nakheel must repay a US$3.52 billion (Dh12.92bn) debt, which comes due next month… SOURCE
Jane Coutts’s monthly ritual has been the same for the past two years: to sit on the terrace of the Lime Tree Cafe in Dubai with a close friend and watch the world go by over coffee and cake. There is one key difference now: her pal has fallen victim to the recession and left the UAE, leaving her to sit and contemplate her future in the country alone.
But while her circle of friends might have changed, the 57-year-old housewife from Australia remains pragmatic about the extent to which the UAE has been affected by the recession.
Expatriates held their collective breath as they waited for the predicted mass exodus over the summer months. With continuing uncertainty in the jobs market and many parents waiting for the end of the school year before packing up their lives in the sun, it seemed that everyone was waiting for the axe to fall.
The landscape has undeniably changed. Some did lose their jobs and return home, wondering what had happened to the Dubai dream.
Those families left behind have tightened their belts, cut back on extravagant or unnecessary spending and been more cautious about investing.
But what they haven’t all done, contrary to the predictions of the fearmongers, who forecast a huge migration, is leave.
Like many of those who have refused to give in to the uncertainty of a life thousands of miles from their homelands in the face of the economic crisis, Mrs Coutts has stuck resolutely to her guns and weathered the storm.
“There have certainly been people I know who left over the summer but an exodus is normal during those months,” she said.
“It is always quieter over summer, but the question was whether anyone would come back. Everyone was predicting schools would be half-empty but that has not been the case and traffic is back to normal.
“People have left but there are new people coming in. The recession has definitely had an impact on life here – rents have gone down and people are less extravagant.”
Mrs Coutts, whose husband is a property consultant, said the family had made some changes to their lifestyle.
“Last year we went on holiday for a month, but we agreed as a family that we could not afford to do that this year. We are more cautious about spending money because we are not sure about the future. But we are still here and quietly confident the UAE will survive.”
According to Donald Trump Jr, speaking at a notably subdued Cityscape in Dubai this week, the city had been unfairly painted by critics worldwide as a “dust bowl with no lights turned on”.
So what of the bleak images of deserted roads, empty schools and droves of unemployed expats dumping their cars at the airport, leaving trails of debts in their wake?
It simply did not happen, according to Simon Williams, the chief economist at HSBC bank in the Middle East.
“An awful lot of people with very little information were suggesting very strongly that there was going to be a mass exodus from the UAE, and Dubai in particular, when the school year ended. That did not materialise,” he said.
“The big downturn in employment came at the end of last year and the first four months of this year. The data is not there yet but we can all see what is around us.
“My very strong conviction is that the storm is largely over.”…SOURCE
UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi confirmed yesterday that 13 local banks are exposed to the Saad and Algosaibi groups, but declined to specify the total amount owed by the Saudi family businesses.
Speaking on the sidelines of the annual meeting of Arab central bankers, Al Suwaidi said the Central Bank will soon set the minimum amount to be set aside by each bank to cover the potential losses.
“We have four categories of exposure and will announce the degree of provisions the banks must take for each one,” the governor told reporters, adding he expected banks to report lower earnings for the rest of the year as a result of their exposure to the groups.
So far, only Abu Dhabi Commercial Bank (ADCB), mashreq and National Bank of Abu Dhabi (NBAD) have disclosed their exposure to Saad and Algosaibi. ADCB and mashreq said they are owed $609 million (Dh2.2 billion) and $400 million respectively, while NBAD has reported an almost negligible $11 million. “It has been clear for some time that banks in the UAE and elsewhere have been hit fairly hard by Saad and Algosaibi,” said David Butter, Economist Intelligence Unit chief economist. “But it will be difficult for central bankers to take any decisive measures on this affair because it is still subject to some fairly large lawsuits in New York.”… SOURCE
Two new draft laws, which will be submitted to the cabinet within two months, could see the UAE change its rule on foreign ownership of companies, Economy Minister Sultan bin Saeed Al Mansouri said on Sunday.
The minister said the UAE government was working on a new industrial law that would allow 100 per cent ownership for foreign investors in a move aimed at attracting investment in high-tech and capital-intensive industries.
The government wants to make the industrial law more attractive to foreigners who wanted to relocate their businesses to the UAE to benefit from the country’s manufacturing infrastructure.
“We must create the right environment to attract foreign investors,” the minister told reporters.
Details about the new industrial law would be announced after it is approved by the Cabinet, he said. At present, foreign investors can own only up to a 49 per cent share in a business, except in free zones, where they can own as much as 100 per cent… SOURCE
A few months ago, any one of them probably would have turned heads. Today, few people give them a second glance except, perhaps, to read the latest graffiti scrawled in the thick dust that has obliterated their lustre.
They are the abandoned cars of Dubai, among them Porsches, Mercedes and BMWs. Each was once someone’s dream, but now they are unloved, unwanted and making a poor job of fending for themselves on the streets of the city.
Take the BMW Z3 wasting away on a side street in Dubai Marina. There is little sadder than the sight of a once proud sports car slumped in the gutter, its top down, tyres all but flat and its gleaming black paint job lost beneath an ever-thickening layer of dust… MORE
Bank yesterday. Deutsche Bank, which is trustee to the sukuk, said it was seeking clarity from the issuer about its plans to restructure debt, according to two investors who participated in the conference call. Bloomberg reported that the call finished without any discussion of adopting specific recommendations, said the investors, who declined to be identified because the discussion was private.
