They were heralded as “The 8th Wonder of the World” by numerous travel sites. They required a staggering $60 billion to construct, according to their developers. They attracted A-List celebrities from the Jolie-Pitts to the Beckhams to Lindsay Lohan. They were, in fact, “one of the most enterprising and ambitious ventures to ever have been imagined,” according to travel Web site Destination 360.
“They” are the epic Palm Islands, a series of three man-made islands in the shape of a palm tree, that along with the surrounding city of Dubai, were considered the “it” playground to the stars, a chic status-symbol to the rich, and a mammoth, epic, super-expensive, luxury landmark to the rest of us.
When you”re this high, you”ve got a long way to fall… And fall they have.
Yes, the global recession seems to be official, as the Palm Islands and Dubai have smacked into economic trouble, according to numerous published reports.
“It is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai”s major construction projects have been suspended or cancelled,” the New York Times reports.
And the Palm Islands themselves? Not looking so good. The Mirror reports that the islands” real estate values have plummeted – by about half. Properties that were selling for about $4.5 million are now going for around $2.3 million. Probably not welcome news to celebs like Brad Pitt and Angelina Jolie who own property there, the paper reports.
But it gets worse. Real estate developer, Nakheel, maker of Dubai”s Palm Islands, has suffered recent layoffs, according to ABC News. The Guardian reports that the third of the Palm Islands, the Palm Deira, which was previously under construction, is on hold, and VIrtualTripping.com reports that it is downsizing in scale.
Why the conflicting views on these and other issues swirling around regarding Dubai”s economic state? Because both Dubai”s government and many of its residents are remaining silent. The New York Times reports that the government generally will not release data on the extent of the economic crisis in Dubai, and the Guardian reports that the general climate is one of denial in that “nobody wants to lose face, and everybody”s trying to put a gloss on the bad news.”
But here”s what we do know – and it does not paint a pretty picture of the economic landscape in Dubai.
Local newspapers have said that more than 3,000 cars, many from debt-plagued foreigners, now sit abandoned in the parking lot of the Dubai airport, as one can be imprisoned for not paying their bills in Dubai. (The Dubai government says this number is much lower.) Citing anonymous government officials, newspapers also claimed that Dubai was canceling 1,500 work visas per day, the New York Times reported.
On Tuesday, several Dubai banks including Emirates Bank International PJSC and National Bank of Dubai were put on “credit watch,” thus lowering their S&P rating. In a statement, Standard & Poor”s said: “The global economic downturn has been hurting some of Dubai”s key economic sectors including trade, tourism, and commerce.”
Related article: S&P downgrades Emaar, other Dubai cos on slowdown (Reuters):
And the S&P wasn”t done with Dubai just yet that day, as it also lowered the credit rating of Emaar Properties PJSC, the biggest real estate developer in the UAE, as well as six other government-controlled Dubai companies.
The Emaar cut, which gives the company a “negative” outlook, “reflects the continued weak real estate markets in Dubai, and our increased uncertainties about the depth of the downturn and the pace of eventual recovery,” S&P said in a statement.
February data from Morgan Stanley finds that real estate values in Dubai have fallen 25 percent since September. That”s a crash of 25 percent in only 5 months – pretty dramatic by any measure.
“Before, so many of us were living a good life here. Now, we cannot pay our loans. We are all just sleeping, smoking, drinking coffee and having headaches because of the situation,” Hamza Thiab, an Iraqi who moved to Dubai
in 2005, told the New York Times.
Yes, from the common man to Angelina Jolie, from trade to tourism to commerce to real estate, it appears that the recession in Dubai has extended its fronds into all corners of the world. Welcome to the global recession.
by Catey Hill
daily news staff writer
Thursday, March 19th 2009, 9:48 AM
Source: New York Daily News