How bad is the global economy? The illness is reaching into every nook and cranny, even into places where you’d never imagine it…such as Dubai:
Sofia, a 34-year-old Frenchwoman, moved here a year ago to take an advertising job, so confident about Dubai’s burgeoning economy that she bought an apartment for $300,000 with a 15-year mortgage.
Now, like many of the foreign workers who make up 90% of the population here, she has been laid off and faces the prospect of being forced to leave this city — or worse. “I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld. “If I can’t pay it off, I was told I could end up in debtors’ prison.”
With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the airport, left by debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.
And, no, this isn’t an example of a press looking for issues and creating stories that aren’t really there. Dubai has been hit hard by the world economic crisis and is trying to restructure ASAP:
Dubai unveils plans to restructure its faltering economy as the global meltdown has hit at the core of its financial and property sectors.
The back offices of three real estate entities – Dubai Properties Group, Sama Dubai and Mizin (a member of Tatweer) – were brought under one consolidated operation to reduce costs. All entities are owned by the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum.
A similar decision also merged the back-office operations of Dubai Group and Dubai International Capital (DIC) under the umbrella of the Dubai Holding Investment Group (DHIG).
DIC, which functions as an overseas investment arm with around USD 13 billion in assets, is thought to have lost billions in the crisis through stakes in top Wall Street firms.
Dubai officials have declined to comment on possible job cuts.
It has come to this at the annual Dubai Shopping Festival: free makeovers, car and home giveaways, and big discounts on plane tickets and hotel rates.
Authorities and businesses in Dubai, United Arab Emirates, are going the extra mile this year to spur cash-strapped tourists to loosen their purse strings during what has become an iconic fete of conspicuous consumption.
The 32-day sales-fest, which ends Sunday, has coincided this year with the global financial crisis, which has cast a shadow over the once-booming Persian Gulf. Even here, companies are shedding jobs amid lower revenue and tighter credit.
The city-state of Dubai, which prides itself on being the Middle East’s highest-profile commercial hub, has seen real estate prices plunge and businesses go under.
“The mood in Dubai has certainly changed,” Trevor Lloyd-Jones, managing editor of Business Intelligence Middle East, said in a telephone interview. “Everybody is more cautious in their spending. People are saving for a rainy day. We are in a wait-and-see period.”
There’s almost a sense of culture shock in reading these stories when you contrast them to stories such as THIS — although even then there was a down side.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.