Dubai Property News

Dubai Lawyers list

2011-03-01T20:47:00.000-08:00

Are you looking for a alwayer in Dubai to go to court for the real estate property?
Or you have a problem with developer and want to consult with a good lawyer who know arabic language and shariat law?

Here is a list of Dubai lawyers compiled by British Embassy in UAE.

Dubai Mirage - Analysis and Commentary

2011-03-01T20:37:00.000-08:00

You can describe arrogance using different definitions - but I like this one the most: In 2007, you could buy credit default protection on Dubai for four basis points.

(applauds)

OK, let me break this down another way. Let's say you owned $10 million in debt guaranteed by the government of Dubai and wanted to insure it against the risk that the government wouldn't have enough money to pay you back. If you decided to buy a swap that would pay you $10 million should Dubai default, the cost would have been $4,000. Four grand to get 10 million in protection!

And because it's a swap, you didn't even have to own $10 million in debt; you could just speculate that things would be worse than expected for Dubai and make a massive profit.

Remember, in 2007, oil had hit $140 per barrel, sending gushers of money to the oil sheikhdoms in the Middle East -- measured in the billions of dollars per week. Dubai default? How?!?

Here's what four basis points means: The market believed that Dubai would default one year out of 25,000, despite its economy being dependent on revenue from oil, a commodity that has at times suffered spectacularly volatile price swings.

Dubai's rulers believed it, too. They built one new downtown -- now anchored by the Burj Khalifa, the world's tallest building at 2,400 feet. Then they started building another, with hundreds of thousands of square feet of office, hotel, retail, and residential space. Just inland, construction continues on Al Maktoum International Airport, which will, at 160-million-passenger annual capacity, be the world's largest, by far.

Dubai accomplished its plan to become an elite tourist destination and financial center to perfection, except for two things. First, for an oil sheikdom, Dubai is blessedly devoid of oil. Sure, the United Arab Emirates, the country which Dubai became a part of in 1971, has tons of oil and gas, but it is concentrated in Abu Dhabi. In turn, Abu Dhabi has provided much of the financing for Dubai's building boom (sometimes quite resentfully so).

The second problem is that sometimes entities with ultra-low borrowing costs start to believe that they are bulletproof. In 2009, Dubai World, Dubai's massive state-owned conglomerate, had to restructure $26 billion of its estimated $60 billion debt load. It was only a $10 billion rescue package from Abu Dhabi that spared Dubai World (and thus Dubai) from default.

"Look around you," one slightly defensive Emirati exhorted me, "Dubai isn't in a crisis anywhere except in real estate."

He was right. Dubai's ports and airplanes were full, its centuries-old position as a major trading center for the Middle East well and truly intact. Warehouse space in Dubai ranges from expensive to unavailable.

But saying everything in Dubai is OK "outside of real estate" is sort of like saying that a flight was really great except for the part where it crashed. Dubai's torrid growth over the past 20 years has property values at its core. While Dubai's strengths as a trading and transportation hub as well as its popularity as a tourist destination remain unvarnished, collapsing property values may still prove to be the cause of the emirate's economic collapse. More Dubai debt comes due this year, and it's an open question whether the emirate will make good.

You've seen pictures of partially built casinos in Las Vegas, abandoned houses in California, deserted neighborhoods in Florida. In Dubai, developers have stopped building islands. Just off the coast near the oldest part of Dubai stands a bridge to nowhere, the moorings of a multilane highway that may someday whisk people to the Palm Deira, which may someday be the world's largest man-made island.

Lest you lament the loss of a giant island in the shape of a palm tree, the good/bad news is that Dubai has two more of them, the already completed Palm Jumeirah, and the completed but abandoned Palm Jebel Ali, plus an offshore (also largely mothballed) project to recreate the world. All told, an estimated $300 billion in planned real estate projects in Dubai lie in purgatory. Others have (and continue to) come online simply because the path of least resistance was to open and hope for the best rather than allow the massive sunk cost to founder.

In the end, Dubai can't get out of its own way. You see buildings by the dozen with cranes on top, beautiful graphics promising massive new developments, and meanwhile, according to Deutsche Bank, property values in the emirate have dropped 62% on average from their peak, with rents not far behind at a 54% decline. Even just thinking about Dubai's property market from a basic economic perspective, it's a bit much to ask investors to buy into existing projects or homes when there is the promise or the potential for an almost ceaseless amount of additional supply. In January, values dropped another 2%, with no real catalyst in sight to turn things around.

Property developers in the United Arab Emirates have had their shares crushed over the past few years, with firms like Emaar, Deyaar Development, and Aldar trading at less than half their tangible book values. Book value for property companies is always a funny thing, because the value yield is deeply affected by liquidity. If you have a house in Dubai, you can probably sell it for close to going market rates without too much problem. But if you have thousands of square feet of office space, or hundreds of houses, or acres and acres of land, you can't flood the market and liquidate them at once. You'll never get anywhere close to the cash value that the market says these combined units are worth.

This is Dubai's big problem, which makes it Abu Dhabi's problem as well. Oil and gas revenues in the UAE are skyrocketing once again, which gives the country on the whole a bit of protection. But at the end of the day, the rulers in Abu Dhabi in particular may have to decide whether it's better to throw good money after bad and guarantee Dubai's debts, or to let the system wash clean by letting bad investments run their course. I predict the former. Not only would a Dubai default be extremely painful for Abu Dhabi, but Abu Dhabi, which has occasionally displayed public displeasure at its upstart neighbor, may see it as an opportunity to bring Dubai to heel.

"You'd think this place is paradise, turns out lots of people who come here to live don't like it that much."

My friend was right, Dubai seems downright unreal, a proud member of that small fraternity of cities where the superlative can seem downright commonplace: Las Vegas, Orlando, Singapore, Dubai, Shanghai. It's rare that you meet an Emirati, some estimate fewer than 10% of the people in the UAE are natives.

Dubai is Arab. It is an Islamic society, but long experience as a global trade center has created a sense of tolerance greater than elsewhere in the Middle East. And while Dubai has an extremely active, decadent nightlife, there are constant reminders (including the ferocious cost of alcohol!) that this is no go-along-to-get-along society.

There is no path to citizenship for foreign workers living in the UAE. Further, the government practices an overt form of discrimination. The amount of pay a worker will receive for a job is directly tied to his nationality of origin: Indians earn less than Egyptians, who earn less than Europeans. And Dubai is certainly a young person's realm -- foreign retirees are much less welcome to remain in the country than the actively employed.

The end result is that many people's relationships with their adopted home are more transactional than emotional, something that author Christopher Davidson refers to as "rentier pathology." It's easy to love Dubai; it's truly a magnificent city. But talk to people who spend lots of time here and you begin to hear a refrain: Dubai's polyglot nature leaves it culturally rudderless, it's difficult to meet Emiratis, the city's great desire to reinvent itself on an ever-grander scale comes at a cost of bulldozing its past. (Unexpected observation: I asked several Western expats who lived in Dubai which place in the Middle East they enjoyed the most. The majority said Saudi Arabia, the reason being that it was a place where they could most easily interact with locals. I'm not making this up).

I spent my last evening in Dubai with an old college friend who expressed ambivalence at raising his family in a place where the greatest landmarks were primarily shopping centers. He's been in Dubai for nearly 20 years and clearly loves his life there, the fact that in Dubai you truly feel like you are in the center of everything. Dubai's (and the UAE's) political situation is quite stable. The Emir is genuinely beloved and admired for having wrought such an economic marvel out of so little. But the financial condition of the city is an open question, simply because the property overhang is just so huge.

Dubai is a miracle, a place that has taken its best attributes (location, location, location ... and the weather) and maximized their importance. It has won the battle over much larger, better-heeled cities in the region to become the economic and commercial center, the Singapore of the Middle East. But what happens if its financial crisis overwhelms it? Dubai cannot manage its debt load without either a miracle or a benefactor, or both. Given the unrest throughout the Middle East, it's quite possible that neither will be forthcoming. What then?

Good Question & Answers Site

2011-01-23T07:45:00.000-08:00

Do you know what are the best penny stocks to invest ?

Will the stocks continue to drop?

What are the good stock to buy in a short-term?

Is it better to buy franchise or start own business?

Britons sentenced to a month in prison for kissing in Dubai restaurant

2010-08-19T12:07:00.000-07:00

Ayman Najafi, 24, a marketing consultant who lives in Dubai, and Charlotte Adams, 25, an estate agent from North London, were said to have been touching each other and kissing passionately as they dined with friends in a beachfront restaurant.

They were arrested and sentenced to a month in prison after which they were told they would be deported.

But the pair told a hearing at the Dubai Appeal Court on Sunday that they were the victims of a "huge misunderstanding" and had simply exchanged a friendly greeting.

"We kissed each other on the cheek as a greeting, nothing more,” Mr Najafi told Judge Aysar Fouad. Miss Adams pointed at her cheek to show where contact had taken place.

The two are not the first Britons to fall foul of the strict laws in the conservative Muslim state. Last year Michelle Palmer, 36, and Vince Acors, 34, were sentenced to three months imprisonment for having sex on a beach.

The latest incident took place when Miss Adams and Mr Najafi met along with four other friends for dinner at Bob's Easy Diner on the beachfront at the Jumeirah Beach Residence complex on November 27.

The police were called at around 2am by an Emirati woman sitting at a nearby table with her children and claimed her daughter had been upset by the display of affection.

"My daughter told me that the accused were kissing on the mouth,” she said.

“Then I spotted them doing so myself. I also saw them touching each other, as they were seated two to three metres away from our table. A number of customers witnessed the scene as well.”

After being arrested, the two were tested for alcohol and shown to have been drinking, though the readings of 22mg/dl are less than the drink-drive limit in Britain.

At the appeal hearing on Sunday, their defence lawyer Khalaf al Hosany said the couple admitted kissing each other on the cheek but denied any intention to break the law.

“It’s part of their culture to kiss on cheeks as a greeting,” he told the judge.

But their pleas of not guilty to indecency were rejected and they were sentenced to a month in prison followed by deportation.

They were also fined 1000 dirham (180 pounds) for being in a public place after consuming alcohol – an offence in Dubai, though drinking alcohol itself is not.

Mr Najafi has lived in Dubai for 18 months, where he works as a consultant for the Hay Group, a marketing firm.

Miss Adams, 25, was visiting the country and staying with another friend.

Her flatmate Jade Christa Williams, acting as a spokesman for Miss Adams, said what had happened was simply "a huge misunderstanding".

"She is completely innocent and is looking forward to coming home soon to carry on with her life and put this behind her," she said.

The pair were released on bail and are awaiting an April 4 verdict.

Dubai Property - Price Report from Collier International

2010-08-01T20:58:00.001-07:00

Prices for UAE property came down again in the last quarter at an average of 4 per cent, with villas performing the strongest, according to Colliers International House Price Index, suggesting a trend for the remainder of the year.

"We anticipate a further slowdown and we have an ongoing concern of the new supply entering the market, which will further impede recovery," said Ian Albert, regional director, Colliers International.
Another 33,000 units expected to come online by year end are the main reason to be less optimistic about the market despite stabilising since the steep high and subsequent drop of 2008 and 2009. However, some of the supply could be further delayed into 2011, but current occupancy figures suggest that there is enough on the market as it is.
"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87 per cent, with further declines anticipated. The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down," Albert said.
House prices are back to the earlier parts of 2007 yet, according to the Colliers Index, house price values overall still enjoyed a 7 per cent increase when comparing the second quarter of last year with the current one. The index is based on statistics of lenders transactional prices and sets the blended average house price for the second quarter at about Dh1,014 per square foot.
Villas are tops
Villas fared better than apartments, comparing this quarter to the first of this year. The former decreased by only 3 per cent, whilst the latter's prices fell 5 per cent. Interestingly, townhouses took the biggest hit of an 8 per cent price reduction.
"The reason why townhouses have taken a larger hit than villas is simply because as the market corrected, many families upgraded to villas as more became available and affordable," said Tom Bunker, Investment Sales Consultant, Better Homes.
Reason he says, villas are typically larger and in most cases have a half decent back yard, sometimes absent in townhouses. "Many of the townhouse communities are a little more out of the way," he added.
Villas also trumped on the number of transactions with 49 per cent of the total, followed by apartments with 34 per cent and the 17 per cent remaining going to townhouses. Interestingly, buyers seem to spot value, the number of transactions has been 15 per cent higher this second quarter than in 2009's.
Hot spots
Popular villa communities are in the Emirates Living District thanks to the quick and easy access to Shaikh Zayed Road and beyond, said Bunker. The favourite within is The Lakes, reckons Kim Robinson, residential sales and leasing manager, Cluttons.
"The Lakes is an upgrade to The Springs. Prices dropped so much that families who are looking for space, better feel and facilities can now afford The Lakes independent villas. We recently sold one upgraded to a five-bed for Dh3.6 million net," she detailed. Others in vogue are the Montgomery Maisonettes, luxury townhouse type.
The average occupancy rate in Dubai's existing 340,000 residential properties is 87 per cent and is expected to decline, according to Colliers. With rents at half of what they were in 2008 the lack of return on investment is further subduing buyer's appetite, Albert said.
Top five by price

1 The Palm Jumeirah — Villas
2 Downtown Dubai
3 The Palm Jumeirah — Apartments
4 Dubai Marina
5 The Lakes — Villas

Top 5 developments by number of transactions

1 Arabian Ranches
2 The Springs
3 Victory Heights
4 Downtown Dubai
5 Green Community

Dubai Property Prices (Aug 2010 Update) - Still going down

2010-08-01T20:57:00.001-07:00

-Dubai property prices fell 4% during the second quarter of 2010, compared with the first three months of the year, the first quarter-on-quarter contraction in 12 months, U.K.-based real-estate consultancy Colliers International said Sunday.
Despite the second quarter slide, Colliers said its quarterly price index showed a 7% increase in overall house price values compared with the second quarter of 2009.
The average price of property slipped to 1,014 U.A.E. dirhams ($276) per square foot in the second quarter of 2010, compared with AED1,061 in the first quarter, Colliers said in an emailed statement.
The real-estate consultancy warned that forthcoming housing supply and declining rental incomes are likely to put downward pressure on Dubai house prices moving forward.
"We anticipate a further slowdown and we have an ongoing concern of the new supply entering the market, which will further impede recovery," said Ian Albert, regional director at Colliers International.
Dubai's property market has been hit hard by the global financial crisis and prices have slumped close to 50% since their peak in 2008 while many of the emirate's most ambitious projects are on hold.
Colliers said it expects around 33,000 units to be released onto the Dubai market by the end of 2010, down from its earlier estimate of 41,000 following project delays or rescheduling. However, given Dubai's history so far, a large number of these units may not be delivered on time and may cross over into 2011, it added.
"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87%, with further declines anticipated. The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down," said Collier's Albert.
Compounding the situation are dwindling rents in the emirate with Dubai's overbuilt residential market contributing to more than a 50% decline in average rental rates since 2008, discouraging ownership and further dampening demand, said Colliers.

2010-08-01T20:55:00.000-07:00

Do you really think that the Google (GOOG) shares of stock at 489 or the shares of stock of the Chicago Mercantile Exchange (CME) at 284 are really that high priced? There are actually several stocks that trade above a thousand dollars per share. However, if you are considering including some of the high prices shares in your portfolio, you will probably want those that trade on a regular basis, excluding such stocks as Indians Inc....

Goldman Sachs is bullish on Gold and Oil in 2011

2010-08-01T20:53:00.001-07:00

Goldman Sachs recently shared its analysis for commodities and how they expect commdities to behave in 2011. As per their projections, commodities will continue rally in next 12 months and price of gold can achieve USD 1350. While seeming aggressive, this projection is logical and can be explained by US treasury continuing pumping money onto the world and smart investors are continuing to accumulate gold bullion. Another commodity which....

Dubai Prime Property Values Approach Floor, BofA Says

2010-05-20T19:42:00.000-07:00

By Camilla Hall

May 17 (Bloomberg) -- Property prices in centrally located areas in Dubai may be reaching a “floor” after values dropped by 45 percent, Bank of America Merrill Lynch said.

“We see an emerging floor for prime assets, particularly in the retail sector, which has the smallest supply pipeline,” Dubai-based analysts including Karthik Sankaran and Abdelrali El Jattari wrote in a note to investors today. Growth in retail, trade and tourism should resume, helping the real-estate industry, the analysts said.

Dubai property projects stalled after the global credit crisis pushed up the cost of financing, prices plummeted and buyers defaulted on payments. The market’s collapse followed a construction boom that created thousands of homes just as demand began to evaporate. Average residential prices across the emirate may fall a further 15 percent this year, according to the bank.

Abu Dhabi-based Aldar Properties PJSC is the Bank of Americai Merrill Lynch’s “preferred developer” because “substantial negativity is priced in.” The analysts reinstated coverage of Emaar Properties PJSC, which opened the largest skyscraper this year in Dubai, giving the company a “neutral rating” and a 12-month share price target of 4.4 dirhams. Emaar closed at 3.75 dirhams yesterday and Aldar at 3.77 dirhams.

Migration within the United Arab Emirates will support established residential locations, though that isn’t a “panacea,” the analysts said. Dubai would have 44,000 vacancies this year “even if all qualifying expats from Abu Dhabi and Sharjah relocated to Dubai tomorrow.”

The completion of a “significant” number of new homes in Dubai later this year will put pressure on prices after they rose 2 percent in the first quarter, Colliers International said in a May 9 report.

Nakheel PJSC, the Dubai World-owned property company seeking to restructure $10.5 billion of debt, restarted work on projects that have been put on hold, Al Bayan reported today, citing people it did not identify.

Dubai - The Vulnerability of Success

2010-05-14T11:53:00.000-07:00

"This is the best study of Dubai that I have read and an important contribution to the still meager literature on the extraordinary formation that is the United Arab Emirates. Especially interesting is the book's discussion of the emirates' founding under British rule and the continuing influence of this imperial history on its politics and society; the imported character of its 'Arab' identity; and the regional context that informs everything from security concerns to demography." -- Faisal Devji, St. Antony's College, University of Oxford, and author of Landscapes of the Jihad: Militancy, Morality, Modernity

"Davidson traces Dubai's rise from sleepy Gulf port to player on the world scene." -- Christopher Hawthorne, Los Angeles Times

"Mr. Davidson nicely lays out this flashy emirate's astonishing ascent from tiny fishing and pearling village to global hub." -- New York Times

"Davidson offers a detailed historical and topical study of the Dubai phenomenon." -- Foreign Affairs

"Davidson gives an excellent overview of Dubai, the UAE in general, and its path to economic development... Recommended." -- Choice
Get this book now at AMAZON - Dubai: The Vulnerability of Success

Dubai Houses Prices - May Update

2010-05-14T11:43:00.000-07:00

May 9 (Bloomberg) -- The completion of a “significant” number of new homes in Dubai later year will further pressure prices that rose 2 percent in the first quarter, Colliers International said.

Colliers, a global real-estate-services firm, estimates that 41,000 residential units will enter the market by the end of 2010, mostly in the low- to mid-income segments. House prices in the first quarter were on par with 2007 levels, rising on average to 1,061 dirhams ($289) a square foot from 1,037 dirhams a year earlier, Colliers said in an e-mailed report today.

“There will be significant oversupply in the market by the end of the year, so it is anticipated the index will experience fluctuations in value going forward,” Colliers’ regional Director Ian Albert said in the report. “Demand is not expected to match the growth in supply, creating downward pressure on property prices,” according to the document.

Dubai’s property prices have slumped more than 50 percent since their peak in mid-2008 as the financial crisis forced companies to dismiss workers. The market’s collapse followed a construction boom that created thousands of homes just as demand began to evaporate.

Apartment prices in the emirate gained 6 percent in the first quarter compared with the previous three months and villa prices rose 2 percent while the cost of townhouses was down 4 percent, Colliers’ house-price index showed.

Banks ‘Selective’

“Numerous” banks and mortgage providers increased the loan-to-value ratio to between 75 percent and 90 percent in the first quarter, according to Colliers. Some also lowered interest rates on mortgages to between 6.5 percent and 8.5 percent.

“Banks remain selective in offering finance, providing it against specific projects, mainly completed or near completion, and only to borrowers who can meet the strict lending criteria adopted by most banks,” Colliers said in the report.

The change of demand from speculative investors to end- users places more importance on the “liveability” aspect and there will be better demand and greater stability for projects that offer a “community lifestyle,” according to the report.

Rework

2010-04-06T02:52:00.000-07:00

"If given a choice between investing in someone who has read REWORK or has an MBA, I'm investing in REWORK every time. This is a must read for every entrepreneur."
--Mark Cuban, co-founder of HDNet and Broadcast.com and owner of the Dallas Mavericks

Crash Proof 2.0: How to Profit From the Economic Collapse

2010-04-06T02:47:00.000-07:00

If you have not heard the name of Peter Schiff, you are missing a lot. This is a great economic adviser (I do not want to use the word guru...) - and he explains complex things using very simple terms and definitions.

I absolutely love Peter Schiff. He's astute, sound financial mind, and always right on. "Crash Proof" was written before the crash and Peter had explained exactly how the bubble was blowing up and how it was inevitably was going to burst, which it did. The updated version brings us into the modern age of disgusting deficits, unacceptable government spending, and horrendous regulation into the free market. Schiff predicts that government isn't making things better with all this additional spending and intrusion into the market and that we're not out of the woods--as some people are claiming--and that it's actually making things worse. He concludes with his solid foreign currency assets and commodities-centered investment strategies that will help you avoid the next crash (and the coming collapse of the dollar). If you had taken his advice in 2006, you'd be much better off today.

Dubai: The Vulnerability of Success

2010-04-06T02:45:00.001-07:00

This is the best study of Dubai that I have read and an important contribution to the still meager literature on the extraordinary formation that is the United Arab Emirates. Especially interesting is the book's discussion of the emirates' founding under British rule and the continuing influence of this imperial history on its politics and society; the imported character of its 'Arab' identity; and the regional context that informs everything from security concerns to demography...

2010 - a good year for Dubai properties and real estate

2010-04-06T02:39:00.000-07:00

The prices of real estate in Dubai are returning to pre-crisis levels and indicates a very good year for real estate investments in 2010, claims a leading industry report.

The worst part of the economic meltdown is generally believed to be over, and investors are full of cheer and looking forward to 2010.

Most of the investors in 2010 will be those who ensure that their assets are realistically priced, professionally managed, and will offer long-term stable liquidity, said a recent report by Jones LangLa Salle.

The MENA region was the last to feel the pinch of global economic meltdown, with property prices falling up to 50 percent in few areas in the past year, but, its real estate market was the fastest to cope with the economic crunch.

With the financial pressures beginning to ease, the sale activity is likely to pick-up marginally in 2010 and this will a psychological boost for investors, thereby increasing market confidence. The investors with sufficient cash too invest will benefit immensely, with the low sale prices, almost equivalent to the 2006 levels, said Matthew Green, Head of Research and Consultancy, CB Richard Ellis.

The report mentions that investors are now happier with the state-of-the-market during recent months. This sunny optimism is primarily driven by the overall economic strength derived by hydrocarbon-based economies.

Qatar, Saudi Arabia and Abu Dhabi property markets will be among the first to recover in the region, with stronger economic fundamentals and government initiatives. These markets will see greater increase in performance and pricing during the coming year.

Dubai, in particular, is likely to grow at a steady pace of four to six percent per year until 2015. Investors are considering Dubai to be the regional leader in terms of city competitiveness and real estate infrastructure, says Brendan Coakley, Managing Director at Chesterton International.

The success of Dubai in the past comes largely from its name being built as a city with good infrastructure. However, concerns still remain about the availability of capital for real estate purposes and supply-demand dynamics. The lack of liquidity and resentment on the part of few financial institutions to resume lending is proving to be a barrier for the Dubai Market.

However, taking into account the huge volume of new stock either completed or in pipeline, and combined with minimal levels of demand, the supply-demand imbalance is the main issue for the future recovery of the market, Green said.

Therefore, in future, there is increased need transparency and honesty on the part of developers, brokers and investors themselves.

Burj dubai , burj khalifa live video opening ceremony

2010-01-04T11:21:00.000-08:00

This is a live video from the opening ceremony of Burj Dubai (or Burj Khalifa as it is called now) - this is a ust to watch this week.

Burj Dubai / Khalifa - The World's Tallest Skyscraper - Dubai, United Arab Emirates
828 m | 2716 feet

Burj Dubai is now Burj Khalifa

2010-01-04T11:20:00.001-08:00

Dubai’s Sheikh Mohammed bin Rashid Al Maktoum opened the world’s tallest tower today and renamed it after the ruler of neighboring Abu Dhabi, which bailed out Dubai during the country’s debt crisis last year.

The 200-story Burj Khalifa cost $1.5 billion to build, said Mohammed Alabbar, chairman of developer Emaar Properties PJSC. The tower takes it name from Sheikh Khalifa Bin Zayed Al Nahyan, who is also president of the United Arab Emirates. While mainly residential, the building will have 37 floors of office and retail space.

During the five years of the tower’s construction the sheikhdom’s debt-fueled property market went from the world’s best performing to the worst, forcing officials to renegotiate loans and seek bailouts from Abu Dhabi. The Burj’s occupancy rate may reach 75 percent this year, with office leasing proving the biggest challenge for investors, said Roy Cherry, an analyst at investment bank Shuaa Capital PSC.

“Those who bought with the intention of leasing will face a difficult time because few companies today can justify paying premiums for luxury,” Cherry said.

Burj Khalifa has a height of 828 meters (2,717 feet), Alabbar said in a telephone interview today. Apartment prices in the tower, formerly known as Burj Dubai, have fallen to less than half of the 10,000 dirhams ($2,700) a square foot that they reached at the 2008 peak.

Burj Dubai -World's tallest building

2010-01-04T11:14:00.000-08:00

The 828 metre (2,717 ft) supertall skyscraper in Dubai, United Arab Emirates, is being opened with much fanfare despite the doom and gloom that has surrounded the emirate's economy in recent weeks.

Crews of cleaners today rushed to finalise preparations for the grand inauguration of the Burj Dubai, the tallest building in the world. With batteries of fireworks and an invited crowd of 6,000 guests, the rulers of the Gulf emirate will tonight attempt to convince the world that their financial troubles have been overstated with a lavish celebration of a glass and steel building that tapers almost a kilometre into the sky.

Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, is expected to make a triumphal ascent of the spire-shaped tower which rises over 800m from the Arabian desert. He will announce the exact height this evening in a move intended to draw a line under the country's financial crisis, which has left a trail of outstanding creditors.

"Crises come and go, and cities move on," said Mohamed Alabbar, chairman of Emaar Properties, the state-owned developer of the building. "You have to move on. Because if you stop taking decisions, you stop growing."

With swimming pools on floors 43 and 76 and plans for the world's highest mosque on the 158th floor, the $1bn "superscraper" dwarfs both the world's previous tallest building, the 508m tall tower 101 in Taipei, and the 629m KVLY-TV mast in North Dakota, the tallest man-made structure. It is so high, the temperature is said to be 10C cooler at the zenith than at the base.

But with many investors in the building's 1,044 apartments already facing losses after property prices in Dubai slumped, the Burj's owners are struggling to present their architectural achievement as anything but a pyrrhic victory. The offices and most of the flats are still an estimated two months from completion and the emirate's neighbours in Saudi Arabia and Abu Dhabi, which provided Dubai with a £15bn bailout last year, are also understood to be unimpressed at the ostentation of the building.

The fountain outside cost a reported £133m and the 160 room hotel was designed by fashion designer Georgio Armani and boasts a nightclub, two restaurants and a spa. Meanwhile, labourers on the project, including many immigrants from Pakistan, India and Bangladesh, earned low wages. Skilled carpenters took home just £4.34 a day and labourers, £2.84.

Security is expected to be tight. Local newspapers quoted Major General Mohammed Eid al-Mansouri, head of the protective security and emergency unit for Dubai police, saying more than 1,000 security personnel, including plainclothes police and sharpshooters, will be deployed to secure the site for the opening.

But even by the standards of an emirate which has created miles more beach front by building vast islands from millions of tonnes of sand in the shapes of palms, the tower stands out as Dubai's most remarkable achievement. Around 12,000 people are expected to live and work in the tower which is part of a 500-acre development known as "downtown" Burj Dubai.

Alabbar said Burj Dubai was "another demonstration of Dubai's ability to achieve what few people thought possible".

"The tower is a global icon," he said. "It represents the determination and optimism of Dubai as a truly world city. It is a powerful symbol for the entire Arab world."

Dubai World - what was built with borrowed money

2009-12-07T06:24:00.001-08:00

Are you wondering where 60 bn borrowed by Dubai World was spent?
Here is a video that will show you the bright ideas that have been turned into real things by Dubia World.

Dubai crisis - a person at a glance

2009-12-04T22:03:00.000-08:00

Typical was the case of British developer Arthur Fitzwilliam, an affable 58-year-old polo fan from London. He had lived in Dubai for two decades, dabbling in real estate and other ventures. In 2004, he inked a deal to develop a 14.5 million-square-foot plot of desert acquired from a government-controlled company.

The Plantation Equestrian and Polo Club would have air-conditioned stables for 800 horses, four polo fields, facilities to host horse shows and a five-star hotel. Mr. Fitzwilliam sought partners to help finance the project. A British banker agreed to provide financing, in exchange for a 30% stake, Mr. Fitzwilliam said in an interview.

But in June 2008, authorities detained Mr. Fitzwilliam, the banker and one other. Then in September, Dubai Islamic Bank, or DIB, foreclosed on the land for the project. It also seized more than 100 polo ponies, Mr. Fitzwilliam said. For almost a year, he sat in jail before charges were filed. In March 2009, authorities charged seven men with scheming to defraud DIB, according to a bill of indictment filed by Dubai's public prosecutors. Mr. Fitzwilliam was accused of aiding the scheme.

Last month, he was transferred to a Dubai hospital to undergo tests for cancer. Four Dubai police officers stood guard outside his room.

Mr. Fitzwilliam denied any wrongdoing, as did the British banker he was working with. "I want a fair trial, and I'm prepared to go with the system," he says, shackled to his hospital bed. "Anyone who knows the case knows I'm not guilty."

A spokesman for the Dubai prosecutor's office didn't respond to requests for comment.

Amid the uncertainty surrounding the arrests, the crisis roiling the rest of the world was catching up with Dubai. When global credit markets froze up in late 2008, international investors stopped buying Dubai property. Some who had already bought stopped making installment payments. Nakheel and others shed staff and scrapped or delayed dozens of projects.

Last February, the troubles touched Ms. Chana's plan for a new home in Dubai. Nakheel halted work on the Palm Jebel Ali. Though dredging had been done, little construction had.

Ms. Chana says she has sunk about $550,000 into her still-unfinished home. Earlier this year, she flew to Dubai to try to salvage the investment. She is living in a hotel-apartment with her daughter, helping to organize other investors and petition Nakheel for rebates. "I just won't let this drop," she says. "It's become my obsession."

In October, Nakheel proposed that Jebel Ali investors transfer their contracts to property elsewhere that is already finished or close to it.

Simon Murphy bought a $240,000 ground-floor apartment in the Palm Jumeirah in 2002 and moved in five years later. He is now a "resident representative" to Nakheel, like being part of a homeowners board. He says that in recent weeks, Nakheel has cut back on maintenance, including tree trimming.

Since Dubai's debt-standstill announcement, Mr. Murphy says, many apartment residents have stopped paying management fees, typically around $700 a month. Nakheel declined to comment. "Most people fear that their money will go into the bottomless pit of Nakheel debt," Mr. Murphy says.

Freehold definition is under scrutiny in Dubai - Jumeirah Lake Towers is the first

2009-12-03T00:05:00.001-08:00

The Dubai Municipality's latest statement regarding the free-zone status of Jumeirah Lake Towers (JLT) has marred the hopes of several thousands of residents who were under the hope of gaining housing fee exemptions.

According to an official at the Municipality, the status of JLT needs to be clarified by a decree, and that free zone claims by a developer does not imply exemption of housing fee for its residents.

The Head of Housing Fee Section at the Dubai Municipality, Abdullah Hashim, confirmed that JLT is not officially a free zone.

The residents of towers in the 'mini-Manhattan' around the man-made lakes by Nakheel have been questioning about housing fee exemption to the developer.

"Although several areas have been claimed to be free zones, they are not free zones. Media reports had stated that the free zone areas are exempt from housing fee, and JLT has been wrongly named as a free zone. But, we never said that, and this has created lot of confusion. None of the buildings there are considered to be part of a free zone," Hashim said.

He added that municipality is however, waiting for a list which could clearly stipulate the areas designated as free zones. The concerned authorities are likely to come up with such a list shortly.

Dubai Shows What A Property Plunge Really Looks Like

2009-12-02T12:58:00.001-08:00

Here's essentially what caused Dubai's debt extravaganza to finally come to an end.

Far too much easy money flowed into Dubai during previous years, fueling a massive construction boom financed with debt. For awhile this debt looked sustainable to those involved because it was ostensibly backed by valuable property.

Yet when the global financial crisis hit, property prices fell in many parts of the world. Dubai property prices were hit especially hard.

As shown below by the skiing Emirati, Dubai property rates per square foot fell 45% from Q3 2008 to Q3 2009 according to Colliers International.

Thus just as many American's went underwater on their mortgages due to the American property crisis, owing more to the bank than their house was worth, the same thing basically happened to the Nakheel property business of the Dubai state-owned conglomerate Dubai World.

Combined with near-term cash flow constraints, this finally forced Dubai World to admit to its creditors that it would not be able to meet all of its debt obligations.

2009-11-30T14:07:00.001-08:00

Dubai's property market could plummet by up to 30 per cent from current levels - already down 50 per cent from peak - and may take more than a decade to recover

Dubai government washes its hands of $59bn debt built up by Dubai World

2009-11-30T14:01:00.000-08:00

The Dubai government refused to guarantee the huge debts built up by its conglomerate Dubai World, dashing investor hopes that the latest episode in the global financial crisis might be swiftly resolved.

The comments were made as the region reopened for business after the Eid holiday and local stock markets fell sharply.

Creditors, including several British banks, had been eagerly awaiting some clarification from Dubai officials since the brief announcement ahead of the long weekend on Wednesday night that Dubai World was seeking to defer repayments on its $59bn (£36bn) debt pile, but there was no comfort on offer. British banks have a $50bn exposure to the United Arab Emirates and high street names including Lloyds, HSBC and Royal Bank of Scotland have formed a creditors' committee seeking urgent meetings with Dubai officials.

In an interview on local television, the director general of Dubai's department of finance, Abdulrahman al-Saleh, appeared to suggest that investors only had themselves to blame for the unfolding crisis. "Creditors need to take part of the responsibility for their decision to lend to the companies," he said.

"They think Dubai World is part of the government, which is not correct. Dubai World was established as an independent company; it is true that the government is the owner, but given that the company has various activities and is exposed to various types of risks, the decision, since its establishment, has been that the company is not guaranteed by the [Dubai] government."

Dubai World is the largest of a handful of state-controlled companies and owns assets such as a profitable ports business that includes the former P&O, the QE2 liner, and the property firm behind some of the more outlandish developments of the last decade.

Fears that it could potentially default on its debts sparked turmoil on world markets at the end of last week and concerns that other heavily indebted states could be affected as investor confidence eroded, with much of the focus on Greece, Ukraine and the Baltic states.

The central bank of the United Arab Emirates yesterday sought to restore some calm by providing an emergency facility to shore up local banks, and foreign banks operating in the Emirates.

The International Monetary Fund today welcomed the move and said it continued to monitor the situation.

Dubai’s $59 Billion Default Sends Tremor Through Global Financial System

2009-11-29T04:39:00.000-08:00

Dubai’s announcement on Wednesday that it would be delaying by “at least” six months the maturity date of $59 billion in bonds issued by the city-state’s largest state-owned company, Dubai World, has sent global shares tumbling. The market reaction to Dubai’s massive debt default is partly explained by the exposure of European and Asian banks to DP World and its tourism subsidiary, Nakheel.

The real reason for the falls, however, is that Dubai’s apparent insolvency confirms that default by hyper-indebted government borrowers is now a real risk right across the globe, especially in the Middle East and Eastern Europe. Such a default would not only mean an immediate worsening of the already brutal post-crash conditions suffered by millions of workers in defaulting countries, but would usher in a second, and probably worse, phase in the global financial crisis.

If countries like Dubai begin to fail, who will save them?

2009-11-29T04:35:00.000-08:00

As one financial crisis recedes, another may be beginning. In Dubai this week, we've had a foretaste of what may be to come as governments around the globe seek to grapple with the explosive growth of fiscal deficits and public debt.

Like everyone else, my regard for the miracle of Dubai's fast-evolving skyline has always been tempered with a high degree of scepticism. As a monument to the vanity and hubris of Sheikh Mohammed bin Rashid al-Maktoum, Dubai has long looked like an accident waiting to happen. Such has been the pace of development that nobody could have been surprised by the debt default now threatened. Only the assumed support of Dubai's richer neighbour Abu Dhabi, which is now far from certain, has prevented it happening sooner.

Yet the important question for markets today is not whether Dubai and Sheikh Mohammed can survive the sandstorm; in fact, that is almost irrelevant. Dubai's debts of $80 billion (£48 billion) are a tiresome and unwelcome irritant which will cause further write-downs among western banks, but in the scale of things not of great significance: Britain is planning to raise more than three times that amount in the debt markets in this financial year alone.

Rather, the issue is whether this folie de grandeur of a desert kingdom is just an isolated, and therefore containable, incident, or a more worrying outrider for a wider sovereign debt crisis which might eventually engulf major, advanced economies. Everyone thought the financial implosion of the last two years was largely behind us – yet Dubai has reminded us that if nations start defaulting, then it may be about to enter a new and even more frightening phase.

Think of Dubai not so much as the hors d'oeuvre as the pre-dinner canapé, with the starter reserved for larger economies with distressed fiscal positions, such as Greece and Ireland, moving for the main course on to Japan and possibly even Britain and the US.

Already, there are rumblings. The cost of insuring sovereign debt against default has risen across the board, and for countries thought particularly at risk, bond yields are on a firm upward march.

Across the developed world, public debt is set on an explosive course. According to new estimates by Moody's, the credit ratings agency, the total stock of sovereign debt worldwide will have risen by more than 50 per cent between the start of the financial crisis in 2007 and the end of next year, to $15.3 trillion.

But this is just the beginning. On current projections, that total is set to rise by at least a further 50 per cent, before finally peaking in four to five years' time, and then only if governments have by then taken remedial action.

These are uncharted waters, quite without precedent in peacetime. In seeking to address the financial and economic crisis of the past few years, countries have come close to bankrupting themselves. It is as if, in treating the patient, a physician has infected himself with the same deadly disease.

Perhaps oddly, financing these fast-growing deficits has not so far been a problem, at least for the major advanced economies. Risk-averse investors have spurred high demand for sovereign debt, in the possibly misguided belief that there can be no haven safer than assets guaranteed by taxpayers and the ability of their governments to print money.

More perversely still, the crisis in Dubai has caused a renewed flight to the perceived security of G7 government debt. Money is being withdrawn from the periphery and reinvested in US Treasuries, German bunds, and even British gilts.

But if the banking crisis is anything to go by, that's not where the story ends. There, too, the implosion began with smaller, obviously flawed bit-players, who had self-evidently grown too rapidly and overstretched themselves.

Markets dashed to withdraw funding from Northern Rock, but in transferring the money to the likes of the Royal Bank of Scotland found that they had invested only in something even more unstable. The Rock, it turned out, was just an outlier in a systemically unsafe sector.

If Dubai is the sovereign debt equivalent of Northern Rock, then Greece might be its Bear Stearns and Japan its Lehman Brothers. But why stop there? For Citigroup, think the US, and for RBS and HBOS, think Britain. Only there would be no one to bail out their creditors if America or Britain showed signs of defaulting.

Of course, I am exaggerating to make a point. Nobody thinks this a likely outcome, even if it ought to be added that nobody thought the semi-nationalisation of RBS and HBOS remotely likely either. The judgment of the markets is that on present trajectories, the sovereign debt burden is just about manageable. But it's touch and go.

The credit ratings agencies are just itching to downgrade some of the big hitters, alongside the obviously more vulnerable, with Britain and America the first in line. If the markets start to demand a premium for their money, that's going to make the task of economic recovery and fiscal consolidation that much tougher. At the risk of sounding like a scratched record, this crisis is not over yet – not by a long chalk.

Dubai Default - collection of links

2009-11-27T02:30:00.001-08:00

No one saw this coming ...

From Bloomberg: Dubai Debt Delay Rattles Confidence in Gulf Borrowers

Dubai is shaking investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001.
...
Moody’s Investors Service and Standard & Poor’s cut the ratings on state companies yesterday, saying they may consider state-controlled Dubai World’s plan to delay debt payments a default. The sheikhdom, ruled by Sheikh Mohammed Bin Rashid Al Maktoum, borrowed $80 billion in a four-year construction boom ...

And a few articles from the WSJ: Dubai Starts to Untangle Dubai World Fallout

And European Banks Seen Exposed To Dubai World

Most banks on Thursday said their exposure to Dubai and Dubai World is small or declined to comment, but Credit Suisse analysts estimate European banks have about $40 billion in exposure to debt issued by various Dubai city-state entities, including Dubai World.

And from December 2008: Citi Voices Upbeat View on Dubai (ht jb)

With questions about Dubai's looming debt obligations swirling, Citigroup Inc. said it had raised $8 billion for the Persian Gulf city-state over the course of the past year and still had a positive outlook on its economy.

Citigroup Chairman Win Bischoff was quoted in the bank's statement Monday as saying Citigroup continues to see Dubai as among its "most significant markets."

When there are bad loans to be made, apparently Citi never sleeps.

UPDATES: Brad DeLong suggests it might be Time to Reread the History of Austria's Creditanstalt in 1931...

Interesting time. In Europe, the Creditanstalt's bankruptcy and what followed was what turned the recession into the European Great Depression...

And DeLong excerpts from a Financial Times article by Roula Khalaf: The emirate has a lot of explaining to do

And from Izabella Kaminska at the FT Alphaville: Barclays Capital ‘change their view’ on Dubai

My, my, what a difference a few weeks make.

Earlier this month — when all still seemed relatively well in the UAE emirate of Dubai — Barclays Capital was among those touting Dubai-related debt as a decent investment for clients. The bank even confidently predicted the repayment of the now infamous Nakheel sukuk.

In fact on November 4 — the day Moody’s slashed its ratings on five Dubai government related entities — BarCap analysts wrote:
We expect several developments to act as positive catalysts for Dubai’s sovereign spreads. First, the likely repayment of the Nakheel sukuk in December. Second, Dubai’s ability to raise the second USD10bn tranche with the support of Abu Dhabi. Third, a successful conclusion of the merger between Emaar and Dubai Holding, as well as a solution allowing mortgage providers Amlak and Tamweel to resume lending.

On that basis, we recommend a long position in Dubai sovereign credit and see today’s negative price actions as an opportunity to buy.

There is much more at the link.

Dubai default is about to be announced

2009-11-27T02:29:00.000-08:00

Dubai Holding credit-default swaps rose to 1,175 basis points from 1,085 basis points, CMA Datavision prices show. CMA started to track Dubai credit swap at the beginning of this year.

Lending and investment banking in the Gulf are declining as oil prices and stock markets in Dubai and Abu Dhabi are hit by the worst global economic slump since the 1930s. Dubai is also bracing for a real-estate slowdown after a five-year boom as banks cut back on mortgage loans and speculators exit the market.

The largest state-owned companies in the United Arab Emirates -- of which Dubai is one of seven sheikhdoms -- have $20 billion of debt due this year, according to a Merrill Lynch & Co. report published in October.

“Will Abu Dhabi’s government, or even the federal government, follow this step by supporting banks in other emirates?” analysts led by Sofia El Boury at Shuaa Capital PSC, the U.A.E.’s biggest investment bank, wrote in a note released today. “At this point, we do not have a clear direction of how things will proceed.”

A view - Lisa Strotts

2009-11-26T22:19:00.000-08:00

IT was a bubble waiting to burst. For all the glitz and glamour, something about Dubai made me feel distinctly uncomfortable.

When I first visited four years ago Dubai was already a good few years into its frenzy of construction.

The city seemed to me no more than a dusty building site - it screamed environmental disaster.

Everywhere luxury hotels, apartment complexes and more were being thrown up with gay abandon.

As we toured one concrete and glass monstrosity after another I questioned who would fill the thousands of hotel beds.

The scale of the construction came crashing home to me, literally, as I took a breather from a late party at the luxury One & Only Royal Mirage Hotel.

It was 3am and as I strolled down to the beach the sound of the sea was drowned out by hammering.

Guests paying thousands of pounds were trying to sleep as workers toiled away building a hotel next door.

Millions of Brits WERE enjoying holidays in Dubai - drawn by the attainable luxury promoted by hotels including the iconic sail-shaped seven-star Burj Al Arab hotel.

Scorching weather was a given, hotel standards blew traditional Med resorts out of the water - if you didn't fancy any culture or natural wonder it was a great bet.

But as time went on and tourist numbers increased the nagging feeling kept returning. Why, four years after I first saw man-made archipelago The World, was it unfinished and unsold?

Deals to hotels previously thousands of pounds a night began arriving in my inbox.Dubai was on sale.

With the credit crunch, visitor numbers plummeted.

Officially, Brit visitors are down four per cent this year - unofficially, travel experts say it is nearer 15 per cent.

The famous QE2 ocean liner retired last year by Cunard, supposed to become a floating luxury hotel, may end up on the scrap heap.

Plans for Dubai versions of four American theme parks are now on ice.

The practice of pumping salt back into the sea from desalination plants has allegedly all but destroyed aquatic life close to shore.

Apart from sunshine and expensive shops, I can't see a reason to visit Dubai and many other destinations offer that - and more.

Until Dubai offers more than just ostentatious hotels with views of cranes its troubles could get a LOT worse.

What Dubai World owns?

2009-11-26T22:15:00.002-08:00

What Dubai World owns

DUBAI PORTS WORLD: World's fourth largest port operator whose investments include Port Of Tilbury in Essex, Southampton Container Terminals, Churchill Dock in Belgium and Port Of Djibouti in Africa.

NAKHEEL PROPERTIES: Developer of The Palm Jumeirah (including Atlantis, The Palm hotel), World Islands, Universe Islands and owns retired ocean liner QE II.

LEISURE CORP: Owns PGA European Tour venues such as Jumeirah Golf Estates and South Africa's Pearl Valley Golf Estates.

ISTITHMAR WORLD: Dubai World investment arm that owns American department store Barneys.

Dubai World spent the boom years hoovering up trophy assets around the world, including golf courses and hotels.

Their subsidiaries own everything from Barneys department store in the US to the QEII liner. These could now be sold off as Dubai's sheikhs scramble to raise cash.

The financial problems stem from a massive bubble in Dubai's housing market - and the Ј36billion debt taken on by Dubai World during their buying spree.

Dubai is unable to repay $70 bn of debt... Another crisis?

2009-11-26T22:15:00.001-08:00

Debt problems in Dubai struck financial markets hard on Thursday, sinking global stocks, lifting safe-haven bonds and driving the dollar higher.

Gold climbed to a new record high but fell back as the dollar rose. European shares had their worst daily loss in seven months.

Banking stocks came under particular pressure because of potential exposure to any bad debt in the Gulf, as did shares in European car companies, some of which are part-owned by sovereign wealth funds from the region.

Markets were trading without much input from the United States, where it was the Thanksgiving holiday.

Dubai said on Wednesday it wanted creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World, the conglomerate that spearheaded the emirate's breakneck growth.

The announcement triggered widespread concern about the once-booming Gulf region's financial health, although some investors differentiated between leveraged Dubai and other more solidly wealthy emirates and countries in the region.

But the worries fed directly into a general nervousness in financial markets about the real state of the world economy at a time when investors are also seeking to lock in 2009 profits.

"The Dubai worries have played a major role in rattling market sentiment at a time when the U.S. is closed and we are not getting anything from anywhere else," said Peter Dixon, economist at Commerzbank.

"It is a day in which market uncertainty has been provoked again."

Others, such as Royal Bank of Scotland, said Dubai's bombshell meant investors would now have to "re-appraise the quality of sovereign support for state-owned entities in the region."

Dubai sought to ease some concerns about international port operator DP World DPW.DI, saying its debt was not included in the restructuring.

But markets stayed nervous and the cost of insuring debt through credit default swaps around the Gulf rose.

Dubai Property Prices Rise 7%

2009-11-17T21:01:00.001-08:00

Dubai property prices rose in the third quarter for the first time since the emirate's property market crashed late last year, but are still almost 50% lower than a year earlier, U.K.-based real estate consultancy Colliers International said Tuesday.

Prices increased 7% between July and September from the second quarter -- the first price jump since the market fell from its peak in the third quarter of 2008, Colliers said in its quarterly price index, which collates mortgage transactions on properties open to foreign ownership since the start of 2007.

2009-11-17T20:52:00.000-08:00

Here is a post from Emirates City Forum:

I was advised to contact my developer - and request that all PDC's be returned, which I would replace with cheques issued to the new Escrow account. Have been trying to contact the developer, and they say they need more time to set up the Escrow Account. My developer is Sweethomes.

Also, there was a post on Skyscraper City by Ajman_Lover - as follows - about the newly set up AJMAN RERA .... I am reposting below;

A good news for eveybody. From one of my real estate friend, I got some information about AJMAN RERA. The fulflashed office is started in OLD MUNICIPALITY BUILDING & full flash customer supprt office for AJMAN RERA started. Anybody affected peron can visit beween 8 AM to 2.00 PM at their office to lodge your compalint. The staff is very supportive to listen.

Still the office telephone number is not publised officially, so i am not liable for any change/authorised or not. But in interest of my beloved Ajman reputation among investors, anybody can try 009716-7444144 ( Telephone) & 06-7444145 ( Fax ).

One customer support executive communicate me that no need to pay any rest amount direct to developer. Lodge your complaint with the name of developer, who still not register for AJMAN ESCROW account,& this AJMAN RERA seems connected with Ajman rulars Court( Division of property Regulation).

So, give a big hand to AJMAN GOVT. for great initative & don't write bad for AJMAN.

The rest matters better you speak to AJMAN RERA suppott executive regarding PDC cheques return, CONSTRUCTION BASED PAYMENT etc. as I am not a investor.

Dynasty Zarooni is involved in the fraud

2009-11-17T20:51:00.001-08:00

Dubai’s Public Prosecution is detaining Kabir Mulchandani, chairman of Dynasty Zarooni Real Estate, amid allegations he defrauded investors of up to 450 million U.A.E. dirhams ($123 million), according to lawyers for the investors, government officials and one of his business partners.

The first case relates to allegations that he conned a small group of wealthy investors into pledging large sums of money with the promise of a hefty monthly return.

The second case involves the selling of property at the AED2 billion Ebony and Ivory development in Dubai’s Jumeirah Lake Towers district. According to Salem Al Shaali, the lawyer handling the case at Dubai-based Al Shaali & Co., Mulchandani took deposits for 20% of the property but failed to deliver the project.

What is happening in Dubai Property Sector?

2009-11-17T20:49:00.000-08:00

With Dubai property sector undergoing a transitional phase, companies are reviewing their project strategies, and developers are more cautious with their future investments on projects, as several mega-developments are now being reviewed.

For instance, Nakheel has announced that parts of the Dh.350bn Jumeirah Garden City, the Trump International Hotel, the Tower on Palm Jumeirah, and the kilometer-high tower will be put on hold.

Even work on 'The Universe' will be restricted to preliminary studies, Nakheel said. Decrease in liquidity and financing has led to delay in progress of such projects, resulting in these projects bearing the brunt of financial turmoil. The mega-projects that had earlier brought about a property boom in Dubai, have now been put on hold.

Limitless too, revealed that it is reviewing construction schedule of Arabian Canal. The Head of Dubai's RERA, Marwan bin Galita, said that developers need to review their projects which are yet to be launched for sale. Recession is a very crucial phase, and RERA had been urging developers to do this about a year back, Galita said.

The Chairman of Crisis Management Committee, Mohammad al Abbar, last week said that it would pull back on its building spree due to the current financial crisis. Apart from backing out of its projects, Nakheel has also laid off 500 employees, constituting 15 percent of the company's work-force. All the 500 employees were offered redundancy package, including outplacement support services to assist them during this transitional phase.

Better Homes, Damac and Omniyat too, have followed suit, with Better Homes axing 50 jobs, Omniyat with 69 jobs, and Damac laid off 200 jobs, with the drop in demand for properties.
Meeras however, said that it does not have plans for lay-offs at the moment.

According to analysts, about 819 employees have lost their jobs in the Dubai real estate sector till date, with more to follow. However, the Head of Research and Consultancy at Cluttons, Matthew Green, said that these happenings are not restricted to the realty sector alone, and few other major corporate too, have announced staff reductions.

In the meanwhile, the time is now appropriate for small developers to join hands to bring confidence back into the market, say analysts.

A member of Financial Crisis Committee said that Dubai has been witnessing plenty of defaults on high-end properties with worsening financial conditions, and there are possibilities of merger among smaller developers. Even Head of RERA, Marwan bin Galita, agrees that merger between small companies would bring in more confidence, as good mergers in any sector adds more value to the sector.

The developers, Union Properties and Deyaar, although denied talks about any plans of merger, they were unable to comment on whether the government would order their merger.

Secondary prices in Dubai and Abu Dhabi fell 4 to 5 percent in October from the previous month, while the villa prices of Dubai dropped by 19 percent, under strict lending conditions, according to a recent HSBC statement.

The "off-plan" market is not doing too well, due to market speculations. Few of the banks have stopped financing, while few developers are said to be demanding exorbitant prices. However, the prices of "affordable" off-plan properties may pick-up during second quarter of 2009, if the banks improve on their lending, Bin Galita said.

RERA is likely to implement a new law on registration of off-plan properties next week.

On the whole, Dubai real estate sector has met with stringent mortgage lending measures, liquidity crunch, and real estate slowdown during recent months. The indications of property boom in Dubai, have atleast, temporarily halted, and developers are seen scaling back on their projects, while jobs are cut and property prices have plummeted.

Luxury Villa in Dubai

2009-11-16T19:36:00.000-08:00

If you are looking for a luxury villa in Dubai, then I recommend visiting the following Luxury Real Estate Companies:

www.dubailuxuryvilla.com
www.dubaishortstay.com
www.dubailuxuryhomes.com
www.emyproperty.com
www.dubailuxurydevelopments.com

How Dubai has lost its sparkle for one UK jeweller

2009-11-16T19:32:00.001-08:00

For successful London jeweller Nadeem Osman, Dubai had all the bling in the world. Like thousands of others, he loved the city's fast life, with its sports cars, glitzy shopping malls and super-luxury hotels. And, of course, its sun and fabulous beaches.

The 37-year-old businessman from Balham, South London, holidayed there at least twice a year with his wife and even thought of moving there eventually, away from the rain and cold of England.

So 14 months ago, as an investment on the side, Mr Osman decided to buy four apartments in the city, which he planned to rent and also use as his holiday homes.
Losing its sparkle: Jeweller Nadeem Osman bought four flats in Dubai last year, just before the property market there crashed

Losing its sparkle: Jeweller Nadeem Osman bought four flats in Dubai last year, just before the property market there crashed

He paid £580,000 for two off-plan apartments in Villa Caria, a residential block in Jumeirah South, and two more in a proposed hotel on the Dubai Waterfront, known as Hotel K. But his timing could not have been worse, with the Dubai property market then going into free fall: down 32 per cent in the first quarter of this year and 47 per cent in the second, according to Knight Frank.

Assetz, a property investment company, estimates that the fall may reach 70 per cent this year. Mr Osman bought the apartments through Dynasty Zarooni (DZ) - one of the city's biggest real estate companies, with a portfolio of properties worth £219million.

He paid the full sum upfront, assured that the money would be put into an escrow account which protects a buyer's money until the work is complete.

In January, one of the directors of DZ was arrested on a £60million fraud allegation - and since released without charge - but work on Hotel K has not even started. It is scheduled to finish by 2011. The company does not even own the land on which it was to be built.

Villa Caria was supposed to be completed by the end of this year, but DZ has told him it may take a further two years. Mr Osman has also been told that his money was not put into an escrow account, and he is unable to get any back.

'I don't know what to do,' he said. 'If it was in this country I could do something about it, but in Dubai it's so difficult as there is a huge backlog in the courts.' Dynasty Zarooni has declined to comment after repeated attempts to contact it. Mr Osman has now formed a group with ten other investors to decide whether to take legal action or file a criminal case.

Dubai's courts are struggling with a mountain of property cases totalling £3billion - as much as £500million may involve British investors.

Stuart Law, of Assetz, says Britons, who were the largest Western investors, were partly responsible for the crash as they inflated prices through their highly geared buy-to-let schemes.

'We've known of properties that were sold again and again about ten times one after another - it was good as each person made a profit, but the person who was left with the contract at the last was in trouble,' said Mr Law.

Welcome to Debt City

2009-11-03T21:12:00.001-08:00

Default on a loan or bounce a check in Dubai and you could end up in debtors’ prison.

That was the very Dickensian prospect facing Simon Ford, a boyish British entrepreneur whose “alternative gift” business sold rides in hot air balloons and Formula 1 racing cars to the party crowd in this Disneyesque city-state. But the recession has hit Dubai hard and Ford’s business foundered.

When his loans came due last June, he did what thousands of other expats have done. He packed up his family and fled — a few hours ahead of the law.

Ford also left behind an anguished “open letter” to friends and creditors that neatly encapsulates the predicament of many expats in Dubai who took out loans during the flush times and now find themselves out of work and unable to keep up with the payments on their seaside villas and luxury cars.

“I am not running away from debt, I am purely protecting those dearest to me and getting out of a country which, due to the lack of structured bankruptcy laws and a banking system which has zero flexibility on loan repayments, drives people to make horrible decisions,” he wrote in an open letter to local media.

He promised to repay all of his creditors.

Dubai authorities won’t say precisely how many people have been jailed for their debts, but local news accounts put the number at about 1,200 — more than 40 percent of the total prison population.

Even trickier to gauge is how many others took Ford’s route and simply fled. Judging by the number of apparently abandoned BMW’s and Mercedes gathering dust on city streets and the ensuing chatter on expats’ discussion boards, the number is not insignificant.

One recent escapee has written a book about his flight. Herve Jaubert, a former French intelligence agent who used to cruise around Dubai in a red Lamborghini, found the law breathing down his neck after his plans to manufacture “luxury submarines” became submerged in debt.

Jaubert explains that he bolted last year after government interrogators threatened to stick needles up his nose. With 007 panache and a woman’s all-encompassing burqa concealing his frogman gear, Jaubert slipped into the sea, swam out to a police patrol boat and disabled its fuel line so that it could not give chase. He then used a rubber dingy to get safely beyond the UAE’s territorial waters where he was met by a confederate in a sailboat. Eight days later they landed in India.

The book, “Escape from Dubai” comes out next month. But Jaubert’s website has been blocked in Dubai and sale of his book will no doubt be banned here. The Frenchman, now living in Florida, was tried in absentia and sentenced to five years imprisonment for fraud.

A number of U.S. citizens have been imprisoned for bounced checks, but the American Embassy — apparently in keeping with the local custom of casting a veil of silence over disturbing news — declined to provide specific figures.

Reprinted from Global Post

The Dark Side of Dubai

2009-11-03T21:10:00.000-08:00

Karen Andrews can't speak. Every time she starts to tell her story, she puts her head down and crumples. She is slim and angular and has the faded radiance of the once-rich, even though her clothes are as creased as her forehead. I find her in the car park of one of Dubai's finest international hotels, where she is living, in her Range Rover. She has been sleeping here for months, thanks to the kindness of the Bangladeshi car park attendants who don't have the heart to move her on. This is not where she thought her Dubai dream would end.

Her story comes out in stutters, over four hours. At times, her old voice – witty and warm – breaks through. Karen came here from Canada when her husband was offered a job in the senior division of a famous multinational. "When he said Dubai, I said – if you want me to wear black and quit booze, baby, you've got the wrong girl. But he asked me to give it a chance. And I loved him."

All her worries melted when she touched down in Dubai in 2005. "It was an adult Disneyland, where Sheikh Mohammed is the mouse," she says. "Life was fantastic. You had these amazing big apartments, you had a whole army of your own staff, you pay no taxes at all. It seemed like everyone was a CEO. We were partying the whole time."

Her husband, Daniel, bought two properties. "We were drunk on Dubai," she says. But for the first time in his life, he was beginning to mismanage their finances. "We're not talking huge sums, but he was getting confused. It was so unlike Daniel, I was surprised. We got into a little bit of debt." After a year, she found out why: Daniel was diagnosed with a brain tumour.

One doctor told him he had a year to live; another said it was benign and he'd be okay. But the debts were growing. "Before I came here, I didn't know anything about Dubai law. I assumed if all these big companies come here, it must be pretty like Canada's or any other liberal democracy's," she says. Nobody told her there is no concept of bankruptcy. If you get into debt and you can't pay, you go to prison.

"When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let's take the pay-off, clear the debt, and go." So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country.

"Suddenly our cards stopped working. We had nothing. We were thrown out of our apartment." Karen can't speak about what happened next for a long time; she is shaking.

Daniel was arrested and taken away on the day of their eviction. It was six days before she could talk to him. "He told me he was put in a cell with another debtor, a Sri Lankan guy who was only 27, who said he couldn't face the shame to his family. Daniel woke up and the boy had swallowed razor-blades. He banged for help, but nobody came, and the boy died in front of him."

Karen managed to beg from her friends for a few weeks, "but it was so humiliating. I've never lived like this. I worked in the fashion industry. I had my own shops. I've never..." She peters out.

Daniel was sentenced to six months' imprisonment at a trial he couldn't understand. It was in Arabic, and there was no translation. "Now I'm here illegally, too," Karen says I've got no money, nothing. I have to last nine months until he's out, somehow." Looking away, almost paralysed with embarrassment, she asks if I could buy her a meal.

She is not alone. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars.

"The thing you have to understand about Dubai is – nothing is what it seems," Karen says at last. "Nothing. This isn't a city, it's a con-job. They lure you in telling you it's one thing – a modern kind of place – but beneath the surface it's a medieval dictatorship."

II. Tumbleweed

Thirty years ago, almost all of contemporary Dubai was desert, inhabited only by cactuses and tumbleweed and scorpions. But downtown there are traces of the town that once was, buried amidst the metal and glass. In the dusty fort of the Dubai Museum, a sanitised version of this story is told.

In the mid-18th century, a small village was built here, in the lower Persian Gulf, where people would dive for pearls off the coast. It soon began to accumulate a cosmopolitan population washing up from Persia, the Indian subcontinent, and other Arab countries, all hoping to make their fortune. They named it after a local locust, the daba, who consumed everything before it. The town was soon seized by the gunships of the British Empire, who held it by the throat as late as 1971. As they scuttled away, Dubai decided to ally with the six surrounding states and make up the United Arab Emirates (UAE).

The British quit, exhausted, just as oil was being discovered, and the sheikhs who suddenly found themselves in charge faced a remarkable dilemma. They were largely illiterate nomads who spent their lives driving camels through the desert – yet now they had a vast pot of gold. What should they do with it?

Dubai only had a dribble of oil compared to neighbouring Abu Dhabi – so Sheikh Maktoum decided to use the revenues to build something that would last. Israel used to boast it made the desert bloom; Sheikh Maktoum resolved to make the desert boom. He would build a city to be a centre of tourism and financial services, sucking up cash and talent from across the globe. He invited the world to come tax-free – and they came in their millions, swamping the local population, who now make up just 5 per cent of Dubai. A city seemed to fall from the sky in just three decades, whole and complete and swelling. They fast-forwarded from the 18th century to the 21st in a single generation.

If you take the Big Bus Tour of Dubai – the passport to a pre-processed experience of every major city on earth – you are fed the propaganda-vision of how this happened. "Dubai's motto is 'Open doors, open minds'," the tour guide tells you in clipped tones, before depositing you at the souks to buy camel tea-cosies. "Here you are free. To purchase fabrics," he adds. As you pass each new monumental building, he tells you: "The World Trade Centre was built by His Highness..."

But this is a lie. The sheikh did not build this city. It was built by slaves. They are building it now.

Reprinted from Independent.co.uk

Recovering your Dubai Investments from Fraud and Scam

2009-11-02T21:33:00.000-08:00

How to avoid Fraud and Scam when investing in the Dubai and Ajman?
You shall avoid this companies and it owners by any means

3D Ventures -
http://www.3d-venture.com h
ttp://www.3d-venture.co.uk
Mr. Ali Anwar

Fraudulent projects in Dubai - Crown Avenue, R&R Tower
Fraudulent projects in Ajman - Emirates Pearls

Rockland Real Estate -
http://www.rocklanduae.com
Fraudulent projects in Dubai - Cordoba Palace, SP Oasis, Rockland Residence

Remember, investing in these projects is a high-risk and shall be avoided.
They have collected million dollars from investors and are hiding from investors.

If you have invested with those companies - you should join a discussion group to unite with other investors:
http://groups.google.com/group/3dventures

Empty properties in Dubai - but no sign of reducing rents

2009-11-02T21:26:00.000-08:00

I don't understand why a landlord would keep his property empty with no hope of recovery in the near future. Just take a trip around the new developments - you can see so many completed...

IT seems like Dubai landlords are still hoping for quick recovery. As we can see from the reviews and advices from international real-estate companies, the future of Dubai Real Estate is still very shaky and further price decreases are waiting to come.

Dubai Real Estate Could Fall Another 30 Percent

2009-11-02T21:24:00.000-08:00

There will be no recovery in the Dubai property market in 2010 with prices falling up to 30% in 2010, according to an economist who accurately predicted the credit crunch.

Eckart Woerts, a senior economist at think tank the Gulf Research Center who is currently lecturing at Princeton University in the US, said the global economy is in for a big surprise and as a result the already depressed real estate sector in Dubai faces more misery.

‘Are we out of the woods in Dubai? I don’t think so.

There are so many projects coming on stream. I don’t see a recovery.

My initial take was a decline of 60 to 80%.

We have had 50% so maybe we have another 10 to 30% to go measured against the old high,’ he says in an interview to be published in Arabian Business magazine on Sunday. (Nov 1)

‘A lot of the crash has already happened, but don’t think about the old highs, because that is a price you will not see for a very, very long time,’ he adds.

Unlike many economists predicting a recovery from the global economic downturn in 2010, Woertz said that a time lag between state stimulus packages ending and real demand picking up will cause further problems in 2010.

‘We have some stabilization going on, but the problem is this is mainly attributable to government spending and stimulus.

But what happens when the stimulus peters out? Because the job market looks awful.

So the spending cannot come from private households under such conditions,’ he explains.

‘For the real economy, we are in for a nasty surprise in 2010.

We could see several consecutive bottoms rather than a miraculous recovery,’ he adds.

But even when the global economy does recover it will not necessarily mean the start of an upturn for Dubai’s property prices, Woertz says.

‘Dubai has high inventories.

Just based on end user demand, without the speculative hype, you can probably have quite a few people moving back to the city without the market moving at all.

The point is, you shouldn’t calculate the price of real estate based on your opinion of the market and the hope that you will sell to a bigger fool than you for a higher price,’ he adds.

But he believes that the property market downturn could prove to be good news for Dubai in the long run.

‘It is good for Dubai that the real estate is going down in the sense that it was pricing itself out of the market.

It is a model trading hub. Dubai does things much more efficiently and better than neighboring countries.

There is a need and demand for business services made in Dubai.

But not at the price of yesterday which needed to be high because of ridiculous real estate prices,’ he concludes.

This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.

In spite reports of recent growth, the real estate sector in UAE remains "uncertain"

2009-09-11T02:46:00.000-07:00

In spite reports of recent growth, the real estate sector in UAE remains "uncertain", according to a consensus of real estate brokers.

Simon Kylie, head of research at emerging market specialist Real East Watch, advised investors to take a cautious approach as there are no "solid fundamentals" underpinning the industry.

His comments follow news the emirates have seen the highest level of sales activity since 2008, according to new data from real estate consultancy Landmark Advisory.

Mr Chadd noted these figures may indicate the market is "stabilising", but said: "It would be a brave person to suggest that now is the time to invest in Dubai."

Those still keen to buy should opt for one or two-bedroom properties as these offer the best chance of receiving a high return on investment, he added.

In Abu Dhabi, meanwhile, Landmark Advisory's figures suggest prices of villas remained stable, while lower-priced properties declined by up to five per cent.

ARRA

2009-08-20T23:44:00.000-07:00

I see that ARRA (Ajman Real Estate Authrotiy) made a facelift to its site - it is available at http://www.arra.ae
Does this mean they will review the fraudster developers and make real interventions?

Any comments on that?

30,000+ surplus residential units in Dubai

2009-08-20T23:06:00.000-07:00

According to a JP Morgan report, a surplus of 31,000 residential units could be recorded in Dubai, mainly due to the decline in expatriate population, while the shortage of units in Abu Dhabi is hoped to rise to 28,000 by the year-end.

In the short-term, the non-residential sector in the UAE will continue to be under pressure, owing to global financial crisis. However, historical shortage of both retail and commercial space in Abu Dhabi has kept tab against fall in leasing rates well below Dubai, reveals an investment bank report on MENA (Middle East North Africa) real estate.

Ever-since its peak during mid-2008, the average transaction volumes are down by 60 percent during the first half of 2009, compared to that during same period in 2008. Despite the slight pickup in transaction volumes recently, the supply overhand in Dubai property sector will touch 28,500 by end of the year, because of the modest economic forecast and negative population growth estimates, JP Morgan said.

Furthermore, after 2009, the JP Morgan says that the forecast of 3.5 percent population growth for Dubai is unlikely to absorb the surplus residential units, which according to Colliers International, will total to 25,000 per annum in the next three years.

However, given Dubai's large infrastructure investment, the city's positioning which makes it accessible to neighbouring economies out of which few are facing economic challenges, and Dubai being a liberal tax-free business-friendly destination, a surprise demand recovery from regional investors, exposed to less stable geo-political environments, cannot be ruled out, the Bank concludes.

Contrastingly, the short-term supply of homes in Abu Dhabi is fairly limited. The high occupancy levels are unlikely to ease from near 100 percent any time soon, the Bank said.

Dubai’s real estate sector will continue to see price drops until the second quarter of 2010.

2009-08-02T12:26:00.000-07:00

A recent report by credit-rating agency Moody’s claims that Dubai’s real estate sector will continue to see price drops until the second quarter of 2010. “The Dubai property market remains subdued following the fall-out from the credit crunch and the global recession,” it says.

Dust sweeps across the UAE

2009-08-02T12:18:00.000-07:00

August 02, 2009 - Abu Dhabi

The slow-moving dust cloud that settled on the Emirates before the weekend is expected to dissipate by Tuesday.

However, there may be only a brief respite, as more winds are expected to blow towards the UAE from northern Iraq, where the dust originates.

“The problem now is dust is starting again in that area,” said Ahmed Habib, a meteorologist with the National Centre for Meteorology and Seismology.

“There is another one coming from Iraq, but we will wait to determine when exactly it will come here.”

Visibility in most parts of the country yesterday was around 1,000m, although it was reduced to 300m in the west. Mr Habib said the lack of wind meant that the dust was suspended in the air and that visibility would improve only by a few hundred metres a day.

“Wind is light and moving to the south-east, so it’s dissipating gradually,” he said.

“When wind is light to moderate, it means very gradual movement.”

The light winds mean that fishermen at least will still be able to take small boats to sea despite the poor visibility, he said.

In the meantime, asthma sufferers were warned to avoid exposure to the dust. “It’s better to keep in the house today,” he said.

Mr Habib also cautioned motorists to be vigilant on the roads.

From Iraq, the haze moved towards Kuwait and over the Arabian Sea and eastern Saudi Arabia, then over Bahrain and Qatar before blowing to the UAE, Mr Habib said.

In Saudi Arabia, hospital emergency rooms were “packed” over the weekend with people complaining about breathing problems, according to Arab News.

The newspaper quoted a nurse at Dammam hospital saying the facility “received children and elderly men and women with choked throats and breathlessness ... many of them with a history of asthma”.

The patients were put on nebulisers to clear their choked lungs.

It followed six fatalities on Thursday in road accidents caused by the poor visibility in the kingdom’s Eastern Region, the paper added.

In Baghdad, the Iraqi capital, a heavy sandstorm flooded hospitals with people suffering from respiratory problems. Health officials said patients complained about shortness of breath and other problems.

Work restarted on Dubailand's mid income homes

2009-08-02T12:11:00.000-07:00

Construction work has started again on Queue Point in Dubailand after delays forced the developer to put the project on hold earlier this year. Al Mazaya said on Sunday that work had resumed on all buildings in the project, which is aimed at middle income earners, and that delivery was set for 2010.

The Seven Immutable Laws of Bubbles: Example, Housing in USA, UK & Dubai

2009-07-26T10:45:00.000-07:00

The cycle of bubble and bust in housing is drawing to a close. For many the ferocity of the bust and the collateral damage that followed was a shock, but bubbles and busts are not new; chances are there will be more.

I got interested in bubbles in early 2008 trying to figure out why my model of real estate prices that had worked perfectly for ten years was saying that prices in Dubai which is where I was at the time, "should" have been 30% less than where they were.

This is what I found out:

Law #1: All bubbles need a catalyst, like a stone to throw into a still pond.

Bubbles start in "good times", typically GDP is going up and people have money to spend and invest, so money starts chasing assets and if it takes time for the supply of those assets to increase, prices go up.

For example, the fundamental price of housing long-term is exactly equal to nominal GDP per house divided by a function of long-term interest rates (www.marketoracle.co.uk/Article6250.html). When nominal GDP goes up a lot faster than the supply of housing does, then the price of housing goes up; that's supply and demand, there is nothing wrong with that but it's the pebble in your hand; just you didn't throw it yet.

Read more...

Dubai rental prices decrease as some sale prices stabilise

2009-07-26T10:44:00.000-07:00

Property units in areas seen as prestige developments and those that offer completed amenities and ease of commuting access to business zones have begun to see an increase in pricing, as buyers in the Dubai market continue to increasingly highlight differentiation between communities, according to a market report.

Properties on the Palm Jumeirah, which suffered some of the largest falls in price during Q4 2008 and Q1 2009, may be showing signs of stabilisation, driven by the slowdown in 'distressed' units coming onto the market, Dubai-based property services group Asteco has said.

Emirates Financial Tower - July 26 Construction Update

2009-07-26T10:38:00.000-07:00

Emirates Financial Towers, Dubai International Financial Centre (DIFC)
The proposed development on Dubai International Financial Centre (DIFC Plot CP-06)

will be a mixed development with 61,300 sqm of Gross Floor Area, and over a million square feet of gross building area.

The massing of the project will consist of two towers linked by a tubular glass sky bridge. Both almost identical towers will sit on a four-storey podium and a four-storey basement. The podium will comply with the master plan for DIFC in that it will be physically attached to the neighboring plot as well as the retail mall. Below ground, the basements are intended to allow links to the central services, parking and services along the central spine of DIFC.

The elliptical plan profile will allow the shape of the towers to appear different depending on the angle at which the development is viewed from. The sky bridge will also be a distinct feature both from within and beyond the development.

The Towers and Sky Bridge
The two towers are elliptical in plan profile and identical in height. Both towers, each twenty seven-storeys high, will be commercial offices. Piercing the two towers at the 18th floor is the glass tubular sky bridge, which will house a commercial club.

The Podium
The podium and basement will contain the retail component and parking for the entire development. This parking will be able to accommodate four hundred cars.

Part of the podium abutting the retail spine is designed as terraces that will allow light, air and greenery into the retail elements. This will allow opportunities to enliven the retail experience with waterfalls, landscaped features, natural light and outdoor activities such as al fresco dining.

Conclusion
The sensuous and aerodynamic curves of the tower will complement yet distinguish itself from the hard edge buildings increasingly common in the competitive Dubai Skyline. The sculptural profile of the elliptical towers, the sky bridge, and the distinct angles of tower tops will allow the development to define its presence and identity while adding and complementing Dubai's already impressive skyline and cityscape

Ajman and Dubai to be linked by Water Taxi service

2009-07-19T05:21:00.000-07:00

The Ajman Municipality, together with Dubai RTA, plans to launch the water taxi service to link the two emirates. The Ajman Municipality had submitted a proposal regarding this to the RTA, which promptly accepted the joint project.

Ajman-Dubai Water Taxi service will get operational by the beginning of next year, with one million commuters expected to be transported annually.

About 30 percent of water taxi project has been completed at present. The first phase of the project will cost Dh.30million, and the RTA has so far approved 17 stops from Ajman. The first phase will include 10 stops, while the second will include 17, apart from the stops in Ajman.

In Ajman, the Municipality has chosen two locations to construct taxi stops – the Ajman Corniche and the Fish Market. The stops will be easily accessible to commuters from several pasts of the emirate and will be equipped with all necessities such as air-conditioning and vender machines, seats for snacks and soft drinks.

The project aims to develop the areas around the taxi stops, in which restaurants, cafeterias and other outlets will be constructed to attract investors. Booking services will also be available through phones. Commuters can hire taxis from the stops, or they could be rented for tourism purposes between the two emirates.

The project will also help ease traffic congestion between the emirates and is hoped to boost tourism.

Problems with Dubai Property sector

2009-07-19T05:19:00.000-07:00

Dubai´s property market which already saw a plunge of more than 40 percent in the first quarter of 2009 suffered another blow after a respected ratings agency forecasted that the country is in debts that it may have trouble repaying.

According to a report by Property Frontiers, Standard & Poor´s Ratings Service (S&P) downgraded ratings for three government backed entities, namely, port operator DP World, the Jebel Ali Free Zone and Dubai Multi Commodities Centre Authority, putting the trio on credit watch since April.

“The rating actions reflect Standard & Poor’s reappraisal of the likelihood of extraordinary financial support by the Government of Dubai to ensure the timely repayment of their financial obligations,” the agency told Property Frontiers.

S&P said the reappraisal also was the result of “increased uncertainty in regards to the government’s willingness to provide such support” to Nakheel, the property developer who built Dubai’s manmade islands.
On a separate report by Property Wire, the downturn in the property market in Dubai has resulted in about 400 people losing their jobs at major developer, Nakheel.

Property Wire reported that Nakheel, whose ambitious projects include the Palm Islands, has made the latest redundancies on top of 500 that were carried out in December.

´Nakheel continues to re-adjust its current business objectives to match supply and demand in the most effective way,´ a company spokesman told Property Wire.

Developers, who were mostly reliant on off-plan sales to finance the construction of their projects, have struggled to collect payments, leading to rising defaults, while payments to suppliers have been delayed.

High profile development projects have also been delayed and it is estimated that currently over £335 billion of projects have been halted or are on hold.

Dubai´s real estate market is the second worst performing housing market according to a global housing price research, coming in 44th in ranking – second only to Latvia.

S&P said the downgrades “reflect our view of the stand-alone credit profiles of the entities, which in certain instances, we consider to have deteriorated.”

New procedure for UAE visit visas from 1st August 2009

2009-07-19T05:15:00.000-07:00

Beginning next Tuesday, applications will be filed for new visit visas which were revamped under a Federal ruling last June, revealed an official at senior residency department.

The new fee schedule for visas ranging from visit visas to medical treatment visas, which should have been effective from 1st August, has been postponed due to the weekend holidays (30th July is an official government holiday). The rules are applicable to nationalites, requiring sponsorship for arriving in the country.

The DNRD (Dubai Naturalization and Residency Department) and the Economic Department will meet with representatives of tourist agencies, hotels, educational institutions and hospitals on Wednesday to brief them regarding the implementation of changes.

The Director-General of DNRD, Maj. Gen. Mohammad Ahmad Al Merri, has reiterated the fact that visitors should hold health insurance coverage, while the sponsors will have to pay a refundable deposit of Dh.1000.

The Visit visa holder will be permitted to enter UAE once in two months from the date of issuance of visa. As per the amendments, there will be 16 new types of visas.

Residents can seek visas for their spouse or blood relative. Expatriates will not be permitted to sponsor friends, while sponsoring blood relative will need prior permission of a senior officer.

As per the new regulations expatriates will not be eligible to apply for relatives seeking to enter UAE for any medical treatment. Only hospitals are allowed to do this.

New Visa Fees are as follows (in Dirrhams)
Short Entry (visit) Visa - 500 (1 month)
Long Entry (visit) Visa - 1,000 (3 months)
Multiple Entry Visa - 2,000
Entry Visa for Study - 1,000
Renewal of Study Visa - 500
Entry Visa for Medical Treatment - 1,000
Renewal of Medical Treatment Visa - 500
Entry Visa for Expos and Conferences - 100
Tourism Entry Visa - 100
Renewal of Tourism Visa - 500
Entry Visa for GCC State Residents - 100
Renewal of GCC State Resident's Visa - 500
Entry Visa for GCC State Resident's Companions - 100
Renewal of GCC State Residents Companions' Visa - 200
Mission Entry Visa - 200
Transit Entry Visa - 100

Burj Dubai - July 02 2009

2009-07-16T06:31:00.000-07:00

The most beatiful bulding in Dubai - filmed on July 02, 2009

Donald Trump - Dubai Tower

2009-07-10T22:26:00.001-07:00

Donald Trump is one of the world’s most successful businessmen, with an impressive international property portfolio. Speaking from the Trump Tower boardroom in New York, he tells us about his latest venture in Dubai

Why have you bought in Dubai?

Dubai is a splendid place, which I’ve been to many times. Trump Tower Dubai is a project I’m involved with along with the property developers, Nakheel. It is unbelievable, it will be the best in the world.

Do you actually own there yourself, or are you just putting your name to the venture?

No, I’m keeping one of the apartments there for myself. I love the city, it’s a hot place, it’s a great place, and there will not be any other buildings or locations like it. People from around the world tend to buy wherever I build, so it represents a great investment.

Surely you must have one of the luxury penthouses?

No, it’s just an apartment. The penthouses are already in great demand and are setting property rice records at £3,000 per square foot which, for what they are getting, is an incredible bargain.

We’ve heard all about your plans for a golf development in Aberdeen, Scotland, being on hold because of various environmental issues. Has your experience there put you off developing?

Certainly not! We have 97 per cent agreement and are confident that it will go ahead – we’re swaying them! That course will be one of the world’s finest. I now even have the great 007, Sean Connery, on my side, which I’m very happy about. I certainly wouldn’t want him against me!

How does developing in Dubai compare with, say, developing in New York?

In Dubai they are building in the ocean, which has never been seen before – it’s really spectacular, a real engineering feat. I love building and I love engineering. I come from a country that likes to get things done but it’s now very hard to get things done in the US. With planning constraints, you couldn’t do what we’re doing in Dubai here in New York so I’ve great respect for what they’re achieving out there Your current portfolio includes the Grenadines, Seoul, São Paulo, Istanbul, Punta Bandera in Mexico, Cap Cana in the Dominican Republic, Tel Aviv, Toronto and Puerto Rico.

Wherever next?

We are looking at other things but I don’t want to say where until the contracts are signed. We want to make sure that Trump Tower Dubai is the great success which we know it will be, then we will be looking at other things, ideally with Nakheel.

Are there any destinations which you wouldn’t touch?

There are but I wouldn’t like to insult anyone by naming them.

With much of the world suffering an economic downturn, do you think your timing on this project is good?

I think the timing on this is great as Dubai is doing so well. Most of the USA’s not doing so well, although places like Manhattan are unique. I just sold a house in Palm Beach, Florida for over $100 million – that’s another unique area.

You front the original, American version of The Apprentice. Who is meaner, you or Sir Alan Sugar?

We’re different but I think he’s terrific and does a good job. We had plenty of choice for the UK show, lots of people wanted to do it but I think we made the right decision when we hired him.

You are involved in so many diverse products, from clothes to casinos even water and vodka. Which of your business interests gives you the most pleasure?

I take great pleasure in all of them, but I really hope the golf development works out in Scotland. The Apprentice has been great for the Trump brand – we’re all about quality and the show highlights that, all over the world.

You have numerous holiday homes around the world, and have just added to them with this latest Dubai property. Do you plan on taking many holidays there?

I’ll be visiting for business and to play golf, which I love – but no, I don’t take too many holidays. What do you like doing in your rare moments off? I love all sports, golf, tennis and soccer – or football as you call it in Europe.

Ajman - new building regulation

2009-07-10T22:10:00.000-07:00

A new Law issued by H H Shaikh Saud bin Saqr Al Qasmi, the Crown Prince and Deputy Ruler of Ras Al Khaimah, will bring in better regulation to the building sector in the emirate.

According to Law No.1 of 2009 for regulation of buildings in the emirate, it will be applicable to all buildings, except those that come under special decree or resolution.

The Law does not permit anybody to construct a building or make additions, or expansion, or partly or wholly demolish it, or make any modifications, whether on the facet or internal divisions, without prior permission from the authorized section of emirateâ€™s municipality.

The law is applicable to a range of topics dealing with buildings, such as designs, construction, architectural standards, specifications, license, additions, expansions, maintenance, safety, and penalties for breaching provisions of the law.

As per the law, the construction permit will remain valid for a period of one year from the date of issuance and will be considered void, if no construction happens on the site within the said period or if the work is stopped for more than six months, without valid reasons. The permit can be renewed within 30 days following expiry.

The Architect is responsible for the safety of the building for ten years after delivery. The Municipality Chairman has the right to instruct the concerned authorities to remove unlicensed caravans, pounds, and makeshift houses when their owners fail to do so after expiry of the grace period given to them.

Based on the Technical Committee recommendations, the Municipality Chairman can also order demolition of any worn-out buildings or facilities that may pose danger to inhabitants and passers-by or harm the environment and public health.

The law will be implemented within a month after its issuance and will be published in the gazette.

THE GREAT AMERICAN BUBBLE MACHINE

2009-07-06T20:22:00.000-07:00

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression - and they're about to do it again
By MATT TAIBBI

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates.

By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup - which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the rear end in a top hat chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York - which, incidentally, is now in charge of overseeing Goldman - not to mention ...

But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain - an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere - high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth - pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s - and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet. ...

IF AMERICA IS NOW CIRCLING THE DRAIN, GOLDMAN SACHS HAS FOUND A WAY TO BE THAT DRAIN.

BUBBLE #1 - THE GREAT DEPRESSION
Goldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids - just almost always. The bank was actually founded in 1869 by a German immigrant named Marcus Goldman, who built it up with his son-in-law Samuel Sachs. They were pioneers in the use of commercial paper, which is just a fancy way of saying they made money lending out short-term IOUs to small-time vendors in downtown Manhattan.

You can probably guess the basic plotline of Goldman's first 100 years in business: plucky, immigrant-led investment bank beats the odds, pulls itself up by its bootstraps, makes shitloads of money. In that ancient history there's really only one episode that bears scrutiny now, in light of more recent events: Goldman's disastrous foray into the speculative mania of pre-crash Wall Street in the late 1920s.

This great Hindenburg of financial history has a few features that might sound familiar. Back then, the main financial tool used to bilk investors was called an "investment trust." Similar to modern mutual funds, the trusts took the cash of investors large and small and (theoretically, at least) invested it in a smorgasbord of Wall Street securities, though the securities and amounts were often kept hidden from the public. So a regular guy could invest $10 or $100 in a trust and feel like he was a big player. Much as in the 1990s, when new vehicles like day trading and e-trading attracted reams of new suckers from the sticks who wanted to feel like big shots, investment trusts roped a new generation of regular-guy investors into the speculation game.

Beginning a pattern that would repeat itself over and over again, Goldman got into the investment-trust game late, then jumped in with both feet and went hog-wild. The first effort was the Goldman Sachs Trading Corporation; the bank issued a million shares at $100 apiece, bought all those shares with its own money and then sold 90 percent of them to the hungry public at $104. The trading corporation then relentlessly bought shares in itself, bidding the price up further and further. Eventually it dumped part of its holdings and sponsored a new trust, the Shenandoah Corporation, issuing millions more in shares in that fund - which in turn sponsored yet another trust called the Blue Ridge Corporation. In this way, each investment trust served as a front for an endless investment pyramid: Goldman hiding behind Goldman hiding behind Goldman. Of the 7,250,000 initial shares of Blue Ridge, 6,250,000 were actually owned by Shenandoah - which, of course, was in large part owned by Goldman Trading.

The end result (ask yourself if this sounds familiar) was a daisy chain of borrowed money, one exquisitely vulnerable to a decline in performance anywhere along the line ....

BUBBLE #2 - TECH STOCKS
Fast-Forward about 65 years. Goldman not only survived the crash that wiped out so many of the investors it duped, it went on to become the chief underwriter to the country's wealthiest and most powerful corporations. Thanks to Sidney Weinberg, who rose from the rank of janitor's assistant to head the firm, Goldman became the pioneer of the initial public offering, one of the principal and most lucrative means by which companies raise money. During the 1970s and 1980s, Goldman may not have been the planet-eating Death Star of political influence it is today, but it was a top-drawer firm that had a reputation for attracting the very smartest talent on the Street.

It also, oddly enough, had a reputation for relatively solid ethics and a patient approach to investment that shunned the fast buck; its executives were trained to adopt the firm's mantra, "long-term greedy." One former Goldman banker who left the firm in the early Nineties recalls seeing his superiors give up a very profitable deal on the grounds that it was a long-term loser. "We gave back money to 'grownup' corporate clients who had made bad deals with us," he says. "Everything we did was legal and fair - but 'long-term greedy' said we didn't want to make such a profit at the clients' collective expense that we spoiled the marketplace." ...

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. ...

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliche that whatever Rubin thought was best for the economy - a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline THE COMMITTEE TO SAVE THE WORLD. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. ...

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system - one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

"Since the Depression, there were strict underwriting guidelines that Wall Street adhered to when taking a company public," says one prominent hedge-fund manager. "The company had to be in business for a minimum of five years, and it had to show profitability for three consecutive years. But Wall Street took these guidelines and threw them in the trash." Goldman completed the snow job by pumping up the sham stocks: "Their analysts were out there saying Bullshit.com is worth $100 a share."

The problem was, nobody told investors that the rules had changed. "Everyone on the inside knew," the manager says. "Bob Rubin sure as hell knew what the underwriting standards were. They'd been intact since the 1930s." ...

Goldman has denied that it changed its underwriting standards during the Internet years, but its own statistics belie the claim. Just as it did with the investment trust in the 1920s, Goldman started slow and finished crazy in the Internet years. After it took a little-known company with weak financials called Yahoo! public in 1996, once the tech boom had already begun, Goldman quickly became the IPO king of the Internet era. Of the 24 companies it took public in 1997, a third were losing money at the time of the IPO. In 1999, at the height of the boom, it took 47 companies public, including stillborns like Webvan and eToys, investment offerings that were in many ways the modern equivalents of Blue Ridge and Shenandoah. The following year, it underwrote 18 companies in the first four months, 14 of which were money losers at the time. As a leading underwriter of Internet stocks during the boom, Goldman provided profits far more volatile than those of its competitors: In 1999, the average Goldman IPO leapt 281 percent above its offering price, compared to the Wall Street average of 181 percent.

How did Goldman achieve such extraordinary results? One answer is that they used a practice called "laddering," which is just a fancy way of saying they manipulated the share price of new offerings. Here's how it works: Say you're Goldman Sachs, and Bullshit.com comes to you and asks you to take their company public. You agree on the usual terms: You'll price the stock, determine how many shares should be released and take the Bullshit.com CEO on a "road show" to schmooze investors, all in exchange for a substantial fee (typically six to seven percent of the amount raised). You then promise your best clients the right to buy big chunks of the IPO at the low offering price - let's say Bullshit.com's starting share price is $15 - in exchange for a promise that they will buy more shares later on the open market. That seemingly simple demand gives you inside knowledge of the IPO's future, knowledge that wasn't disclosed to the day-trader schmucks who only had the prospectus to go by: You know that certain of your clients who bought X amount of shares at $15 are also going to buy Y more shares at $20 or $25, virtually guaranteeing that the price is going to go to $25 and beyond. In this way, Goldman could artificially jack up the new company's price, which of course was to the bank's benefit - a six percent fee of a $500 million IPO is serious money.

Goldman was repeatedly sued by shareholders for engaging in laddering in a variety of Internet IPOs, including Webvan and NetZero. The deceptive practices also caught the attention of Nichol as Maier, the syndicate manager of Cramer & Co., the hedge fund run at the time by the now-famous chattering television rear end in a top hat Jim Cramer, himself a Goldman alum. ...

"Goldman, from what I witnessed, they were the worst perpetrator," Maier said. "They totally fueled the bubble. And it's specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation - manipulated up - and ultimately, it really was the small person who ended up buying in." In 2005, Goldman agreed to pay $40 million for its laddering violations - a puny penalty relative to the enormous profits it made. (Goldman, which has denied wrongdoing in all of the cases it has settled, refused to respond to questions for this story.)

Another practice Goldman engaged in during the Internet boom was "spinning," better known as bribery. Here the investment bank would offer the executives of the newly public company shares at extra-low prices, in exchange for future underwriting business. Banks that engaged in spinning would then undervalue the initial offering price - ensuring that those "hot" opening price shares it had handed out to insiders would be more likely to rise quickly, supplying bigger first-day rewards for the chosen few. So instead of Bullshit.com opening at $20, the bank would approach the Bullshit.com CEO and offer him a million shares of his own company at $18 in exchange for future business - effectively robbing all of Bullshit's new shareholders by diverting cash that should have gone to the company's bottom line into the private bank account of the company's CEO. ...

Such practices conspired to turn the Internet bubble into one of the greatest financial disasters in world history: Some $5 trillion of wealth was wiped out on the NASDAQ alone. But the real problem wasn't the money that was lost by shareholders, it was the money gained by investment bankers, who received hefty bonuses for tampering with the market. Instead of teaching Wall Street a lesson that bubbles always deflate, the Internet years demonstrated to bankers that in the age of freely flowing capital and publicly owned financial companies, bubbles are incredibly easy to inflate, and individual bonuses are actually bigger when the mania and the irrationality are greater.

GOLDMAN SCAMMED HOUSING INVESTORS BY BETTING AGAINST ITS OWN CRAPPY MORTGAGES.

Nowhere was this truer than at Goldman. Between 1999 and 2002, the firm paid out $28.5 billion in compensation and benefits - an average of roughly $350,000 a year per employee. Those numbers are important because the key legacy of the Internet boom is that the economy is now driven in large part by the pursuit of the enormous salaries and bonuses that such bubbles make possible. Goldman's mantra of "long-term greedy" vanished into thin air as the game became about getting your check before the melon hit the pavement.

The market was no longer a rationally managed place to grow real, profitable businesses: It was a huge ocean of Someone Else's Money where bankers hauled in vast sums through whatever means necessary and tried to convert that money into bonuses and payouts as quickly as possible. If you laddered and spun 50 Internet IPOs that went bust within a year, so what? By the time the Securities and Exchange Commission got around to fining your firm $110 million, the yacht you bought with your IPO bonuses was already six years old. Besides, you were probably out of Goldman by then, running the U.S. Treasury or maybe the state of New Jersey. (One of the truly comic moments in the history of America's recent financial collapse came when Gov. Jon Corzine of New Jersey, who ran Goldman from 1994 to 1999 and left with $320 million in IPO-fattened stock, insisted in 2002 that "I've never even heard the term 'laddering' before.")

For a bank that paid out $7 billion a year in salaries, $110 million fines issued half a decade late were something far less than a deterrent - they were a joke. Once the Internet bubble burst, Goldman had no incentive to reassess its new, profit-driven strategy; it just searched around for another bubble to inflate. As it turns out, it had one ready, thanks in large part to Rubin.

BUBBLE #3 - THE HOUSING CRAZE
Goldman's role in the sweeping disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. ...

None of that would have been possible without investment bankers like Goldman, who created vehicles to package those lovely mortgages and sell them en masse to unsuspecting insurance companies and pension funds. This created a mass market for toxic debt that would never have existed before; in the old days, no bank would have wanted to keep some addict ex-con's mortgage on its books, knowing how likely it was to fail. You can't write these mortgages, in other words, unless you can sell them to someone who doesn't know what they are.

Goldman used two methods to hide the mess they were selling. First, they bundled hundreds of different mortgages into instruments called Collateralized Debt Obligations. Then they sold investors on the idea that, because a bunch of those mortgages would turn out to be OK, there was no reason to worry so much about the lovely ones: The CDO, as a whole, was sound. Thus, junk-rated mortgages were turned into AAA-rated investments. Second, to hedge its own bets, Goldman got companies like AIG to provide insurance - known as credit-default swaps - on the CDOs. The swaps were essentially a racetrack bet between AIG and Goldman: Goldman is betting the ex-cons will default, AIG is betting they won't.

There was only one problem with the deals: All of the wheeling and dealing represented exactly the kind of dangerous speculation that federal regulators are supposed to rein in. Derivatives like CDOs and credit swaps had already caused a series of serious financial calamities: Procter & Gamble and Gibson Greetings both lost fortunes, and Orange County, California, was forced to default in 1994. A report that year by the Government Accountability Office recommended that such financial instruments be tightly regulated - and in 1998, the head of the Commodity Futures Trading Commission, a woman named Brooksley Born, agreed. That May, she circulated a letter to business leaders and the Clinton administration suggesting that banks be required to provide greater disclosure in derivatives trades, and maintain reserves to cushion against losses. ...

Clinton's reigning economic foursome - "especially Rubin," according to Greenberger - called Born in for a meeting and pleaded their case. She refused to back down, however, and continued to push for more regulation of the derivatives. Then, in June 1998, Rubin went public to denounce her move, eventually recommending that Congress strip the CFTC of its regulatory authority. In 2000, on its last day in session, Congress passed the now-notorious Commodity Futures Modernization Act, which had been inserted into an 1l,000-page spending bill at the last minute, with almost no debate on the floor of the Senate. Banks were now free to trade default swaps with impunity.

But the story didn't end there. AIG, a major purveyor of default swaps, approached the New York State Insurance Department in 2000 and asked whether default swaps would be regulated as insurance. At the time, the office was run by one Neil Levin, a former Goldman vice president, who decided against regulating the swaps. Now freed to underwrite as many housing-based securities and buy as much credit-default protection as it wanted, Goldman went berserk with lending lust. By the peak of the housing boom in 2006, Goldman was underwriting $76.5 billion worth of mortgage-backed securities - a third of which were subprime - much of it to institutional investors like pensions and insurance companies. And in these massive issues of real estate were vast swamps of crap.

Take one $494 million issue that year, GSAMP Trust 2006-S3. Many of the mortgages belonged to second-mortgage borrowers, and the average equity they had in their homes was 0.71 percent. Moreover, 58 percent of the loans included little or no documentation - no names of the borrowers, no addresses of the homes, just zip codes. Yet both of the major ratings agencies, Moody's and Standard & Poor's, rated 93 percent of the issue as investment grade. Moody's projected that less than 10 percent of the loans would default. In reality, 18 percent of the mortgages were in default within 18 months.

Not that Goldman was personally at any risk. The bank might be taking all these hideous, completely irresponsible mortgages from beneath-gangster-status firms like Countrywide and selling them off to municipalities and pensioners - old people, for God's sake - pretending the whole time that it wasn't grade-D horseshit. But even as it was doing so, it was taking short positions in the same market, in essence betting against the same crap it was selling. Even worse, Goldman bragged about it in public. "The mortgage sector continues to be challenged," David Viniar, the bank's chief financial officer, boasted in 2007. "As a result, we took significant markdowns on our long inventory positions .... However, our risk bias in that market was to be short, and that net short position was profitable." In other words, the mortgages it was selling were for chumps. The real money was in betting against those same mortgages.

"That's how audacious these assholes are," says one hedge-fund manager. "At least with other banks, you could say that they were just dumb - they believed what they were selling, and it blew them up. Goldman knew what it was doing." I ask the manager how it could be that selling something to customers that you're actually betting against - particularly when you know more about the weaknesses of those products than the customer - doesn't amount to securities fraud.

"It's exactly securities fraud," he says. "It's the heart of securities fraud."

Eventually, lots of aggrieved investors agreed. In a virtual repeat of the Internet IPO craze, Goldman was hit with a wave of lawsuits after the collapse of the housing bubble, many of which accused the bank of withholding pertinent information about the quality of the mortgages it issued. .... But once again, Goldman got off virtually scot-free, staving off prosecution by agreeing to pay a paltry $60 million - about what the bank's CDO division made in a day and a half during the real estate boom.

The effects of the housing bubble are well known - it led more or less directly to the collapse of Bear Stearns, Lehman Brothers and AIG, whose toxic portfolio of credit swaps was in significant part composed of the insurance that banks like Goldman bought against their own housing portfolios. In fact, at least $13 billion of the taxpayer money given to AIG in the bailout ultimately went to Goldman, meaning that the bank made out on the housing bubble twice: It hosed the investors who bought their horseshit CDOs by betting against its own crappy product, then it turned around and hosed the taxpayer by making him payoff those same bets.

And once again, while the world was crashing down all around the bank, Goldman made sure it was doing just fine in the compensation department. In 2006, the firm's payroll jumped to $16.5 billion - an average of $622,000 per employee. As a Goldman spokesman explained, "We work very hard here."

But the best was yet to come. While the collapse of the housing bubble sent most of the financial world fleeing for the exits, or to jail, Goldman boldly doubled down - and almost single-handedly created yet another bubble, one the world still barely knows the firm had anything to do with.

BUBBLE #4 - $4 A GALLON
By the beginning of 2008, the financial world was in turmoil. Wall Street had spent the past two and a half decades producing one scandal after another, which didn't leave much to sell that wasn't tainted. The terms junk bond, IPO, subprime mortgage and other once-hot financial fare were now firmly associated in the public's mind with scams; the terms credit swaps and CDOs were about to join them. The credit markets were in crisis, and the mantra that had sustained the fantasy economy throughout the Bush years - the notion that housing prices never go down - was now a fully exploded myth, leaving the Street clamoring for a new bullshit paradigm to sling.

Where to go? With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market - stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil. In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a "flight to commodities." Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008.

That summer, as the presidential campaign heated up, the accepted explanation for why gasoline had hit $4.11 a gallon was that there was a problem with the world oil supply. In a classic example of how Republicans and Democrats respond to crises by engaging in fierce exchanges of moronic irrelevancies, John McCain insisted that ending the moratorium on offshore drilling would be "very helpful in the short term," while Barack Obama in typical liberal-arts yuppie style argued that federal investment in hybrid cars was the way out.

GOLDMAN TURNED A SLEEPY OIL MARKET INTO A GIANT BETTING PARLOR - SPIKING PRICES AT THE PUMP.

But it was all a lie. While the global supply of oil will eventually dry up, the short-term flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the short-term supply of oil rising, the demand for it was falling - which, in classic economic terms, should have brought prices at the pump down.

So what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help - there were other players in the physical-commodities market - but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures - agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. ... In 1936, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission - the very same body that would later try and fail to regulate credit swaps - to place limits on speculative trades in commodities. As a result of the CFTC's oversight, peace and harmony reigned in the commodities markets for more than 50 years.

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldman-owned commodities-trading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren't the only ones who needed to hedge their risk against future price drops - Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too.

This was complete and utter crap - the 1936 law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone. But the CFTC, amazingly, bought Goldman's argument. It issued the bank a free pass, called the "Bona Fide Hedging" exemption, allowing Goldman's subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.

Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008, when the number of speculators in the market - driven there by fear of the falling dollar and the housing crash - finally overwhelmed the real physical suppliers and consumers. By 2008, at least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers - and that's likely a conservative estimate. By the middle of last summer, despite rising supply and a drop in demand, we were paying $4 a gallon every time we pulled up to the pump.

What is even more amazing is that the letter to Goldman, along with most of the other trading exemptions, was handed out more or less in secret. "I was the head of the division of trading and markets, and Brooksley Born was the chair of the CFTC," says Greenberger, "and neither of us knew this letter was out there." In fact, the letters only came to light by accident. Last year, a staffer for the House Energy and Commerce Committee just happened to be at a briefing when officials from the CFTC made an offhand reference to the exemptions.

"1 had been invited to a briefing the commission was holding on energy," the staffer recounts. "And suddenly in the middle of it, they start saying, 'Yeah, we've been issuing these letters for years now.' I raised my hand and said, 'Really? You issued a letter? Can I see it?' And they were like, 'Duh, duh.' So we went back and forth, and finally they said, 'We have to clear it with Goldman Sachs.' I'm like, 'What do you mean, you have to clear it with Goldman Sachs?'" ... [I]n a classic example of how complete Goldman's capture of government is, the CFTC waited until it got clearance from the bank before it turned the letter over.

Armed with the semi-secret government exemption, Goldman had become the chief designer of a giant commodities betting parlor. Its Goldman Sachs Commodities Index - which tracks the prices of 24 major commodities but is overwhelmingly weighted toward oil - became the place where pension funds and insurance companies and other institutional investors could make massive long-term bets on commodity prices. Which was all well and good, except for a couple of things. One was that index speculators are mostly "long only" bettors, who seldom if ever take short positions - meaning they only bet on prices to rise. While this kind of behavior is good for a stock market, it's terrible for commodities, because it continually forces prices upward. "If index speculators took short positions as well as long ones, you'd see them pushing prices both up and down," says Michael Masters, a hedge-fund manager who has helped expose the role of investment banks in the manipulation of oil prices. "But they only push prices in one direction: up."

Complicating matters even further was the fact that Goldman itself was cheerleading with all its might for an increase in oil prices. In the beginning of 2008, Arjun Murti, a Goldman analyst, hailed as an "oracle of oil" by The New York Times, predicted a "super spike" in oil prices, forecasting a rise to $200 a barrel. At the time Goldman was heavily invested in oil through its commodities-trading subsidiary, J. Aron; it also owned a stake in a major oil refinery in Kansas, where it warehoused the crude it bought and sold. Even though the supply of oil was keeping pace with demand, Murti continually warned of disruptions to the world oil supply, going so far as to broadcast the fact that he owned two hybrid cars. High prices, the bank insisted, were somehow the fault of the piggish American consumer; in 2005, Goldman analysts insisted that we wouldn't know when oil prices would fall until we knew "when American consumers will stop buying gas-guzzling sport utility vehicles and instead seek fuel-efficient alternatives."

But it wasn't the consumption of real oil that was driving up prices - it was the trade in paper oil. By the summer of2008, in fact, commodities speculators had bought and stockpiled enough oil futures to fill 1.1 billion barrels of crude, which meant that speculators owned more future oil on paper than there was real, physical oil stored in all of the country's commercial storage tanks and the Strategic Petroleum Reserve combined. It was a repeat of both the Internet craze and the housing bubble, when Wall Street jacked up present-day profits by selling suckers shares of a fictional fantasy future of endlessly rising prices.

In what was by now a painfully familiar pattern, the oil-commodities melon hit the pavement hard in the summer of 2008, causing a massive loss of wealth; crude prices plunged from $147 to $33. Once again the big losers were ordinary people. The pensioners whose funds invested in this crap got massacred: CalPERS, the California Public Employees' Retirement System, had $1.1 billion in commodities when the crash came. And the damage didn't just come from oil. Soaring food prices driven by the commodities bubble led to catastrophes across the planet, forcing an estimated 100 million people into hunger and sparking food riots throughout the Third World. ...

BUBBLE #5 - RIGGING THE BAILOUT
After the oil bubble collapsed last fall, there was no new bubble to keep things humming - this time, the money seems to be really gone, like worldwide-depression gone. So the financial safari has moved elsewhere, and the big game in the hunt has become the only remaining pool of dumb, unguarded capital left to feed upon: taxpayer money. Here, in the biggest bailout in history, is where Goldman Sachs really started to flex its muscle.

It began in September of last year, when then-Treasury secretary Paulson made a momentous series of decisions. Although he had already engineered a rescue of Bear Stearns a few months before and helped bail out quasi-private lenders Fannie Mae and Freddie Mac, Paulson elected to let Lehman Brothers - one of Goldman's last real competitors - collapse without intervention. ("Goldman's superhero status was left intact," says market analyst Eric Salzman, "and an investment-banking competitor, Lehman, goes away.") The very next day, Paulson greenlighted a massive, $85 billion bailout of AIG, which promptly turned around and repaid $13 billion it owed to Goldman. Thanks to the rescue effort, the bank ended up getting paid in full for its bad bets: By contrast, retired auto workers awaiting the Chrysler bailout will be lucky to receive 50 cents for every dollar they are owed.

Immediately after the AIG bailout, Paulson announced his federal bailout for the financial industry, a $700 billion plan called the Troubled Asset Relief Program, and put a heretofore unknown 35-year-old Goldman banker named Neel Kashkari in charge of administering the funds. In order to qualify for bailout monies, Goldman announced that it would convert from an investment bank to a bankholding company, a move that allows it access not only to $10 billion in TARP funds, but to a whole galaxy of less conspicuous, publicly backed funding - most notably, lending from the discount window of the Federal Reserve. By the end of March, the Fed will have lent or guaranteed at least $8.7 trillion under a series of new bailout programs - and thanks to an obscure law allowing the Fed to block most congressional audits, both the amounts and the recipients of the monies remain almost entirely secret.

Converting to a bank-holding company has other benefits as well: Goldman's primary supervisor is now the New York Fed, whose chairman at the time of its announcement was Stephen Friedman, a former co-chairman of Goldman Sachs. Friedman was technically in violation of Federal Reserve policy by remaining on the board of Goldman even as he was supposedly regulating the bank; in order to rectify the problem, he applied for, and got, a conflict-of-interest waiver from the government. Friedman was also supposed to divest himself of his Goldman stock after Goldman became a bank-holding company, but thanks to the waiver, he was allowed to go out and buy 52,000 additional shares in his old bank, leaving him $3 million richer. Friedman stepped down in May, but the man now in charge of supervising Goldman - New York Fed president William Dudley - is yet another former Goldmanite.

The collective message of all this - the AIG bailout, the swift approval for its bank-holding conversion, the TARP funds - is that when it comes to Goldman Sachs, there isn't a free market at all. The government might let other players on the market die, but it simply will not allow Goldman to fail under any circumstances. Its edge in the market has suddenly become an open declaration of supreme privilege. "In the past it was an implicit advantage," says Simon Johnson, an economics professor at MIT and former official at the International Monetary Fund, who compares the bailout to the crony capitalism he has seen in Third World countries. "Now it's more of an explicit advantage." ...

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

That is what the firm paid in taxes in 2008, an effective tax rate of exactly one, read it, one percent. The bank paid out $10 billion in compensation and benefits that same year and made a profit of more than $2 billion - yet it paid the Treasury less than a third of what it forked over to CEO Lloyd Blankfein, who made $42.9 million last year.

How is this possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix." In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely hosed corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income. This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes. A GAO report, in fact, found that between 1998 and 2005, roughly two-thirds of all corporations operating in the U.S. paid no taxes at all.

This should be a pitchfork-level outrage - but somehow, when Goldman released its post-bailout tax profile, hardly anyone said a word. One of the few to remark on the obscenity was Rep. Lloyd Doggett, a Democrat from Texas who serves on the House Ways and Means Committee. "With the right hand out begging for bailout money," he said, "the left is hiding it offshore."

BUBBLE #6 - GLOBAL WARMING
Fast-Forward to today. It's early June in Washington, D.C. Barack Obama, a popular young politician whose leading private campaign donor was an investment bank called Goldman Sachs - its employees paid some $981,000 to his campaign - sits in the White House. Having seamlessly navigated the political minefield of the bailout era, Goldman is once again back to its old business, scouting out loopholes in a new government-created market with the aid of a new set of alumni occupying key government jobs.

AS ENVISIONED BY GOLDMAN, THE FIGHT TO STOP GLOBAL WARMING WILL BECOME A "CARBON MARKET" WORTH $1 TRILLION A YEAR.

Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits - a booming trillion-dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade.

The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Here's how it works: If the bill passes; there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billions worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.

The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand-new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of an electricity suppliers in the U.S. total $320 billion.

Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they're the profit-making slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues. (One of their lobbyists at the time was none other than Patterson, now Treasury chief of staff.) Back in 2005, when Hank Paulson was chief of Goldman, he personally helped author the bank's environmental policy, a document that contains some surprising elements for a firm that in all other areas has been consistently opposed to any sort of government regulation. Paulson's report argued that "voluntary action alone cannot solve the climate-change problem." A few years later, the bank's carbon chief, Ken Newcombe, insisted that cap-and-trade alone won't be enough to fix the climate problem and called for further public investments in research and development. Which is convenient, considering that 'Goldman made early investments in wind power (it bought a subsidiary called Horizon Wind Energy), renewable diesel (it is an investor in a firm called Changing World Technologies) and solar power (it partnered with BP Solar), exactly the kind of deals that will prosper if the government forces energy producers to use cleaner energy. As Paulson said at the time, "We're not making those investments to lose money."

The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets. There's also a $500 million Green Growth Fund set up by a Goldmanite to invest in green-tech ... the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot. Will this market be bigger than the energy-futures market?

"Oh, it'll dwarf it," says a former staffer on the House energy committee. ....

"If it's going to be a tax, I would prefer that Washington set the tax and collect it," says Michael Masters, the hedge fund director who spoke out against oil-futures speculation. "But we're saying that Wall Street can set the tax, and Wall Street can collect the tax. That's the last thing in the world I want. It's just asinine."

Cap-and-trade is going to happen. Or, if it doesn't, something like it will. The moral is the same as for all the other bubbles that Goldman helped create, from 1929 to 2009. In almost every case, the very same bank that behaved recklessly for years, weighing down the system with toxic loans and predatory debt, and accomplishing nothing but massive bonuses for a few bosses, has been rewarded with mountains of virtually free money and government guarantees - while the actual victims in this mess, ordinary taxpayers, are the ones paying for it.

It's not always easy to accept the reality of what we now routinely allow these people to get away with; there's a kind of collective denial that kicks in when a country goes through what America has gone through lately, when a people lose as much prestige and status as we have in the past few years. You can't really register the fact that you're no longer a citizen of a thriving first-world democracy, that you're no longer above getting robbed in broad daylight, because like an amputee, you can still sort of feel things that are no longer there.

But this is it. This is the world we live in now. And in this world, some of us have to play by the rules, while others get a note from the principal excusing them from homework till the end of time, plus 10 billion free dollars in a paper bag to buy lunch. It's a gangster state, running on gangster economics, and even prices can't be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can't stop it, but we should at least know where it's all going.

The bubbles don't come 'til the end of the program... Turn off the bubbles... Turn off the bubble machine!

Dubai Real estate sector - July 2009 update

2009-07-06T11:44:00.000-07:00

For instance, Nakheel has announced that parts of the Dh.350bn Jumeirah Garden City, the Trump International Hotel, the Tower on Palm Jumeirah, and the kilometer-high tower will be put on hold.

Even work on 'The Universe' will be restricted to preliminary studies, Nakheel said. Decrease in liquidity and financing has led to delay in progress of such projects, resulting in these projects bearing the brunt of financial turmoil. The mega-projects that had earlier brought about a property boom in Dubai, have now been put on hold.

Limitless too, revealed that it is reviewing construction schedule of Arabian Canal. The Head of Dubai's RERA, Marwan bin Galita, said that developers need to review their projects which are yet to be launched for sale. Recession is a very crucial phase, and RERA had been urging developers to do this about a year back, Galita said.

Moody's rating change - Emaar and Dubai Holding merger

2009-07-06T11:43:00.001-07:00

Moody's yesterday reacted to this scenario by downgrading its credit rating on Dubai Holding from level A2 to A3 and placed it on review for further downgrade. Similarly, Emaar has been put on review for possible downgrade from the current Baa1.

Although Moody's acknowledges that Dubai property market have almost bottomed out, the financial implications of its decline have taken its toll on both companies 'debt protection metrics', said Phillip Lotter, Senior Vice President at Moody's and Lead Analyst for Dubai Holding.

Best real estate investment overseas

2009-07-06T11:41:00.000-07:00

When it comes to overseas property investment there are several choices to be made. What type of investment a person makes depends on what they want from the property, and the type of investment they are making also affects the destinations they will consider.

If a person wants a holiday home that will pay for itself in rental income when the buyer is not using it, then that person is a holiday home investor. They must choose a property suitable to accommodate them and those they holiday with, in a destination that they would like to spend their holidays in, which also has a strong rental market.

Then there are pure-investors, which are then split into short-term investors and long-term investors.

Short-term investors must choose a property that is going to appreciate rapidly in value, in a location where there will be plenty of people to sell to 2-3 years down the line. For this they will probably be looking for a strong and/or growing internal housing market.

Long-term investors have a much wider choice; because, failing some catastrophic event, practically every property is going to appreciate in value over the long-term. The question is by how much?

For long-term investors it is primarily about economic growth and stability. It is growth in the economy that really pushes up house prices, and also increases internal demand for housing and second homes, which in turn provide the exit strategy.

Below we have attempted to narrow down this vast choice, by choosing five destinations we think will be among the most lucrative for long-term property investors.

Albania

Albania is busy making the transition into a great industrialised nation. The government has managed the economy excellently over the last decade, making some excellent structural reforms. Between 2002 and 2006 a quarter of Albania’s poorest were brought out of poverty. This led to the World Bank upping Albania’s status to a middle income country in 2007.

This meant that Albania could then apply for loans from international banks as oppose to being reliant on hand-outs from the likes of the International Monetary Fund.

Albania made the most of this; taking out several multi-million dollar loans for infrastructure projects to increase the productivity of the country.

These included a massive loan from the Japanese government to improve the country’s canal system, another from the European Bank for Reconstruction and Development to build a new terminal at Albania’s largest port in Duress, and another loan to build a major highway between Duress and Kosovo.

What’s more Albania is on track to join the European Union in 2014. Their loans and grants will aide in Albanian economic reforms, and EU membership will boost the economy massively.

Property values in Albanian cities, especially the capital Tirana will grow exponentially over the long-term, especially since they have such a low starting point. You can currently buy a luxury 2 bedroom apartment in Tirana for under £50K off the plan. This is likely to be worth £250-£500K within 7-10 years.

Panama

Even as almost every country in the world is falling into recession, the Panamanian economy is to grow by 3% this year according to the International Monetary Fund. Panama’s economy is primarily fuelled by its strong and massively growing services sector, especially the services involved in the operation of the Panama Canal, the only waterway that transverses the land-bank between Central and South America, as well as the Colon Free Trade Zone. More recently tourism has started to play a bigger part.

The Canal is currently being expanded to triple its capacity. This has led to Panama being at the centre of global investment, with many businesses seeing the benefit of having offices or distribution centres within range of the Canal. Because of this Panama’s economy will continue to grow between now and the completion of the expansion in 2014, when growth will accelerate.

The good thing about Panama is that it is the most popular choice for American retirees, to American’s what the Costas are to Brits if you like. This can be looked upon as an exit strategy for today’s investors. Panama property is likely to be worth 2-5 times its current value over the next 5-10-15 years.

Brazil

In Brazil’s case it is simple. Brazil is among the top 5 largest food exporters in the world, with the world’s second largest cattle stocks, and is also the second largest exporter of meat. On top of that Brazil’s services sector is growing rapidly as are the hospitality, construction, tourism and health tourism sectors

The world’s leading analysts have predicted that Brazil will be the fifth largest economy in the world in the next 5-10 years. Yet property is currently a lot less expensive than in the world’s other leading economies — especially if you look at houses on the internal market. As Brazil grows into one of the largest economies, property will grow in value till prices are similar to those in the other major economies, at which point growth will slow to the established market average of 10% per annum.

Tunisia

Tunisia is also one of the fastest growing emerging market economies, based mainly on massive growth in the agricultural sector, and more recently stable growth in the construction industry. The Tunisian economy is expected to grow by over 4% this year according to the IMF.

Tunisia is unique among the emerging markets because the government would not allow foreigners to buy property until over 75% of the internal population owned their own homes. This is far more than in the world’s larger economies, including the UK in which only 71% of people own their own homes.

Property in Tunisia presents the opportunity to buy property at the low prices you’d expect to find in an emerging market, within the developed internal housing market you’d expect to find in an established market. A great combo for the long-term investor.

Philippines

You can’t have a list of top overseas property investment destinations without including parts of Asia. The only reason there aren’t other Asian countries in this is because of laws preventing foreign ownership, and/or because they are better for short-term investment which is of course another article.

The Philippines is the tiger among the emerging markets of Asia. Its services sector continues to grow exponentially on the back of the outsourcing boom which has expanded due to the credit-crunch tightening the belts of global businesses. Worker remittances from the thousands of Filipinos working abroad also continue to grow. Because of these two industries and others, the Philippines economy is forecast to grow by over 4% this year according to the IMF.

The Philippines was among the worst affected by the Asian economic crash earlier this millennium, so property prices are currently among the lowest in Asia. Because of this and the fact that the two main growth sectors mentioned above are pretty much recession-resistant, the Philippines is an excellent long-term property investment destination.

Dubai real estate prices are heading down... 2009

2009-07-06T11:40:00.000-07:00

Moves by the Dubai government to inspire confidence in the once booming property market seem to have backfired.

The recession has shown that Dubai’s growth was financed by billions of pounds of debt and this burden is threatening to drag the city under the desert sands.

Several government-backed developers were at the forefront of major residential and commercial buildings in Dubai.

Shares in the largest listed Arab developer Emaar Property had 10% wiped off their price on announcement of the merger with Dubai Properties, Sama Dubai and Tatweer.

These three companies are all subsidiaries of Dubai Holdings, which has the backing of the Dubai royal family and analysts fear in the background assets are just being shuffled on paper to shore up ailing companies.

The new company would have assets of £32 billion, according to Emaar chairman Mohammed Alabbar. The problem is no one knows how far property prices have plunged in Dubai and whether they have hit the bottom yet.

Dubai has already issued a $10 billion bond tranche to help the crisis hit economy, but still faces debt issues.

The last official figures showed 40% was wiped off residential property values in the first few weeks of this year - and Alabbar confirmed his valuation of the assets was on figures for the end of 2008.

The mergers smack of debt consolidation by using Emaar’s stronger balance sheet as security against the weaker financial positions of the other companies.

The move has yielded mixed results for Emaar, with Standard & Poors (S&P) saying it revised its ratings for the firm to developing while Moody’s Investors Service, in a separate statement, said it placed Emaar on review for possible downgrade. Moody’s also downgraded Dubai Holding’s and placed it on review for further downgrade.

S&P also downgraded credit ratings for port operator DP World, the Jebel Ali Free Zone and Dubai Multi Commodities Centre Authority, all of which had been on negative credit watch since April.

“The rating actions reflect Standard & Poor’s reappraisal of the likelihood of extraordinary financial support by the Government of Dubai to government related entities to ensure the timely repayment of their financial obligations,” said S&P.

The downgrades also “reflect our view of the stand-alone credit profiles of the entities, which in certain instances, we consider to have deteriorated,” said S&P.

The agency added the reappraisal also was the result of “increased uncertainty regarding the government’s willingness to provide such support” to Nakheel, the property developer famed for building Dubai’s manmade islands.

For property investors, the S&P and Moody’s downgrades are definite red light to putting any more cash in to Dubai until the storm has settled and the full extent of how much debt the government is carrying as a major shareholder in just about every business deal in the country.

Investors should remember that all property market and financial data is historical and it may take a year or so for accounts and statistics to catch up with what is really happening on the ground in Dubai.

Dubai property prices should rise in Q4

2009-07-06T11:39:00.000-07:00

Dubai property prices are provisionally starting to stabilise as the market embarks on the road to recovery, according to Sherwoods Independent Property Consultants.

The company expects residential prices to start appreciating by Q4 2009, followed by a year of ‘stability’ in 2010.

Iseeb Rehman, managing director of Sherwoods says the fall in Dubai property prices has created the potential for good value for money deals for both buyers and investors.

Commenting on the fact that Dubai has recently introduced a series of property regulations and legal framework in an attempt to improve the sector’s transparency, Rehman told the press:

"I think the effort put in by RERA (Real Estate Regulatory Agency)has been extremely positive, but the challenge is to continue to carve out and enhance the regulatory framework and to ensure adherence of the same from all segments of the industry.

“Also, I think they now have to focus on sending positive signals into the market and make sure that the interests of every segment of the real estate industry is taken care of.”

Dubai free zones record significant drop in rent rates

2009-05-05T21:57:00.001-07:00

With the drop in demand owing to global economic crisis, rents for office spaces in Dubai Free Zones have also dropped considerably, noted an industry analyst.

The Research Analyst at CB Richard Ellis, Mohammed Faheem, said that the average rates of privately managed buildings in the free zones have dropped from the Dh.240-380 per sq ft range, to Dh.92-180 per sq ft during the first quarter of this year, thereby indicating a 52 to 61 percent drop.

This is a clear indication of decrease in demand. The free zones included in the survey were the Media City, Internet City, Dubai Silicon Oasis, Knowledge Village and Jumeirah Lake Free Zone.

Rents within the various zones vary from one another with few zones implementing rate restrictions to stimulate demand from occupiers. The buildings managed by free zone authorities have rents in the range of Dh.170-190 per sq ft.

The Dubai International Finance Center (DIFC), the special economic zone located in the central business district of the city, has fared much better, standing out above the rest of the prime locations in Dubai, with average rents ranging from $115-123 per sq ft. This is mainly because DIFC is a popular location among companies seeking to move in to Dubai.

Although, the lower rent rates in few of the free zones in Dubai, makes it more attractive, it really depends on the motive of the free zone managers. The rents are affected within the free zones mainly because the authorities have a different agenda than the commercial landlords, says Nicholas Maclean, Managing Director, C B Richard Ellis.

Multiple entry visa for property owners in UAE

2009-05-05T21:51:00.001-07:00

Property owners can now enter UAE on a multi-trip entry visa, which permits them for a stay of up to six months, according to a new decree issued by the Interior Ministry.

This move is hoped to improve the local economic environment and offer all fundamentals that would help ensure prosperity and economic growth in the country. The multiple-entry permit can be renewed under certain conditions.

The regulation forms a part of the efforts by the UAE government to introduce adequate regulations to boost the local economic sector and offers all factors that aims to contribute to the growth and prosperity of the local markets and be of benefit to the public.

This initiative would benefit people seeking to bring in their families to the UAE, and this emphasizes the keenness on the part of the government to provide them with family stability.

A new clause has been added to the Article 33 of the new regulation, which states that owners of built-in properties are allowed to stay for a six-month period, after which, the owner can depart to his home country or stay in any of the GCC countries. He can however, enter the country again, after meeting the necessary criteria.

Another new article of the new regulation, states that the owner must submit a multi-trip entry visa, with respect to the property, under the following conditions.

* The property should be a built-in property, and should not include owners of vacant lands.
* The title of the property should be obtained from the Property Registration Authority in the emirate, by the owner. Also, the house or the apartment should be wholly owned by the owner.
* The cost of the unit should not be less than Dh.1million. The unit should have the capacity to accommodate the members of the family. The owner can include his spouse and children's details in the visa application, and attach an insurance cover for himself and his family, which would be valid during he period of their stay in the country.
* The fixed income of the owner should not be less than Dh.10,000 or its equivalent in foreign currencies, whether inside or outside the county, although the visa doesn't offer the owner the right to work within the country.

The permit would be considered invalid if any of the above terms are not met. The regulation would be effective from its date of issuance.

40% decrease of Dubai property in Q1 2009 - Colliers International

2009-04-29T13:14:00.001-07:00

Colliers International, the global real estate consultancy, has released the Dubai House Price Index (HPI) for Q1 2009, which indicates a decline in the overall index of 41% for the first 3 months of 2009. The index, compiled using mortgage transaction data from financial institutions accounting for 60% of the mortgage market in Dubai, also demonstrates a 34% year-on-year decline between Q1 2008 and Q1 2009. At the end of Q1 2009, property prices in Dubai had returned to approximately the same level as those recorded in Q2 2007.

John Davis, CEO, Colliers International, said, "Negative sentiment is the key factor driving the decline in the Index and the availability of finance continues to impact the market. End-users are concerned about job security and therefore unwilling to enter the market, even if finance is available to them, while the price/yield gap is tempting professional investors to wait for further declines. On a more positive note, the Index remained unchanged in March 2009. However, we would caution that it is too early to say whether the halt in the decline of the Index can be sustained, especially over the traditionally quieter summer months."

Colliers' analysis also highlights a key change in Dubai real estate market as professional investors, focused on the yield generated by a property, became the primary purchaser type as end-users and speculators fell away from the market. The HPI also analyses the trends for prices achieved for completed properties as opposed to properties still under construction.

Dubai Property prices are expected to fall by 70-75%

2009-04-29T13:11:00.000-07:00

A recovery in the property market in Dubai is unlikely this year with some analysts predicting further steep falls in real estate prices.

The latest analysis from UBS Bank predicts that house prices in Dubai could plunge by up to 70% from their peak levels in 2008.

Analysts said that the real estate sector in Dubai will face a substantial glut next year while demand will continue to be weak as many of the expatriates who drove the property boom in recent years are losing their jobs and are returning home.

"In our view, we are still in relatively early stages of the property downcycle in UAE, and we believe risk-reward profits are not yet compelling for investors to consider market re-entry, hence, continued price declines are expected," said UBS.

UBS expects the average house price in Dubai drop to about Dh500 per square foot this year, compared to its peak of Dh1,850 in the fourth quarter of 2008. Prices have already fallen by 25% cent to about Dh1,400 per square foot.

It also predicts a further decline in Dubai's expatriate population which will fall by 8% this year and 2% in 2010. "We would not be surprised to find Dubai residential vacancy rates reach between 25% and 30% by the end of 2010," it said in its report.

UBS has also downgraded Emaar Properties, Union Properties and Aldar Properties, saying the UAE's property market fundamentals have weakened in the first quarter of 2009.

It cited existing investors defaulting on payments, insignificant incremental financing for both infrastructure projects and mortgage issuance and an increase in project cancellations

Dubai residential property prices have fallen by up to 42% over the last six months and have further to fall further to fall, according to the latest report Colliers International.

Ian Albert, Colliers' regional director said that speculators had largely quit the Gulf market and debt financing was unavailable, leaving only professional investors who only want nearly complete or income generating property investments.

New regulation likely for termination of off-plan contracts in Dubai

2009-04-07T12:01:00.001-07:00

The Dubai Land Department has amended the Article 11 of Law No.13 regulating the Interim Real Estate Register, and this will be released in 15 days time. Once, released the new regulation is hoped to introduce provision for cancellation of contracts, and is hoped to benefit the market.

The department had already issued an internal circular during November 2008, wherein the circular stated that in case of termination of an off-plan contract, the developer can retain 30 percent of the contract value (30 to 70 percent of the amount paid), and that this would be applicable to amounts exceeding 30 percent.

However, in case of termination of contract, the developer of the property will retain the amounts paid by the buyer, until the real estate is sold.

The Director-General of Dubai Land Department, Sultan Butti bin Mejren, has said that the revised article would establish new grades for properties and developers, and would be more than the 30-70 rule, currently applicable.

The Law No.13, Article 11, which is currently applicable states that a developer is required to keep the Land Department informed, if a buyer breaches a sales contract. Thereafter the department would notify the purchaser personally or by registered mail or email, giving him one month time to fulfill the contractual obligations. At the end of the term, the developer can cancel the contract and refund the sum paid by the buyer, after deducting an amount not more than 30 percent of the total value of the unit.

Discount for Dubai property? Easy!

2009-04-06T11:23:00.000-07:00

New property in Dubai could now be snapped up for huge discounts after agents said some prices have fallen by as much as 70 per cent in 12 months.

Some brokers also believe the correction will continue into this year and will reach a level similar to prices seen in 2005, before a full recovery starts.

Earlier this year many real estate companies began to introduce flexible payment plans, discounts, and revised prices for people who had already put down deposits.

Even some of the plushest property in the emirate has been hit, with brokers claiming in February that some real estate schemes on the man-made Palm Jumeirah island had dropped by 50 per cent.

Quoted by the Khaleej Times, Mohammed Khan of real estate brokers New World Capital said: “We have already seen prices plummet across Dubai’s property sector by 50 to 70 per cent to the level of 2005.

“We expect the plunge to continue for the next six to eight months to bring prices down to their original level five years ago.”

According to the Khaleej Times, Khan mentioned a number of real estate schemes which have seen price drops, including villas at the Garden Homes project at AED 6 million ($1.6 million), down from AED 15 million ($4 million) a year ago.

Also mentioned were falls in property prices at Jumeirah Lake Towers, which were selling at AED 700 ($190) per sq ft of real estate compared to previous levels of AED 1,500 ($407) per sq ft

Dubai property authorities to clarify default rules

2009-04-06T11:22:00.000-07:00

A new real estate law amendment is to be introduced in Dubai to clarify what happens when a property buyers defaults on payments.

At present Article 11, Law 13, states that if a buyer defaults on a sales contract the developer can cancel the contract and return the buyer's money minus 30%. But there has been confusion over whether the law applies to 30% of the money paid to date or 30% of the total amount due.

The Dubai Land Department is expected to release an amended Article 11 this month introducing new provisions for the cancellation of contracts. 'We will release an amendment to Article 11 in the coming weeks. It is something good for the market as it is more comprehensive and detailed,' said the department's Director General, Sultan Butti bin Mejren

'The revised article will set new grades for properties and developers. It will be more than the 30-70 rule which is now applicable,' he added.

Meanwhile the Real Estate Regulatory Authority has clarified confusion over its new rental index. A spokesman denied reports that it was not going to be issued in April and confirmed it will be published this month and will reflect falling rent values.

It is expected to include lower rental values to take into account the current slowdown in the property market.

In a statement Mohammed Khalifa bin Hammad, the director of Real Estate Relationship Regulation at Rera, said the index was being updated as a result of data collected through the online rental contract registration programme.

TARP - Troubled Assets Relief Program

2009-02-01T05:27:00.000-08:00

TARP allows the United States Department of the Treasury to purchase or insure up to $700 billion of "troubled" assets. "Troubled assets" are defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."

In short, this allows the Treasury to purchase nonliquid, difficult-to-value assets from banks and other financial institutions. The targeted assets can be collateralized debt obligations, which were sold in a booming market until 2007 when they were hit by widespread foreclosures on the underlying loans. TARP is intended to improve the liquidity of these assets by purchasing them using secondary market mechanisms, thus allowing participating institutions to stabilize their balance sheets and avoid further losses.

TARP does not allow banks to recoup losses already incurred on troubled assets, but officials hope that once trading of these assets resumes, their prices will stabilize and ultimately increase in value, resulting in gains to both participating banks and the Treasury itself. The concept of future gains from troubled assets comes from opinion in the financial industry that these assets are oversold, as only a small percentage of all mortgages are in default, while the relative fall in prices represents losses from a much higher default rate.

Another important goal of TARP is to encourage banks to resume lending again at levels seen before the crisis, both to each other and to consumers and businesses. If TARP can stabilize bank capital ratios, it should theoretically allow them to increase lending instead of hoarding cash to cushion against future, unforeseen losses from troubled assets. Increased lending equates to 'loosening' of credit, which the government hopes will restore order to the financial markets and improve investor confidence in financial institutions and the markets. As banks gain increased lending confidence, the interbank lending interest rates (the rates at which the banks lend to each other on a short term basis) should decrease, further facilitating lending.

The TARP will operate as a “revolving purchase facility.” The Treasury will have a set spending limit, $250 billion at the start of the program, with which it will purchase the assets and then either sell them or hold the assets and collect the 'coupons'. The money received from sales and coupons will go back into the pool, facilitating the purchase of more assets. The initial $250 billion can be increased to $350 billion upon the President’s certification to Congress that such an increase is necessary. The remaining $350 billion may be released to the Treasury upon a written report to Congress from the Treasury with details of its plan for the money. Congress then has 15 days to vote to disapprove the increase before the money will be automatically released.

The authority of the United States Department of the Treasury to establish and manage TARP under a newly created Office of Financial Stability became law October 3, 2008, the result of an initial proposal that ultimately was passed by Congress as H.R. 1424, enacting the Emergency Economic Stabilization Act of 2008 and several other acts.

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A TARP In The Trillions?

2009-01-31T11:58:00.000-08:00

How much to bail out the banks now? $3.5 trillion by one estimate.

A federal program to guarantee or buy bad assets from the ailing U.S. bank sector could come with a $3.5 trillion price tag.

That would push the accumulated costs of rescuing the financial markets over the last year through various federal loan, stock purchase, debt guarantee and other programs close to $9 trillion and counting, with practically no end in sight for the bad news battering the banking industry.

That figure doesn't count the $825 billion economic stimulus plan also under consideration.

"We expect massive federal intervention into the financial sector from the new administration in the coming months," says Keefe Bruyette & Woods (nyse: KBW - news - people ) analyst Frederick Cannon, who calculated the $3.5 trillion figure, which is one-quarter of the banking sector's $14 trillion in combined assets.

So far, more than 200 banks have gotten $191 billion in relief from the $700 billion Troubled Asset Relief Program, according to Keefe Bruyette. About $90 billion of it went to just two banks, Citigroup (nyse: C - news - people ) and Bank of America (nyse: BAC - news - people ).

Just before leaving office, the Bush administration asked Congress to release the remaining $350 billion authorized under the TARP plan, which passed in October.

The new Obama administration will certainly use that money--and ask for more. "The ultimate costs of this crisis will be greater if we do not act with sufficient strength now," said Treasury nominee Timothy Geithner in his Senate confirmation hearing Wednesday. "In a crisis of this magnitude, the most prudent course is the most forceful course."

Geithner, the president of the Federal Reserve Bank of New York who has been in the crucible as the financial crisis erupted over the last year, told the Senators that the TARP needed "serious reform."

The new idea: A federal plan to buy up bank assets, relieving bank balance sheets of the need to constantly adjust deteriorating market values, could come in the form of an "aggregator" bank or other type of bad bank structure--a throwback to the 1980s real estate lending crisis--that would buy assets from banks.

This was former Treasury Secretary Henry Paulson's original vision for the TARP fund, but he switched course and decided to devote $250 billion to direct equity stake investments in banks before waffling again and heading back in the direction of asset purchases.

In November, and again last week, the Treasury agreed to guarantee more than $400 billion of assets at Citigroup and Bank of America.

The availability of federal bank bailout funds attracted other industries, including the automakers, who managed to get $17 billion under the program, and American International Group (nyse: AIG - news - people ), an insurer, which got $40 billion.

Regulators have been trying to calm panicked markets by emphasizing that most banks (98% of the industry according to Federal Deposit Insurance Corp. Chairman Sheila Bair) are well-capitalized.

That doesn't mean they don't need to raise more capital, however, a fact that just about every bank stock analyst has dwelled on in the last few months.

"There is a fear factor," Bair acknowledged in a television interview Wednesday. People don't know how bad the economy is going to get, what the outer limit on these losses could be."

A federal "bad bank" could warehouse billions in deteriorating assets and relieve banks of the need to continually shore up capital. It would come at a steep price to shareholders, however, potentially wiping them out.

But free from the burden on their balance sheets, banks could revive lending, regulators say, and get the economy humming again.

World's Best Places For Real Estate Buys

2009-01-31T11:57:00.000-08:00

Washington, D.C., traditionally takes a back seat to world cities like London, New York and Tokyo when it comes to real estate investment.

That's likely to change.

Thanks to a proposed $1 trillion wave government spending, investors are flocking to D.C. for opportunities in the commercial and residential real estate markets. All these new programs will need offices, after all, and their employees will need places to live.

This year, Washington leapfrogged London for the first-place ranking in the world's best cities for real estate investment. But don't count out the world's financial capitals just yet--even with massive financial troubles in London and New York, those cities finished second and third, respectively.
In Depth: World's Best Places For Real Estate Buys

Why? It's the appeal of long-term stability, and fears that emerging countries are going to take a harder hit. While the U.S. property market sputters, China is poised for its worst deflation in a decade, focused heavily on property price declines, according to Deutsche Bank (nyse: DB - news - people ).

"For the U.S. and U.K., part of it is flying back to safety," says François Ortalo-Magne, a real estate professor at the Wisconsin School of Business. " For China and India, there's a sense that we went there and tried it, but it wasn't producing."

Behind the Numbers
Forbes' rankings come from the Association of Foreign Investors in Real Estate, a research association that tracks where member investors are finding the best opportunities around the world. AFIRE surveys its 200 members, who collectively hold $700 billion in cross-border real estate.

U.S. cities surged up this year's list: San Francisco moved to sixth from 24th last year; Los Angeles moved to seventh from 19th; Houston moved to eigth from 32nd. Cities in the Asia Pacific region dropped: Sydney fell to 11th from ninth; Hong Kong dropped to 22nd from 10th place.

This year, investors know that valuations can't be trusted. In 2008, the American residential market fell 19%, according to the Case-Shiller index; U.K. prices dropped 16% according to Nationwide, a U.K. builder. Commercial values in both countries have started to soften due to recessions on either side of the pond.

In 2008, investors to spend tried to call the bottom and gambled in emerging markets. This year, they're looking at premium locations in cities with proven track records.

"We don't feel comfortable that we are able to identify what value is," says Richard Kessler, chief operating officer of Benenson Capital Partners, a global real estate investment group. "Having said that, if an opportunity exists on Park and 57th Street, or something we've always wanted to own on Pennsylvania Avenue in D.C., or some other very strategic long-term asset, we would look at it."

That makes 2009 the year of playing it safe and not chasing exotic opportunities in far-flung locations. It's even injected a sense of humility into the investing world.

"There used to be a rivalry between New York and London," says Kenneth Patton, divisional dean of the New York University Schack Institute of Real Estate. "The subject has shifted to the fact that we're both in the same lifeboat, and maybe it's leaking."

While some investors play it safe, others are content to wait out the real estate downturn entirely.

"Most of the [usual] participants are sitting on the sidelines," says Kessler. "There's a lot of capital, but everyone is uncomfortable about deploying that capital."

For their part, the optimists think 2009 might be the year that sideline money starts to come back into the marketplace--and, especially for the cities on this list, it will come back in a flood, not a trickle.

"There's a lot of money that needs to be invested, says Ortalo-Magne. "The instant people feel an inkling of a turnaround, money is going to flow in."

Whether that inkling comes in 2009 or 2010, however, is an altogether different question.

Dubai Moves to Rein in Rents

2009-01-31T11:55:00.000-08:00

DUBAI - Tenants whose home or commercial property is less than a quarter below the average price for a similar premises will not have to pay any increase in rent, according to a decree issued on Monday by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE, in his capacity as Ruler of Dubai.

Mohammed Ibrahim Al Shaibani, director of the Dubai Ruler’s Court said the decree was aimed at curbing the increase in property prices within the emirate to maintain a balance between the interests of both landlords and tenants and to ensure stability of the real estate sector, according to state news agency, Wam.

The decree, the Ruler’s first of 2009, provides for a freeze of rent prices in 2009 for tenants renewing contracts signed in 2008.

It states that the rental value of those properties must be equal to or less than 25 per cent of a corresponding rent average established by the rental index.

The guideline for the rental index was issued on Wednesday last week by Dubai’s Real Estate Regulatory Authority and is expected to replace the rent cap.

While the authority has issued a point system for evaluating the rental value of a property, the average rents for properties are yet to be ascertained.

“The evaluation process for all types of properties is based on giving each property points for various attributes such as building facilities, near-by retail outlets, age and condition of building, etc,” according to the Rera statement.

“These points are used as a statistical basis to set a minimum average and a maximum average rent price.”

The minimum average and maximum average rent price are yet to be declared and the status of the evaluation process has not been given by the authority.

However, the decree issued on Monday states that the rate would be established when the tenancy contract is renewed.

The ruling also defines a formula designed to generate lower rent values but allowing a proportional increase in 2009.

Another decree outlined the relationship between the tenant and landlord. The law, which came into effect on December 1 last year, has been amended. It includes points on the basis of which a tenant can be evicted, such as non-payment of rent or if the tenant is found subletting the property.

“Bad Banks” for Beginners

2009-01-29T05:35:00.000-08:00

To understand this, you need to understand what a bank balance sheet looks like. I’ve covered this elsewhere, but for now a simple example should do. Let’s say that the Bank of Middle-Earth has $105 in assets (mortgages, commercial loans, cash, etc.), $95 in liabilities (deposit accounts, bonds issued, other financing), and therefore $10 in capital.

The assets are things that have value and theoretically could be sold to raise cash; the liabilities are promises to pay money to other people; and the capital, or the difference between the two, is therefore the net amount of value that is “owned” by the common shareholders. Next assume that the assets fall into two categories: there are $60 of “good” assets, such as loans that are still worth what they were when they were made (no defaults and no increased probability of default) and $45 of “bad” assets, such as loans that are delinquent, or mortgage-backed securities where the underlying loans are delinquent, etc.

Say the bank takes a $5 writedown on these bad assets, so it now counts them as $40 of assets, but if it actually had to sell them right now they would only sell for $20 because no one wants to buy them. (When a bank has to take a writedown and for how much is a complicated subject; suffice it to say that in many cases banks have assets on their balance sheet at values that everyone knows could not be realized in the current market, and this is completely legal.)

Right now the bank balance sheet has $100 in assets, $95 in liabilities, and $5 in capital, so it is still solvent. However, everyone looking at the bank thinks that those $40 in bad assets are really only worth $20, and is afraid that the bank may need to take another $20 writedown in the future. So no one wants to buy the stock and, more importantly, no one wants to lend it money, because a $20 writedown would make the bank insolvent, it could go bankrupt, stockholders would get nothing, and creditors (lenders to the bank) would not get all their money back. Because no one wants to lend it money, the bank itself hoards cash and doesn’t lend to people who need money.

Although not necessarily to scale, this is roughly what the banking systems of the U.S. and several other major economies look like right now.

How does a bad bank solve this problem? There are two basic models: one in which each sick bank splits into a good bank and a bad bank, the other in which the government creates one big bad bank and multiple sick banks unload their toxic assets onto it.

Bank mitosis

In the first model, the Bank of Middle-Earth splits into two: a Bank of Gandalf and a Bank of Sauron. The Bank of Gandalf gets the $60 in good assets, and the Bank of Sauron gets the $40 in bad assets (that may only be worth $20). The Bank of Sauron will probably fail. But the Bank of Gandalf no longer has any bad assets, so people will invest in it and lend money to it, and it will start lending again.

This model has one tricky problem, though: How do you allocate the liabilities of the old bank between the two new banks? Luigi Zingales says the simplest solution is to do it on a proportional basis. Because the Bank of Gandalf gets 60% of the assets, it gets 60% of the liabilities. So if the Bank of Middle-Earth owed someone $1, now the Bank of Gandalf owes him 60 cents and the Bank of Sauron owes him 40 cents. Now the Bank of Gandalf has $60 in assets, $57 in liabilities (60% of $95), and $3 in capital; the Bank of Sauron has $40 in bad assets (that are really only worth $20) and $38 in liabilities. Instead of one sick bank with $100 in assets that isn’t doing any lending, you have a healthy bank with $60 of assets that is lending, and what Zingales calls a “closed-end fund holding the toxic assets” whose creditors will probably get some but not all of their money back. The tricky part is that this is a good deal for shareholders in the Bank of Middle-Earth and a bad deal for creditors to the Bank of Middle-Earth, and so it’s illegal for banks to divide up the liabilities like this. Zingales recommends legislation to make it possible, but I suspect that even were Congress to pass such a bill, there would still be lots of lawsuits challenging its constitutionality.

I started with Zingales’s version of bank mitosis because it illustrates the principle neatly, but the legal complication makes it difficult to implement in practice. Another way to divide one back into two is to find separate funding for the Bank of Sauron. This is what UBS did in November, with the support of the Swiss government. UBS had $60 billion in bad assets that it unloaded onto the new bad bank. To pay for those bad assets, however, the bad bank needed $60 billion. How did it get it? First UBS raised $6 billion in new capital by selling shares to the Swiss government. Then it invested those $6 billion in the bad bank - that became the bad bank’s capital. Then the Swiss central bank loaned the bad bank $54 billion. (There is little chance that any private-sector entity would lend a self-confessed bad bank money, but this was in the public interest.) Because shareholders get wiped out first, that effectively means that UBS was taking the first $6 billion in losses, and any losses after that would be borne by the Swiss government. This constitutes a subsidy by the Swiss government to UBS, but one that was justified by the need to stabilize the financial system. At the end of the transaction, UBS had diluted its shareholders by 9% (because of the new shares sold to the government) and had a $6 billion investment in the bad bank it was likely to lose, but it had cleaned its balance sheet of $60 billion in toxic assets.

One issue in this version is how to value the assets that are being sold to the bad bank. If they are sold at market value ($20 in the Middle-Earth example), then the parent bank has to take a writedown immediately, which arguably defeats the purpose of the whole transaction (because that could render the parent bank immediately insolvent). In that case, the parent bank would need to be recapitalized (presumably by the government) immediately, and the “bad bank” would actually be not that bad, since it is holding assets it bought on the cheap. If they are sold at the value at which they are carried on the parent bank’s balance sheet, then the bad bank is essentially making a stupid purchase (overpaying for securities it expects to decline in value) for the public good. In the UBS case, forcing UBS to provide the $6 billion in capital was a way of forcing UBS to suffer at least some of the loss that the bad bank was expected to incur.

Big Bad Bank

The second model, which has been proposed by Sheila Bair, Ben Bernanke, and others, is the “aggregator” bank. Instead of splitting every sick back into a good bank and a bad bank, in this model the government creates one Big Bad Bank, which then takes bad assets off the balance sheets of many banks. (This doesn’t necessarily have to be created by the government; the Master Liquidity Enhancement Conduit - bonus points for anyone who remembers what it was for - was supposed to be funded by private-sector banks. But in today’s market conditions, the government is the only plausible solution.) In this plan, the capital for the Big Bad Bank is provided by the Treasury Department (perhaps out of TARP), and the loan comes from the Federal Reserve, which has virtually unlimited powers to lend money in a financial emergency. Once this Big Bad Bank is set up and funded, it will buy toxic assets from regular banks, which will hopefully remove the uncertainty that has hampered their operations.

Yes, the Big Bad Bank is similar in concept to the original TARP proposal, and it faces the same central question: what price will it pay for the assets (the issue discussed two paragraphs above)? If it pays market value, it could force the banks into immediate insolvency, so recapitalization would have to be part of the same transaction. If it pays current book value (the value on the banks’ balance sheets), it will be making a huge gift to the banks’ shareholders. There has been talk of forcing participating banks to take equity in the Big Bad Bank (as in the UBS deal), presumably to make them shoulder some of the overpayment. In any case, the money the government puts in, up to the market value of the assets purchased, is a reasonable investment for the taxpayer; but there will need to be additional money, either to recapitalize the remaining banks (which, if done at market prices, would lead to government majority ownership), or to overpay for their assets. Pick one.

One last issue: Creating a bad bank works nicely if you can draw a clear line between the good assets and the bad assets. My theoretical Bank of Gandalf above only has good assets, so there are no doubts about its health. But what if you can’t? This crisis started in subprime mortgage-backed securities, and it’s pretty clear that things like second-order CDOs based on subprime debt are deeply troubled. But as the recession deepens, all sorts of asset-backed securities - such as those backed by credit card debt or auto loans - start losing value, and then even simple loan portfolios lose value as ordinary households and businesses that were creditworthy just a few years ago go into default. Put another way, if it were possible to neatly separate off the bad assets, then the second Citigroup bailout would have worked, since that provided a government guarantee for $300 billion in assets. Yet Citigroup’s stock price, even after Wednesday’s huge rally (up 31%) is still below the price on November 21, the last trading day before that bailout was announced. Clearly no one believes that Citigroup had only $300 billion in bad assets.

The goal of a bad bank is to restore confidence in the good bank, and it’s not clear how much of the parent bank’s assets have to be jettisoned before anyone will have confidence that only good assets are left. One potential problem with the Big Bad Bank is that banks could be tempted to underplay their problems, sell only some of their bad assets, hope the rest are all good, take the bump in their stock price . . . and then show up two quarters later with more bad assets. If investors suspect that is going on, and that the banks are still holding onto bad assets, then the scheme will fail. The solution to that problem is to overpay for the assets, which gives banks the incentive to dump all of them onto the Big Bad Bank . . . and then we are back where we started.

Update: Citigroup’s division into a good bank (Citicorp) and a bad bank (Citi Holdings, which includes the $300 billion in assets guaranteed by you and me) is more symbolic than anything else at this point, because they are still just divisions of one company. So if Citi Holdings goes broke, the creditors can demand money from Citicorp, which defeats the purpose of a good/bad separation. The goal here was more to communicate what the bank’s long-term strategy is (the hope is to either sell off or run off everything in Citi Holdings) in hopes of convincing shareholders that the management knows what they are doing.

Key facts about USA Bad Bank

2009-01-29T05:14:00.000-08:00

Who will run Bad Bank?

FDIC Chairman Sheila Bair would run the operation, Bloomberg said, citing a source familiar with the matter. It said another source told the news agency that Bair is arguing that her agency could help finance the effort by issuing bonds guaranteed by the FDIC.

Who will create the Bad Bank?

The Federal Deposit Insurance Corp is aiming to take control of a widely mooted 'bad bank', to be set up by the U.S. government to mop up toxic assets of struggling banks, Bloomberg News reported on Tuesday.

How the Funding for Bad Bank will be arranged?
It remains to be seen how the "bad bank" will be funded, given the original $700bn (£493bn) bail-out fund has just $350bn remaining, up to $100bn of which is to be allocated towards the housing crisis, with the need to return to the US Congress for extra funding a likely possibility.

Why does the Administration need to be fair?

This is a one-off, emergency measure. The fact that it is worrying about other banks demanding the same deal suggests the terms are not sufficiently punitive to Citi management (note the stress on the impact on the key actors). But even if it is not as nasty as it ought to be to Citi, people in power have the right to be capricious. Citi is unique on so many dimensions that it is easy to argue that a deal for Citi need not apply to anyone else.

6 Reasons to invest in Dubai Real Estate

2009-01-20T12:02:00.000-08:00

With lavish lifestyles, tall buildings, world-class facilities, and growing economy, Dubai has increasingly becoming a true heaven for all. With so much to offer, Dubai is indeed the hottest real estate destination in the world. In this article, we'll discuss why anyone should invest in the Dubai Property:

One of the primary reasons for investing in Dubai is to earn consistent money through renting out properties. It will help in earning money in the longer run.

Secondly, it is said that the basic value of the property will never change no matter how much the cost of the property might fluctuate. It simply means that the property can always be seen as a money generating tool.

Third, property is always seen as the finest tool for seeking collateral for loans and stuff. They are the best way to get some security.

Fourth, with more and more entertainment projects are heading towards Dubai, investing in land has become the golden opportunity for all real estate property dealers. Development of places such as Dubai Palm lands, Dubai International Financial center, as well as other big centers, investment in Dubai property is the most beneficial real estate opportunity.

Fifth, if you compare with the property prices of Dubai with rest of the world, you'll find that Dubai still has comparatively inexpensive property rates in the world. However, the property rates around the world are touching the skies these days, but in Dubai, one can find good and quite affordable rates.

Sixth, the property portfolio in Dubai helps an investor to diversify the risk. Real estate in Dubai is potential to transform the risks into different types of properties.

Dubai gives you the hundred reasons to get a suitable real estate property in some of the best locations. In fact, one can find property in sale in Dubai to realize the dreams. So, why wait? Get a suitable property now!

8 things you must do in Dubai

2009-01-20T12:01:00.000-08:00

Dubai Museum
This museum is located at Al Fahidi Fort. This was built in 1787 and has served as a palace, garrison and prison. In 1970, it was converted to a novel and creatively conceptualized museum depicting Dubai’s history.

Dubai Mosques
Jumeirah Mosque is one of the biggest and beautiful mosques in Dubai and is resplendent of modern Islamic architecture. The mosque is built of stone in medieval Fatimid tradition with twin minarets and a majestic dome. The Grand Mosque is another beautiful mosque with the tallest minaret at 70 meters. The Grand Mosque has 45 small domes and 9 large domes.

Heritage & Dining Villages
You can go back in time and experience some of Dubai's heritage. The heritage village located near the mouth of the Creek has potters and weavers working on their pearling crafts, along with dancers, Arabic restaurants and many other traditional pursuits.

Dubai Zoo
The zoo in Jumeirah is home to a variety of animals alongside native Arabian animals, which include the Arabian Wolf. Also there is a huge aviary.

Wonderland
This is a must-see amusement and water park for kids. It has a host of water rides, speed slides, a roller coaster etc. In addition, there is a water mist show and water cinema which is an exciting experience.

Magic Planet
This is a splendid and exciting children's recreation zone. It is filled with fairground rides, bowling alleys, electronic games and a mini golf course.

Encounter Zone
It is another kids’ zone, and is situated in Wafi Shopping Mall. Encounter Zone offers many rides, games, the Crystal Maze horror chamber, simulated rides etc.

Wild Wadi
Situated next to the Jumeirah Beach Hotel is the 12-acre water park filled with exciting rides, wave pools and a host of water fun for all ages. The park is set in an ancient theme of Arabia.

Ajman Corniche

2009-01-16T23:56:00.000-08:00

Ajman Corniche comprises seven interlinked towers which give it a distinctive architectural design. The two highest sections of the structure stand at 47 floors, on top of an eight level podium.

In terms of scale the building will become a major landmark along the Ajman coastline with the two highest sections of the building standing at forty seven floors built on top of an eight level podium. The building comprises a 200m long structure of varying heights enveloped by a flowing wall of glass which is interrupted on its surface by openings of varying shape and size forming sky gardens.

The Ajman Corniche Residence Project is backed by the Ajman Government who have engaged an international team of Consultants to act on their behalf for the Project.

Villa in Ajman - Q&A

2009-01-16T23:55:00.000-08:00

Q: I am thinking of buying a villa in Ajman, a 2 bed for USD 200k.
Does this Seem to be a good deal? How far is Ajman from Dubai and is Ajman far from the beach?

A: Villa for that price looks good. Again, the developer and research is important. If it's for investing 3 BDR villas do better provided you can stretch yourself a little bit more.

Villas in Ajman should do well. Ajman should be 30 kms and yes Ajman has a coastline. Need to see if villas are beach front. For that price, I don't think so.

A lot is happening in Ajman.

I read this in a book.....Always buy in an area where growth is coming. If you are a little early or little wrong, the growth will take care of it. If you invest in an area where growth has been and growth is not continuing, then when you are wrong, you are wrong forever.

Ajman is an emerging market and an early entry will not hurt especially with Villas.

Rent in ajman

2009-01-16T23:52:00.000-08:00

Despite the more than 30 per cent increase in rents in 2008, Ajman rents are the cheapest compared to Dubai or Sharjah.

Fast access of the emirate via the Emirates Road is also forcing people from as far away as Dubai to Ajman.

Flats in Al Nuaimiya, Zahra and Hamidya are high in demand because they are near the highway and it takes about 20 minutes to get to Dubai from here, one agent said.

By next year 7,000 new apartments will be ready for rent, according to Alison Wilkinson, real estate agent at Northern Emirates Property.

A two-bedroom apartment in Al Nuaimiya is renting at between Dh35,000 and Dh45,000. "You can't find a two bed-room flat in Sharjah today," she said.

According to one agent from Memon Real Estate, rents in Ajman have shot up by Dh6,000 to Dh7,000.

A market analyst said a two-bedroom luxury flat in Dubai is now renting at Dh90,000. A mid-level flat in Bur Dubai or Karama is renting between Dh70,000 and Dh80,000, she said. "Rents are going exorbitantly high despite the 15 per cent cap."

She said there will be an "excess of apartments" in Dubai in the near future, but said it is difficult to predict how that would impact on rents because of the way inflation is now headed.

The other reason why rents are rising in Ajman is because of lack of new rental properties, one agent said.

Most of the new towers being built are for sale, not rent, according to Tariq Salahuddin from Al Ruwaid real estate agency.

Apartments in 20 new residential towers in Karama are for sale, he said, adding that in Al Nuaimiya 17 towers are nearing completion and most of them have been sold.

There is also hectic construction activity on Shaikh Khalifa Bin Zayed Street on the way to Ras Al Khaimah, apparently to also attract property buyers from the adjoining emirate.

Unlike Sharjah, where rents cannot be legally increased in the first three years, Ajman has no such law and landlords can hike it every year. But unlike other emirates, renters do not have to pay "key money" or a guarantee deposit in Ajman.

The rental market in the Northern Emirates is expected to pick up even more after the summer holidays, sometime in August, the agents said.

Rents less than half of Dubai Rents in fairly new apartment buildings in popular districts
Emirate	Two bedroom
Ajman	Dh33,000 to Dh45,000
Sharjah	Dh40,000 to Dh60,000
Dubai	Dh70,000 to Dh120,000

Sweet Homes sells out 70 per cent of AED 3 billion ‘Ajman Uptown’ despite 40 per cent property price hike in 2008

2009-01-05T02:07:00.000-08:00

Sweet Homes, a leading UAE-based developer and multi-service provider to the real estate sector, has announced that it has sold out 70 per cent of its AED 3 billion ‘Ajman Uptown’, the first freehold residential township in Ajman. The announcement follows a GCC-wide roadshow organized by Sweet Homes and is in line with the developers’ AED 2 billion investment plan for 2008. The strong sales reflect the vibrancy of Ajman’s real estate industry and the appeal of ‘Ajman Uptown’, which comprises of seven commercial and residential towers, a hotel and hotel apartments complex, and villas and townhouses, despite a 40 per cent hike in property prices in Ajman in 2008. Reports also indicate that investments into Ajman’s property sector have crossed the AED 400 billion mark this year, which augurs well for the success of the ‘Ajman Uptown’ project.

The strong performance follows Sweet Homes’ successful participation in high-profile property exhibitions as part of an extensive region-wide campaign to promote its ‘Ajman Uptown’ project. The impressive sales indicate that the global financial crisis might actually have a positive effect, as Arab and expatriate investments into the US and European markets are expected to flow back to the local and national property sectors. Ajman in particular is experiencing a property boom due to its investor-friendly property laws and reasonable project rates, with the emirate having attracted significant Foreign Direct Investment (FDI), which has exceeded the rest of the other emirates’ by 300 per cent.

“As the third largest property market in the UAE, Ajman is strategically positioned to attract more foreign investments into the real estate sector, with over 33 per cent of development projects in the area owned by expatriates, as compared to 11 per cent in other emirates. The Ajman Government has mandated the implementation of a solid infrastructure that will entice high-caliber real estate developers and has recently adopted Escrow Accounts and STRATA regulations similar to those adopted in Dubai. Further, the recent signing of an AED 7.34 billion contract between the Ajman Government and Malaysia-based power producer Malaysian Mining Corporation (MMC) to build the first coal-fired power plant in the region is set to build investor confidence, and we are positive of an increased response to our projects,” said Fahad Sattar Dero, CEO, Sweet Homes Group.

Sweet Homes has been boosting its regional presence through an extensive roadshow highlighting its ‘Ajman Uptown’ township community. The developer participated in the recently held ‘City View Syria 2008 - The 2nd Tourism Investment & Real Estate Development Exhibition and Conference’ and ‘Kuwait Property Exhibition 2008’, where it showcased the two office towers - ‘Freesia’ and ‘Gardenia’ and the five mixed-use luxury towers - ‘Heliconia’, ‘Jatropha’, ‘Iris’, ‘Kentia’ and ‘Ludisia’, within its ‘Ajman Uptown’ project. Both events have helped Sweet Homes significantly expand its investor base and motivated the property specialist to plan appearances in other upcoming real estate investment and development shows. With offices in the UAE, Oman and Qatar, Sweet Homes continues to undertake regional awareness campaigns and participate in high profile promotional activities, such as its ongoing participation as a major sponsor for the Doha Shopping Festival, with aims to draw further attention to its latest residential development.

“Our projects, plans and philosophies were warmly received during our roadshow, proving the soundness and appeal of our comprehensive property development approach. We hope that our activities will spur investments not only into Ajman but also into the broader UAE market. Sweet Homes has indeed shown through these events that many opportunities remain despite today’s highly competitive and unpredictable real estate environment,” concluded Dero.

Ajman Uptown’s prime location and its distinction as the first freehold villa and townhouse community in Ajman have made it a highly-sought project among local, regional and international investors. The prime residential development includes 1,504 G+2 villas and townhouses and 7 G+4 buildings spread over 4 million square feet of land that is directly accessible from the Emirates Road and adjacent to Emirates City. Scheduled for completion by 2010, Ajman Uptown will feature a school, a healthcare centre, a fire fighting station, several mosques, a health and recreation club, a swimming pool, markets, shopping mall, hotel & hotel apartments, and convenient and spacious parks.

The Emirate of Ajman has made substantial improvements to its property laws and infrastructural strategies to further attract realty investors. Ajman is the second emirate after Dubai to introduce a freehold property law as early as 2002; the law allows non-GCC developers and buyers to own freehold land and property in designated areas determined and approved by the ruler. The emirate has also streamlined its inheritance policies and introduced bank guarantees to safeguard investor's interest. Finally, Ajman has made substantial investments into utilities, sewage management and transport projects to establish suitable infrastructural foundations for more intensive property development activities.

Dubai Villa Evictions - reaction #1

2009-01-05T02:02:00.002-08:00

s long as people are waiting in line to come here, why should the empowered authorities not try to take every hard-earned Dirham out of our pockets? While everybody -including my family- continues to complain about, and suffer from, the ever increasing cost of living here no laws are implemented to protect or improve our miserable lot.

Residents need to put themselves on the other side of the table briefly when assessing this topic. If this were YOUR country, would you sanction foreigners working on your soil sending their earnings back home? Or would you implement ways and means to ensure their meagre earnings were spent in your country? The strategic plan calls for chipping away at your earnings one Dirham or one Riyal at a time, be it through Salik or Empost fee increases, to ensure your earnings stay HERE. Have you noticed that the prices of US or dollar-denominated goods have increased on par with products which are sourced in other currency denominations, such at Sterling or Euro? While the Dirham is officially tied to the US dollar with a constant exchange rate the selection of US-made groceries has gone up in price by 50+ percent?

Rather than airing complaints in public, these matters need to be addressed in personal letters or emails to appropriate local government officials, perhaps through your Embassy / Consulate, as a matter of international interest. My Consulate could care less, suggesting I go home rather than disrupt the cocktail party circuit they enjoy. At least at home the media finds such tales of woe and despair fascinating, eager to publish them. As do the late-night talk-shows on TV.

The choice is ultimately YOURS - work here, spend your earnings, fall into debt. Use your end-of-service gratuity to pay off your debt before you leave or just abscond as so many seem to do who are unable to repay their loans? You decide. Scores are waiting to take your place at a lower salary than yours. They too will learn the hard way that there's no long-term future here.

Strict deadline announced for villa evictions

2009-01-05T02:02:00.001-08:00

Thousands of people could be forced to find new homes as Dubai Municipality launches a new crackdown on families sharing villas.

Municipality chiefs announced a 30-day deadline on Sunday for residents sharing villas to vacate them.

Omar bin Abdul Rahman, head of the Building Inspection Section at the Dubai Municipality, told UAE daily Khaleej Times that landlords must ensure that only one family lives in their villas.
If they failed to comply with the new rules within the deadline, the municipality would slap fines up to $13,500 on them, the official said.

The new deadline comes as officials aim to prevent the sort of overcrowding that cost several labourers their lives after a villa blaze in Naif early this month.

Abdul Rahman told the paper: “They (the landlords) need to evict the families and others sharing villas. If a villa still houses more than one family, bachelor or labourer after one month, the landlord would face fines in addition to the disconnection of water and electricity supplies."

Dubai Property price growth rate slowing

2008-12-03T20:51:00.001-08:00

Dubai: House prices in Dubai are still rising, but the rate of increase is expected to slow in the coming year, according to the latest research into the local property market.

There was an increase of just 5 per cent in the growth of house prices in Dubai in the three months to September, compared to the previous quarter.

But according to international property firm Colliers, the rate of growth in house prices has been dropping rapidly since the beginning of the year.

Although house prices increased by 43 per cent in the first quarter, by the second quarter the growth rate had declined to 16 per cent.

Growth in residential prices is expected to slow further as the year comes to an end.

Nevertheless, year-on-year growth in the third quarter was 80 per cent.

The negativity in the market is most notable, perhaps, on Palm Jumeirah, where prices have fallen by up to 40 per cent since September. Some previously much sought-after residences in the Burj Dubai area have also seen price drops of up to 30 per cent.

This phenomenon has been attributed to the fact that an increased number of homes is coming onto the market and loans are hard to come by because of the international financial crisis.

"I think [growth in the property market] is slowing ... but what's happened is the formation of micro-markets.

"For instance, values in DIFC, from a sales and a leasing perspective, are still strong," said James Knowles, director of sales and leasing at Asteco.

The volume of transactions so far in the fourth quarter are low, but this is because people are now more cautious about investing and limited money is available from lenders, Knowles said.

The 5 per cent increase in house prices is also not bad compared to other property markets that have slowed more drastically because of the international financial crisis, he said.

"On the one hand, the index results show a 5 per cent increase in overall residential prices for the third quarter, which is good news. On the other hand, over the past three quarters, the rate of growth has slowed to the point where we expect overall price growth to enter negative territory in the fourth quarter," Ian Albert, regional director for consultancy services, Colliers, said.

Buyers in search of a mortgage used to be able to get a loan for around 80 to 85 per cent of the home value. However, it has become difficult to get pre-approved loan-to-value property loans.

Loans in the 60 to 70 per cent region are now more common.

Knowles said this was not a bad thing, as speculation would decrease.

Dubai real estate NOT affected by negative equity problems

2008-12-03T20:48:00.000-08:00

The full scope of the real estate meltdown in Dubai is not clear and will be evident only after a few months. The Gowealthy Research Team evaluated the Negative Equity Problem in detail and has noted that it has not affected the Dubai real estate market. The term Negative Equity implies a condition in which the value of the asset used to secure the loan slides below the outstanding balance of the loan. High interest rates and a drop in the property prices have forced small-time speculators to undersell their properties in Dubai. But after evaluating prices at the various freehold clusters, we have observed that although there has been a price correction of 30 to 40 per cent at Palm Jumeirah, Business Bay and Dubai Waterfront as well as several high-yield zones, Dubai does not face negative equity problems. Our study reveals that the Dubai Property Bubble has ended; property developers are either scaling back their new projects or discussing mergers/ take overs to grapple with the situation.

Currently expatriate buyers in Dubai are guaranteed mortgages of up to 65% of the total value of the property and national buyers over 80%. Property buyers cannot avail of full mortgage options. It is only recently, in 2007 to be precise, that home financiers and lending institutions started issuing flexible loan packages. Under such circumstances, the issue of negative equity does not arise because buyers are not allowed the total price of the asset as mortgage.

Following the global liquidity crunch, banks and financial institutions in the country have tightened their lending policies and raised interest rates despite government reassurances. A majority of such agencies have even stopped issuing mortgages. Why has this happened? Primarily because, the mortgage crisis-induced credit collapse has restricted banks and financiers from lending money to one another. To overcome the situation, the Government has come up with a 'rescue' plan and announced the merger of the country's top financiers, Amlak and Tamweel into the federally administered Real Estate Bank.

The abrupt disruptions in credit flow have affected both real estate developers and investors, resulting in a general slowdown of the sector. Yet, in stark contrast to reports that failure of risk and recovery models adopted by the region's banks and financing institutions led to the current credit crisis, we note that the bulk of funds were used to finance investment assets like shares and bonds.

Burj Dubai Construction Progress

2008-11-28T01:13:00.000-08:00

Burj Dubai (Arabic: برج دبي‎ "Dubai Tower") is a supertall skyscraper under construction in the Business Bay district of Dubai, United Arab Emirates, and is the tallest man-made structure ever built, despite being incomplete. Construction began on September 21, 2004 and is expected to be completed and ready for occupation in September 2009.[1]

The building is part of the 2 km2 (0.8 sq mi) development called "Downtown Dubai", at the "First Interchange" (aka "Defence Roundabout") along Sheikh Zayed Road at Doha Street. The tower's architect is Adrian Smith[4] who worked with Skidmore, Owings and Merrill (SOM) until 2006.[5] The architecture and engineering firm SOM is in charge of the project.[4] The primary builders are Samsung Engineering & Construction and Besix along with Arabtec.[6] Turner Construction Company was chosen as the construction manager.[7]

The total budget for the Burj Dubai project is about US$4.1 billion[8] and for the entire new 'Downtown Dubai', US$20 billion. Mohamed Ali Alabbar, the CEO of Emaar Properties, speaking at the Council on Tall Buildings and Urban Habitat 8th World Congress, said that the price of office space at Burj Dubai had reached $4,000 per sq ft (over $43,000 per sq m) and that the Armani Residences, also in Burj Dubai, were selling for $3,500 per sq ft (over $37,500 per sq m)

Maids: just because you sponsor them, it doesn't mean you own them.

2008-11-28T01:06:00.001-08:00

domestic worker in Dubai, "Jane", has given a testimony of her job and life. It's republished below, slightly edited for punctuation:

"Hi.. I worked in JUMEIRA as a DH.. for 4 years and 5 months.. to a good arab family.. I dont have any comments for them because they are so good to me. They don't look at me as a maid but as a sister to them.. but some of the agencies are taking for granted about the salary.. they get some extra.. which is.. that extra is a big help for our family.

"The problem is... some of the employers.. same my employer are abusing me, like they don't even tell me, if I eat or no? Because they want me to stay all the time with the kids, or tell me to go and sleep just for 30 minutes. You know 5 minutes closing my eyes it's like 1 day of sleeping for me, or I can't even go to the bathroom leaving the children because they are just very busy of talking the phone from morning until evening. Instead, I would find way, how to go and make a release.

"Or I went to some places which is so class or social places without changing my clothes for the reason that she forget to tell me, while I'm so shy and felt embarassed with my kabayan. You know, just uttering those simple words without action is very hard for them while they're doing nothing. Working from 6:00am to 11:pm, sometimes 2:00am or 3:00am is optional when have parties or weddings. Tell me, who is not tired of working and can't have even a nap just for a minutes.

"They know that I am good and I do all the works and taking care of children is really important which is the big factor for them. And they don't even want to find another until I become old. I'm talking about my efforts, they took out from me because they think I'm always ok even they saw me with their eyes that I'm tired everytime.

"They don't mind me because they think they gave me good salaries which is 700Dhs. for 4 years and 5 months without day-off. And I spent with my own money buying those necessary things even they knew that it is their obligations to buy for us. What you expect from it? How much is left from my salary? As long as they can get benefits from me.. they don't mind me at all.. just because I'm so good to them while they are taking for granted.

"Mostly, the problem with arab people are being a LAZY. Machines will sometimes not function or shutdown reading all the datas, how much more the human?"

Paris Hilton is going to settle in Dubai

2008-11-28T01:01:00.000-08:00

Dubai: Paris Hilton could be the latest in a constellation of stars to light up Dubai's property sector, in a possible $2 million (Dh7.3 million) deal with Abu Dhabi-based developer, Hydra Properties.

Hilton, who was famous before she was even born, will add a dash of desert glam to Dubai's celebrity skyline.

"Mr Hilton is having a lawyer look over a million-dollar agreement between a property company in the UAE and Paris Hilton. The deal would give the company 'naming rights' for three years to call a set of twin towers Paris Hilton Towers. The deal currently stands at around $1.5-2million," said celebrity booking agent, Mike Esterman.

Officials at Hydra Properties were not immediately available for comment.

Although Hilton's roots are firmly entrenched in the hotel business, branding a property is just a hop, skip and a jump away.

And there is perhaps nowhere more fitting for a celebrity to flash a smile and name a building than in Dubai, where real estate is very much the name of the game.

As a recent wave of celebrities-turned-real-estate-professionals have found, investors in Dubai real estate are cashing in on a booming economy.

If agreed, Hilton would follow in the impressive footsteps of tennis great, Boris Becker, Formula One champion Michael Schumacher and golf-pro, Tiger Woods.

But if it's glamour you're after, you'd be hard pushed to find a star more focused on glam than Paris.

Of course, aside from those celebrities who want to see their name on a tower, there are other stars here working with local developers who know the bigger the name, the bigger the interest.

There's property heavyweight, Donald Trump with Nakheel, fashion legend Giorgio Armani and Emaar and most recently, bona fide Hollywood superstar, Brad Pitt, working with Zaabeel Properties.

Ras al-Khaimah

2008-11-27T07:44:00.000-08:00

Ras Al-Khaimah (Arabic: رأس الخيمة, transliteration: rās al-Khaymah, literally "The Top of the Tent") is one of the emirates of the United Arab Emirates. It covers an area of 656 square miles (1700 km²). Ras Al Khaimah is in the northern part of the Persian gulf.

The emirate is ruled by Sheikh Saqr bin Mohammad al-Qassimi. It is in the northern part of the UAE bordering Oman. The emirate has a population of about 250,000 inhabitants.

The city has a population of 219,897 as of 2008.[1] It is served by the Ras Al Khaimah International Airport in Al Jazirah Al Hamra.

The city has two main sections, Old Ras Al Khaimah and Nakheel, on either side of the creek which flows through Ras Al Khaimah.

UAE - short information

2008-11-27T07:43:00.000-08:00

The United Arab Emirates is a federation which consists of seven emirates. The largest emirate is Abu Dhabi which contains the nation's capital city Abu Dhabi. Five emirates have one or more exclaves, in addition to the main territory. The seven emirates:

* Abu Dhabi
* Ajman: 1 exclave
* Dubai: 1 exclave
* Fujairah: 2 exclaves
* Ras al-Khaimah: 1 exclave
* Sharjah: 3 exclaves
* Umm al-Quwain

Abu Dhabi
Dubai
Sharjah
Al Ain
Ajman
RAK
Al Fujairah
UAQ
Major cities of the United Arab Emirates

There are two areas under joint control. One is jointly controlled by Oman and Ajman, the other by Fujairah and Sharjah.

There is an Omani enclave surrounded by UAE territory, known as Wadi Madha. It is located halfway between the Musandam peninsula and the rest of Oman, on the Dubai-Hatta road in the Emirate of Sharjah. It covers approximately 75 square kilometres (29 sq mi) and the boundary was settled in 1589. The north-east corner of Madha is closest to the Khor Fakkan-Fujairah road, barely 10 metres (33 ft) away. Within the enclave is a UAE exclave called Nahwa, also belonging to the Emirate of Sharjah. It is about 8 kilometres (5 mi) on a dirt track west of the town of New Madha. It consists of about forty houses with its own clinic and telephone exchange.

Cost of living in Dubai

2008-11-24T11:12:00.000-08:00

COST OF LIVING IN DUBAI

Dubai is generally a very expensive city. Some of the goods provided in Dubai, such as vegetables, computers and cars, are cheaper in the UEA than elsewhere due to the tax free zones. Visits to the doctor (especially those which are state run) and gas are also inexpensive. Prices for groceries are about the same as in Canada, Australia and European members like the UK. To rent a house or an apartment can be more expensive than it would be in another country, so is a visit to the hairdresser.

Those who come to Dubai to live and work should try and get an employment package that includes a housing allowance. For a fully furnished studio you have to calculate 6.250 Dh per month (approximately 1.350 €), for an unfurnished two bedroom apartment 6.700 Dh per month (1.400 €), for an unfurnished three bedroom apartment 7.900 Dh per month (1.700 €) and for a villa in the region around Midriff 8.400 Dh per month (1.800 €). On top of this there is an amount of approximately 420 € per person needed for maintenance.

A three course meal with drinks is around 110 Dh or 24 € and a bottle of beer (which is only available in hotel bars and restaurants) costs 18 Dh or nearly 4 €.

Will falling Dubai house prices ever outpace rental increases?

2008-11-24T11:10:00.001-08:00

The International Monetary Fund recently published an interesting study of housing markets in emerging economies which pointed out that the average decline in house prices in a downturn was 30 per cent spread over four years. This contrasted with much sharper but short-lived plunges in emerging market equities.

Now the first thing to note in the context of the Dubai property market is that we have not reached the top of the cycle yet. House prices and rentals are still going up. And even the moderately pessimistic Asteco real estate company thinks this will last for another 12-18 months.

Therefore, anybody buying a house will save on rising rentals for up to two years. Perhaps then they will additionally save somewhat less in the succeeding three to four years. Given that property yields are around eight per cent in Dubai, we might reasonably assume that in five years the buyer will have saved about 40 per cent of the cost of their home in rent that they would have otherwise paid.

Capital loss versus rental loss
Now what of the capital value of the same home? Let us assume an average annual gain of 10 per cent for the next two years, followed by an IMF-study average decline in three and not four years. Then you would have to figure in roughly a 10 per cent loss in capital over that five-year period.

On this calculation the savings in rent that would otherwise be paid out on comparable property clearly more than outweigh the risk of losing capital in a market downturn. Indeed the margin is quite wide, and this means that the capital loss on a home could be significantly bigger and it would still be better to buy than rent over a five year period.

This really comes down to what everybody knows who lives in Dubai. Rents are high and landlords are making an excellent return on their investment. Meanwhile, the cost of buying homes is cheap by international standards.

Comfort zone
Therefore, buying makes sense to avoid high rentals. But the additional comfort of this calculation is that even in a falling housing market the money saved from rents can more than offset a fall in capital value.

And buyers should also note that high inflation in the UAE will tend to protect the nominal value of homes. In such an environment buying now instead of renting makes good sense even if you see a property crash on the horizon; and waiting for a crash could prove an expensive error of judgment.

For one thing, paying rent is certain to loose you money while at least buying gives you a chance to win on the upside.

Dubai property fall is unavoidable

2008-11-24T11:08:00.001-08:00

The rapid deterioration in sentiment in the UAE has caught even the most pessimistic of observers by surprise.

Predictions that the once unshakable real estate market in the emirates, particularly Dubai, was set for a slowdown have come to fruition even more quickly than anticipated, despite the repeated assurances of senior Dubai officials that the market's onward march would not be deterred.

Reports have put the fall in property prices at 4 per cent in Dubai, and 5 per cent in Abu Dhabi, in August alone. Falls in September and October are likely to be even greater.

The first wave of redundancies at developers is now under way and project work is already slowing on some of Dubai's signature developments. By pulling credit lines to employees at some of Dubai's biggest companies, Emirates NBD, the region's biggest bank by assets, has signalled that it expects the market will continue to fall.

As the emirate's economic growth slows, more lay-offs will undoubtedly be announced.

The number of new workers arriving in the emirate will also dwindle, putting further down-ward pressure on real estate in the emirate.

Other banks in the country now face the choice of whether to try to attract the customers Emirates NBD is passing up, or also view them as too risky. Given that confidence in Dubai's real estate sector is now so low, they will be tempted to steer clear of customers who may quickly find themselves unemployed.

The Central Bank of the UAE says it is looking at ways to prop up the real estate sector, but it is difficult to see what it can do to persuade people to buy in a market that could be on the edge of freefall.

The best it can do is to allow the market to quickly find its floor, so the recovery can begin, and avoid falling into the trap of using government intervention to take on the impossible task of stopping a sharp correction in an overvalued market.

Dubai Property Prices Falling

2008-11-24T11:06:00.000-08:00

It’s not news that Dubai’s property market is expected to experience corrections next year and according to Morgan Stanley gradually decline by up to 10 percent by 2010. However, a real bombshell was dropped last Thursday when Arabian Business reported that Palm Jebel Ali’s island prices have depreciated some 40 percent in the last two months.

After all the hype and excitement about Dubai’s market, this news is certainly a wake up call for many would be investors who are standing on the brink of making a decision right now.

This fall in property values has been pinned on the global crisis and current investors who liquidate their assets in Dubai in order to keep their cash flow going.

This turn of events puts the development (and more to follow for sure) back to where they were some two years ago. To make matters worse, local Dubai mortgage providers acted and reduced home financing loan-to-value (LTV) to about 70 percent down from 90 in October. Of course this isn’t helpful for those looking to finance a property loan right now.

Five and six bedroom villas on the island used to be valued at around 16 million Dirham (approximately $4.35 million). In the last couple of months however these prices were depreciated to 9 million Dirham instead - a huge loss for current property owners.

Despite this, they didn’t really lose out on a bargain since overall the value of properties on the island increased by as much as 80 percent from the original launch buying price.

As reported from various realtors in Dubai, sales have dried up and making them seems harder these days, unless they accept a significant drop in property prices.

It will be interesting to see whether those predictions will come true in the near future. As for now, it is probably a wise move to hold on the investment for existing property owners while new buyers can snap up a bargain.

Dubai Marina at Dusk

2008-11-22T11:02:00.000-08:00

This is a photo of Dubai Marina at Dusk - look at the details and colors of the farthest buildings on the view... Dubai skyscrapers on the left and on the right. Perfect reason to visit Dubai for a holiday break.

Burj Dubai Street (photo)

2008-11-22T10:56:00.000-08:00

Here is a photo of Burj Dubai and the buildings across the street. Magnificient view of Dubai high street in the night...

Dubai Tower named as one of the Best 50 inventions of the Year

2008-11-21T13:36:00.001-08:00

The worlds first rotating skyscraper, 'The Dynamic Tower', has been named as one among the "Best 50 inventions of the Year" by the TIME Magazine, due to its revolutionary design and innovation.

Created by David Fisher, the renowned Italian architect, the tower was one of the first choices in a list of ground-breaking inventions. Every floor of the tower rotates independently so as to form a building that constantly changes its shape and appearance, resulting in a unique and evolving architectural landmark.

The environment-friendly tower is the first building to be completely self-powered with wind turbines, positioned horizontally between each floor. The photovoltaic cells on the roof of each rotating floor, produces solar energy.

The Dynamic Tower in Dubai will also be the first high-rise to be built completely from prefabricated parts that are custom-built in a workshop and then installed on site.

This method comes with several benefits, including environmentally clean on-site construction, reduced time and cost of construction, less onsite accidents. Residents of the tower can park their cars at the entrance of the apartments with voice activated systems.

The residents can get a glimpse of the world rotating around them when looking through the glass wall of the buildings. These buildings will also be the first wherein construction begins at the top, with each floor mechanically installed from top to bottom.

Property agents optimistic about Dubai property market

2008-11-21T13:34:00.000-08:00

Several property agents in Dubai predict a bright property market, with the sector expected to pick-up within next six months.

The CEO of Dubai Properties, Mohammed Binbrek, said that the current issue is more due to public sentiment, than due to liquidity or resource availability. Once the fears and concerns of the people are addressed, the business would return to normal.

The same optimism was seen among the respondents of a survey, involving 170 Dubai-based property agents, out of which 77 percent felt that the issues currently plaguing the Dubai real estate sector would vanish in six months time.

Pointing out to other markets, the Managing Director of Better Homes, Ryan Mahoney, said that the markets had a slow phase for a couple of months, and then improved in terms of transactions, depending on the availability of financial lending.

But Mahoney predicts that although the transactions may not rise to previous levels within next six months, the prices would stop falling, and then grow again, which may take about a year.

Key Questions From the G-20 Summit

2008-11-21T13:32:00.000-08:00

There are (at least) five fundamental questions that went unanswered at this past weekend's G-20 summit in Washington. In their attempt to show solidarity, the world leaders skipped over the complicated and contentious questions. But that's no long-term solution. Once they go home to their respective capitals, the finance ministers and other officials who met in Washington are going to be forced to make some tough decisions. Here are five puzzlers that will demand to be sorted out in the months ahead:

1. What is protectionism? The gathered ministers roundly condemned protectionism in all its forms and even agreed to take another stab at reviving the moribund Doha Round of global trade talks—if possible, by the end of this year. But it's hard to see how much progress they will be able to make when many of the efforts to revive national economies could be regarded as protectionism. For example, wouldn't extensive aid to the Big Three Detroit automakers constitute an illegal subsidy under the World Trade Organization's terms? For that matter, don't the massive aid packages flowing to banks, brokerage firms, and insurers in the U.S. and elsewhere constitute subsidies that are prohibited by the free-trade rules?

2. Should we be encouraging consumers to spend more, or not? There are two schools of thought on this central question. Many economists and ordinary people argue that a sharp drop-off in consumer spending is extremely dangerous, so government needs to help consumers find ways to keep spending. That's one of the reasons U.S. Treasury Secretary Henry Paulson revised the government's $700 billion troubled-asset relief program to support credit card borrowing, auto loans, and student loans. Yet other people, including some economists, say that excessive spending and borrowing got us into this mess in the first place—and that cutting back is exactly what Americans must do to restore balance to the global economy.

3. Is it important to put a floor under the prices of homes? There are two sides to this question as well. Treasury's Paulson has repeatedly argued that the financial crisis won't end until the decline in home prices reaches a bottom. So a lot of people want to stop them from falling further by providing financial incentives to buyers and by preventing more foreclosures. But other experts say that trying to prop prices above the level they naturally seek would merely delay the necessary market adjustment—keeping prices unaffordably high and making buyers afraid to step in because they anticipate further declines. It's hard to sort this one out because no one can reliably say what the "correct" level of home prices ought to be.

4. Should world leaders try to ensure that a financial crisis such as this one never occurs again? This seems like a no-brainer, but it's not. Sure, long-term reforms are needed. But there's a risk that clamping down on risky lending practices now could make matters worse in the short term. The G-20's communiqué instructs the various nations to report back by the end of March about the progress they've made on restructuring financial regulation. The danger is that in their zeal to show progress by then, government officials around the world will push lenders to tighten up, offsetting the elaborate efforts to provide fiscal and monetary support.

5. Do we need global coordination? This seems like another obvious yes. In the first paragraph of their declaration, the G-20 leaders said: "We are determined to enhance our cooperation and work together." Some cooperation is a good thing, of course. But notice that the leaders were quite vague about what they would do together in the short run. Most of their agreements were about long-term reform. This vagueness may be healthy. Each country's situation is unique. What the U.S. needs to do (consume less and save more) is precisely the opposite of what China needs to do (consume more and save less).

All in all, it's great that world leaders came together in an atmosphere of relative good will. Their intentions are good. But as someone once said, the road to hell is paved with good intentions. Hard thinking remains to be done.