They ought to be, for in contention is among the world’s most treasured cities-the emirate of Dubai. The truth is the entire affair was conducted under an atmosphere of strict secrecy and safety, with attendees requested to be tight lipped about the event. They were assisted by executives from Deloitte and other auditors. What is going to happen now is that the petition will be considered in the light of this demonstration and the recouping of the assets and liabilities, undoubtedly redrawn to demonstrate their ability to remain solvent even after the debt has been repaid.
What’s amazing is that this hasn’t sent enough positive signs throughout the area. In the long run it just might have to pay back the debt or part of it so as to block the negative opinion that has echoed throughout the world.
If that occurs, another question is if Dubai will recover from its current crisis and will that recovery be for a short or a long term. Analysts are divided on the issue, but it’s apparent that Dubai’s Government will itself need to do something in this respect, rather than to await the discussion of market forces. It’s understood that market forces are driven by consumer and business sentiment, and if that belief remains negative or there’s uncertainty about future actions, markets will see a reduction of value. Initially announcing that it would encourage the thing and after withdrawing its support, it caused mass confusion and actually set in motion rumors that the emirate itself was at risk of defaulting because of overextending its plans from the boom period. Nothing could be farther from the truth as both Dubai World and the Government of Dubai are well equipped to take care of any financial emergency.
Having said that, in the short term the Government could help companies in getting credit to complete the outstanding jobs. The current credit crunch means that new jobs are facing funding problems in getting their projects off the ground. Everybody in the building industry knows that there’s a substantial lag between the booking and the completion of projects. Secondly, by minding the longer three year visa for employees, Dubai would signal it is prepared to take on expatriate employees again to the completion of old projects and starting new ones. As things are Dubai lodging sector is moving downhill, with lodging in Dubai becoming a buyer’s game. Except for Dubai marina flat, Dubai condos and Dubai villas- that has seen some consistency as well as appreciation in value, generally Dubai flat lease, Dubai Apartments, and Villas in Dubai have depreciated in value during the last couple of months. A additional dip in the industry is likely by March-April 2010, and the sector is anticipated to recover by 2011. However, it’s anyone’s guess as to what will happen, and that’s the reason the Government should take action to see that Dubai is back on track again- the earlier the better. There’s too much at stake.