Tuesday, Nov 25, 2008
Debt figures revealed to end international speculation that Dubai is in trouble
Telegraph: Dubai reveals debt levels to dispel fears over growth
According to one of Dubai's top property bosses, the emirate has $80bn of debt outstanding against a total asset base of $1.3 trillion. "Dubai's growth has been at a rate of 13pc to 14pc a year. If this comes down to 6pc or 7pc or 8pc then fine. We've been running a long time and could probably do with a breather. We will use this time to learn lessons and become a stronger city." [Question: How much of Dubai's wealth is based on foreign investors piling in to their property market? I thought they were a bubble like all the rest?]
Posted by drewster @ 12:33 AM (504 views) Add Comment
10 Comments
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1. little professor said...
Dubai's wealth is almost completely oil-based, they government moved heavily into construction and tourism (duty free haven and all that) to give the country some infrastructure for when the oil revenue dries up. The property bubble was a side-effect of this massive land-grab and building programme, and then you had all the foreign 'investors' piling in and building huge apartment blocks. They'll be fine, even if/when the property bubble bursts.
2. drewster said...
lp,
Wikipedia says: "Although Dubai's economy was built on the back of the oil industry, revenues from oil and natural gas currently account for less than 6% of the emirate's revenues."
I don't see how they'll be fine if/when their property bubble bursts?
3. little professor said...
Dubai is just one of the United Arab Emirates, who still derive over 40% of their GDP from oil revenues. Dubai has diversified into construction and tourism and lowered this to below 5%, (just as London become almost completely service oriented and lost all its manufacturing base to the rest of the country), but they'll still be fine as a country as long as they have the oil to fall back on.
4. drewster said...
Thanks for the clarification. Makes sense now. Looks like a lot of investors there are waiting to be burned!
5. matt_the_hat said...
Dubai is at the centre of massive money laundering operations so unless the criminals stop, money will still flow into Dubai no questions asked
6. fjcruiser said...
Dubai's debt is over 100% of GDP. It is fortunate enough to have the support of the UAE (particularly Abu Dhabi) which gives Dubai an "implicit" guarantee.
The UK debt stands at well over 100% of GDP and has no "implicit" guarantee from anyone. I know where I would rather be.
7. jack c said...
@fjcruiser - I notice from your posting on another current thread you are heading for Dubai - good luck - I'll be interested to hear how things develop out there from a source other than mainstream media.
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