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Saturday, February 14, 2009

More on Dubai

by Calculated Risk on 2/14/2009 01:52:00 PM

“I’m really scared of what could happen, because I bought property here. If I can’t pay it off, I was told I could end up in debtors’ prison.”
Sofia, a 34-year-old expatriate.
Last week I posted a story on "skips" in Dubai - expatriates fleeing home rather than risk jail for defaulting on loans. Below is another story on Dubai from the NY Times.

First, here is a video on the Dubai real estate crash (hat tip James):

From the NY Times: Laid-Off Foreigners Flee as Dubai Spirals Down
With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills).
No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled. But with the government unwilling to provide data, rumors are bound to flourish, damaging confidence and further undermining the economy.

Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.
[M]any expatriates here talk about Dubai as though it were a con game all along. Lurid rumors spread quickly: the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.
It could be worse, at least the U.S. allows reporters (and bloggers!) to report on the crisis. And imagine a debtors' prison ... it would be filling up pretty quickly now. Maybe building all those prisons would add a little stimulus to the economy (just kidding of course).