Financial crisis rocks Dubai and the Emirates…
For several years Abu Dhabi and Dubai have been two of the hottest and most up-and-coming locations in the Mediterranean. Over the last decade Dubai has been transformed from a rural and underdeveloped city to one of the true construction marvels of the modern age. A series of high profile buildings and resort such as the Jumeirah Palm, the Burj Dubai, the Burj Al Arab and the World Islands has cemented Dubai’s place as the Middle East’s centre for design and aestheticism. However, since the onset of the global financial crisis the glitz and glamour of Dubai and Abu Dhabi has started to fade after a number of building projects were shelved due to investment problems.
Early last week Dubai World, the state owned investment company responsible for most of Dubai’s prominent projects, applied for a six month hold on its’ monthly repayments of 3.5bn dollars. News of this request sent shares and financial institutions into disarray, the problem was further compounded when the Dubai government refused to guarantee the companies £35bn worth of debts. Although the majority of investment within Dubai has temporarily halted, it appears that the UAE government remains optimistic of its recovery. In a recent statement Sultan bin Saeed al-Mansouri, the UAE economic minister, assured investors that Dubai World would repay its debts and that financial restructuring within the company was already underway.
In a statement the Sultan announced that “Dubai World’s debts do not affect the economic performance of Dubai or the UAE and it is a matter of time before the company restructures its debts and honours its commitments as per a scheduled plan”. Some analysts have suggested that Dubai may have to sell of a number of its assets, including the hugely successful Emirates Airline, if Dubai’s assets to go up for sale then it is likely that Ethiad, who already run flights to Dubai and flights to Abu Dhabi, will merge or purchase a large amount of the company.
Although there is a lot of discussions and consternation about the financial stability of Dubai, especially amongst British banks who are believed to have over £5bn invested in the emirate, there is no doubt about the commercial viability of the UAE which possesses some of the largest oil reserves in the world. The majority of analysts continue to argue that the present crisis in Dubai is just a mere bump in the road which will fade once the markets have recovered from the shock.
2 Comments to “Financial crisis rocks Dubai and the Emirates…”
[...] of Dubai seems to enjoy the limelight, when they’re not causing international consternation and causing financial ripples across the world, they’re often building things – giant mahoosive, unrivalled and unprecedented things. As [...]
[...] this great little activity tour guide while I was researching Abu Dhabi. As you may recall from my post earlier in the week Dubai, Abu Dhabi’s slightly poorer neighbour, has recently been experiencing a few credit problems. [...]
Revolt Basic theme by NenadK. | Entries (RSS) and Comments (RSS).