Loan defaulters rising in once-booming Dubai.
Borrowing has become almost
The world financial crisis is creating a rising number of loans defaulters in the once-booming Dubai, where credit was as easy as the lifestyle few months ago.
Borrowing has become almost impossible, especially for items such as luxury cars, as jobs are slashed and liquidity dries up in the Gulf emirate e·mir·ate
1. The office of an emir.
2. The nation or territory ruled by an emir.
Noun 1. emirate - the domain controlled by an emir , financial experts and traders say.
Thousands of job cuts have been announced in the emirate as companies trim staffing levels, while according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. reports salaries of some highly paid executives have been slashed in half, reversing a six-year upward trend that had lured foreigners to the city in droves. Default rates on the rise
Prices in the real estate sector meanwhile have slumped by an average of 25 percent from their peak in September after rallying 79 percent in the 18 months to July 2008, according to global financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page. firm Morgan Stanley To comply with Wikipedia's , the introduction of this article needs a complete rewrite. .
"The (credit) default rate has been on the rise with people losing their jobs and being over-leveraged," Haissam Arabi, chief executive officer of GulfMena Alternative Investments told AFP (1) (AppleTalk Filing Protocol) The file sharing protocol used in an AppleTalk network. In order for non-Apple networks to access data in an AppleShare server, their protocols must translate into the AFP language. See file sharing protocol. .
"People are exposed to the real estate market," he said, adding that some investors had been caught short after hoping to make quick profits from property deals.
"Some have been ... buying two or three properties, but now they have to pay back the developers," he said.
Dubai had in recent years embarked on extensive development projects, with real estate firms promising investors skyrocketing profits and mortgage lenders willingly opening up their coffers to borrowers.
But the global liquidity shortage has hit Dubai businesses hard and many employees have been laid off, prompting the surge in loan defaults and the strangulation strangulation /stran·gu·la·tion/ (strang?gu-la´shun)
1. choke (2).
2. arrest of circulation in a part due to compression. See hemostasis (2).
n. of credit.
"Before, money was cheap and it was given to anyone who walked (through) the door, but today, with tight liquidity and high risk, banks are all of a sudden worried about who to extend loans to ... There are questions about people's ability to maintain their jobs," Arabi said.
No comment, no statistics
The UAE central bank and the finance ministry have together floated 120 billion UAE dirhams ($32.67 billion) of emergency funding since September to help banks deal with tight credit conditions. But banks have used little of these funds to boost liquidity in the market, said Arabi.
People working in sales, real estate and investment -- the sectors particularly affected by the crisis -- are among those mostly struggling to secure loans, he added.
Bankers declined to comment on the squeeze in credit and the central bank did not respond to requests for statistics.
Raj raj also Raj
Dominion or rule, especially the British rule over India (1757-1947).
[Hindi r Madha, a banking analyst at Cairo-based investment bank EFG-Hermes, confirmed that the number of non-performing loans have risen, but he could not provide a figure. He also confirmed that credit was hard to come by these days.
"Mortgages are also becoming hard to come by, with many fewer banks offering services, and those services becoming sharply more expensive. The rate of growth in mortgage loans has collapsed from well in excess of 50 percent to a virtual standstill," Madha said.
An indication of the scale of the defaulting are media reports -- denied by the Dubai authorities -- that around 3,000 cars were left at the airport as their expatriate Expatriate
An employee who is a U.S. citizen living and working in a foreign country. owners fled the country and defaulted on their car loans.
Car auctioneers say the volume of trade has increased since the crisis hit Dubai.
"We have definitely seen a rise in the number of cars auctioned off since the financial crisis has affected people's ability to pay back loans," said a worker for Golden Bell Auction, which holds a weekly auction on the outskirts of Dubai.
"There was an increase of between five to 10 percent in the last couple of months in the number of cars being auctioned off."
A Dubai banker said that there were defaults on auto loans "as everybody had been buying cars."
"Most of the defaults are by expatriates who were forced to leave because of the panic situation. Some of the cars were luxury cars," he told AFP requesting anonymity.
An auto dealer confirmed that banks have stopped giving loans to people wanting to buy luxury cars.
"Unless it is someone important, the banks have halted all loans for luxury cars," he said.
Latest figures show that the United Arab Emirates United Arab Emirates, federation of sheikhdoms (2005 est. pop. 2,563,000), c.30,000 sq mi (77,700 sq km), SE Arabia, on the Persian Gulf and the Gulf of Oman. population stood at 6.4 million at the end of 2007, but that only 14 percent were nationals. Dubai's population was estimated at the time to be about two millions.
Expatriates in the UAE mainly come from South and Southeast Asia, many of them low-paid workers. Hundreds of thousands of Arabs were also attracted by work opportunities, while many Westerners were attracted by tax breaks and a potentially lavish lifestyle.
Provided by Syndigate.info an Albawaba.com company