Dubaiâ€™s debt crisis has weakened investor confidence and will hurt the property industry in the United Arab Emirates in 2010.
The Dubai governmentâ€™s announcement of a Dubai World restructuring and debt standstill agreement has put an end to any likelihood of a real estate recovery in 2010. Dubai World, one of Dubaiâ€™s three main state-owned business groups, said on Nov. 25 that it would seek to delay repaying debt for at least six months, roiling markets in the Middle East and around the world. The global credit crisis led to more than 50 percent decline in property prices in the city and hampered the ability of Dubai-based companies to raise loans and refinance.
House prices in Dubai are expected to fall this year and remain little changed in Abu Dhabi, with the second quarter being the low point for the market in the Gulf states.
Dubai, whose debt-fueled expansion forced it to seek funds from neighboring Abu Dhabi last year, may have total debt of as much as $170 billion, more than previously estimated, investment bank EFG-Hermes Holding SAE said in a report Jan. 19.
The emirate has raised $20 billion by selling bonds to Abu Dhabi, two state-run banks there and the U.A.E central bank.