In the past couple of months the world seems to have shifted on its axes (yep, that's the plural of axis). The tsunami that is the world economic downturn has arrived on the sandy shores of the UAE. A couple of weeks ago, the Dubai government announced that it has debts of $80 billion. Abu Dhabi has stepped in with loans to Dubai, but at what cost nobody seems to know, though there are some interesting rumours on the street which involve the future of Emirates Airlines. Several of the major developers here have put what were considered flagship developments "on hold", and redundancies are now happening on a daily basis: 500 people were let go from Nakheel last week, 400 from Emaar, and 70 from the World Trade Centre Real Estate division. There have also been redundancies at Omniyat, Al Ghurair, Damac and Better Homes amongst others.
Meraas has also made a number of staff redundant and their 350 billion dirham Jumeirah Gardens is one of the developments now on the backburner or in CorpSpeak "....we are reviewing...the phasing and roll-out of the Jumeirah Gardens project...". It was the proposed development of Jumeirah Gardens which caused us to be evicted at speed from Satwa by our landlord (Al Ghurair). In the past few months huge sections of Satwa's housing area have been bulldozed and it now seems that those piles of rubble will remain into the foreseeable future as silent monuments to greed gone mad. Still, if the deferral of Jumeirah Gardens means a reprieve for the best Pakistani restaurant in the known universe then its a good thing. Schon Properties developers of the Lagoons have announced they are 'scaling back'. Trump Tower is on hold as of yesterday with resulting redundancies here in Dubai. Australia's largest construction firm Leighton Holdings Group was involved in the building of Trump Tower through its connection with Al Habtoor Engineering. Despite the announcement that Nakheel will cover all Al Habtoor Leighton's costs, Leighton's share price in Australia has dropped 7.3%. All the redundancies referred to are expats but of course the labourers from the sub-continent will be effected immediately too: No work=go home.
The government in the UAE is closed for business for the next 10 days due to Eid so there's no official visa or employment related information available. The websites are no help. I imagine sales of the latest issue of UAE Labour Law at McGrudys have rocketed as a result. There's a growing number of people facing redundancy who can’t find the answers to some very important questions.
1. Once a person is made redundant they and their family have 30 days to leave the country before their visas are cancelled. If they are lucky, they might get 3 months notice period or their employer may hold off cancelling the visa until the employee finds a new job or makes arrangements to move back to their country of origin. 30 days isn't very long to find another job or failing that, organise flights home, pack up a household etc. As the holiday season is close, flights to most Western destination are heavily booked.
2. My understanding is that many of the people being made redundant will also be banned for 6 month from working in UAE. This is a blanket action but the ban can be “bought off” for 1,000 dirhams by the next employer (if there is one…..).
3. How do you get your rent back when its been paid 12 months in advance and you have 30 days to leave the country?
4. Can you get a refund on school fees paid in advance?
5. There is a justifiable fear that the bank accounts of people who’ve been made redundant will be frozen. This happens in Dubai.
6. Will an exit visa system (like that in Saudi) be introduced so no expat resident can leave Dubai unless they can produce a letter from the bank stating that their debts are cleared?
If someone has purchased a property here and, worst case scenario can’t get another job in Dubai, how do they pay the mortgage? Renting is the obvious answer but while rents aren’t going down as yet, the number of renters will fall eventually.
7. What if you’ve bought “off plan” and the development has now been put on hold? In Dubai, the purchaser pays the full price of the unit before they move in, but what if there’s nothing to move into? Residential units in the Lagoons which were initially scheduled for completion by December 2007 are now expected to be ready in 2011.
8. Rumours of increasing numbers of loan defaults are starting to circulate; people who are ‘cutting and running’.
9. As of last week, you cannot get a credit card in Dubai unless you have worked for the same employer for 2 years earning 20,000+ dirhams per month (this from Barclays Bank and confirmed by a contact at HSBC)
10. No loans to lease a car available from any of the banks, strict criteria for loans for vehicle purchase now in place.
I’m no expert and if anyone can help answer any of these questions it’d be appreciated as there are some very worried people searching anxiously for answers.