Tuesday, 31 March 2009

After the gold rush: Getting paid in Dubai

This article from the UK construction industry magazine "Building" dated 27 March '09 is the first to talk openly about the failure of Dubai developers to pay their bills resulting in staggering amounts being owed to the large constructions companies.
It is claimed that the average contractor is owed £50m, while some consultants’ fees are being slashed in half.

Dubai is looking more and more like a place with a great future behind it. You can see that most clearly on the billboards erected beside empty sites and motionless tower cranes. “Ordinary is for other people” says the one where the Trump Tower was to have gone. Well, nemesis follows hubris: at least half of the emirate’s construction projects are “on hold” according to research firm Proleads, and nobody knows when, or if, they will start again.

New signs of the desperate state of Dubai’s developers are emerging every day. To look at the top three of them is telling: Union Properties has admitted it would welcome a merger after shelving its flagship £320m Formula One theme park in Dubailand. Emaar recently announced yet more cancelled projects: Asmaran (a 70 million ft2 , £17bn mixed-community scheme billed as “a jewel in the desert”), Maysan (three residential towers, also covering 70 million ft2) and Warsan (500 villas covering 3.4 million ft2). Meanwhile, Nakheel is facing a fraud investigation and has put its £2bn mall expansion plan on hold. It has also been hit by the halving of property prices on its celebrated Palm Jumeira project. Four-bedroom garden homes on a frond are going for £1.2m compared with £2.6m in July.

Where does all this leave the British consultants and contractors who count these developers among their top clients?

The short answer is, cash-strapped. Some are seeing their fees slashed – a Building survey of more than 150 people working in the UAE found that two-thirds of them have been asked to drop their prices recently. Others have been waiting for payments for six months and many are considering legal action.

What went wrong?
The first problem was that many developers were reliant on bank credit rather than oil revenue, as is often thought. Abu Dhabi, the capital of the UAE, has about 10% of the world’s oil, but Dubai has almost none. Banks were happy to keep lending to its developers as long as property prices were going up, and could act as collateral for more lending and more construction. But when property prices started tumbling, this virtuous circle turned vicious and clients ran out of money to pay consultants and contractors.

Abu Dhabi’s $10bn (£7bn) loan to Dubai announced in February appeared to offer a glimmer of hope, especially when the Dubai government said this money would mainly go to state-linked developers. But questions are being raised about how far it will go. For one thing, Dubai has declared that it owes at least $80bn (£56bn), of which almost a quarter falls due for repayment this year. The boss of a UK consultant with a large presence in Dubai says: “The $10bn won’t even cover developers’ interest payments.” He adds that compounding this is the fact that Dubai has so few ways to make money. Last year, 65% of its GDP was from real estate. He adds: “And there is no oil, no exports, no tax and 80% of the population are expats, many of whom are leaving.” Now the fee cuts are spreading to Abu Dhabi, where developer Aldar has written to consultants to ask them to cut fees – on live projects by up to 20%.

Late payments and fee cuts
So how bad has it got for UK firms? Certainly there is no sign that the government cash is filtering through. A senior source at a UK contractor in Dubai is fuming. He says: “The average contractor here is owed about £50m.”

A source at a UK project manager says some payments from Dubai developers are up to six months late; Mace and EC Harris are saying openly that it is taking at least three months to get paid. WSP is estimated to have set aside £4m to cover bad debts and project management consultancy Blair Anderson now employs someone full-time solely to chase payments in Dubai.
Meanwhile, the head of a British specialist working on a major project that stopped in October says his firm was paid 20% of what it was owed in January. He said he has no idea when he will get the rest, although he believes it will come through eventually, as his client is linked to the Dubai government.

Then there are the fee cuts, which are affecting most firms. Evan Anderson, group director of Blair Anderson, says the firm’s fees are between 20% and 30% lower than six months ago. But he is still better off than many architects, whose fees Anderson is renegotiating on behalf of clients. He says: “We are doing a lot of reverse briefing of designers. We’re asking them to cut their fees by up to half and to change the materials they’re specifying to bring down costs by about 30%.”

Contractors across Dubai are having to renegotiate tenders, typically resulting in 15-20% being lopped off their money. The senior contractor says: “Contractors here had been enjoying margins of seven, eight or nine per cent. Now clients are trying to get us to take margins as low as three or even one per cent. They also want to lengthen programmes so that cash flow is less onerous. It’s chaos.”

More pain for consultants is arriving in the form of deferred payment plans. Mark Prior, head of the Middle East for EC Harris, says: “We are discussing deals that would mean we will be paid in six months’ time – or half of what we’re owed in three months and the rest in six.”

Other companies are understood to have been forced to accept payment in the forms of stakes in a development. George Grant, operations director for infrastructure at M&E specialist Drake & Scull, says: “We have no experience of taking equity instead of cash but we would consider it. Our view is we want to work with the clients if it means that work goes ahead.”

Others are more wary. Anderson has refused payment in shares: “They offer you 1% of a development that you have had no involvement on and no idea how it works. If you invest in something you want to do detailed research on it.”

Meanwhile, the old model of developers paying contractors with money from sales of units in buildings before it has been completed is a thing of the past. Projects launched on this model are being refinanced. Under the new deals institutional investors are brought in and contractors are forced to accept deferred payments.

Anderson says: “The previous model based on off-plan sales is no longer viable, so total financing is being done by investment, and selling is happening when the building is under construction.”
As a result, development is less gung-ho, he adds, which in turn means people are earning lower fees over a longer period. Developments are being built in phases. “Before, a developer would build three high-rises at once; now they are building them one by one. They build a tower, sell it, then use the proceeds to build the next one.”

Such is the state of the market that those who are actually getting paid do not want to admit it. Speaking on condition of anonymity, the head of a British architect’s Dubai office said: “I would rather you didn’t put my name in your article because if other people working for my client find out that I’ve been paid, they’ll be demanding that the client pays them too, and then I’ll have to answer to the client.”

He says at the moment you have the best chance of being paid if you are needed to help with the process of putting a project on hold. “If you are not essential – that is, if you are not putting remedial works in place so the client can put work on hold – you will not get paid.”

Will developers ever pay?
The gravest concern of all is caused by rumours that some developers are about to go bust. Despite their government links, there is no guarantee the state will step in to save these firms. A source at a project manager in Dubai says: “It’s impossible to say whether the government will pay developers’ debts or not. State sponsorship is relatively loose here. Nobody knows whether certain developers are going to be mothballed, merged or go bust.”

Drake & Scull’s Grant, a Middle East veteran, says: “There’s no doubt some clients have run out of money and will disappear. Not the big names though, they need to renegotiate their finance deals but they will carry on.”

He may be right, but the question of when they will pay is still causing UK firms to fret. Emaar, to take one developer, has just had its debt downgraded by Standard & Poor, the ratings agency, from –A to BBB+. It made a loss of 1.6bn dirhams (£304m) in the last quarter of 2008. Meanwhile, the government has warned that the economy may shrink in the second half of 2009.

Most developers are declining to comment on the payment issue, including Nakheel. A spokesperson from developer Limitless did speak to us and insisted that all creditors would be paid. She said: “We’re renegotiating some payment plans, but not all, as part of our overall response to the global situation.”

An Emaar spokesperson also sent the following statement: “Payments for contractors and consultants are based on a credit cycle and set deliverables agreed with them. All payments that meet the criteria have been honoured and will continue to be cleared, in line with our agreements.”

But for those still waiting to be paid and suffering, what recourse is there? Another source says: “Historically, if you’re not getting paid here, you don’t rock the boat; the last thing you do is resort to litigation. But now people are getting highly emotional. If you’re working on a huge project and you recruited a huge team to do it, and you’re owed millions, well maybe it is time to sue.”

He adds that he expects to see “some big disputes in the next three months”, which is perhaps ironic considering that Dubai is aiming to become a regional dispute resolution centre. Prior is among those who admit that “litigation is an option we have our eye on”. It’s a statement that would have been unthinkable in Dubai a year ago.

As the legal cases loom (see box below,it’s clear that relations between clients and project teams are strained to the limit. The head of another UK consultancy, who asked not be named, revealed a conversation he had with a senior emirati working for a big developer. “I said to him, if I don’t get my money, I will sue. He said, you will never work in Dubai again. I said, why would I want to?”

Disputes in Dubai
Dubai’s legal system is facing a sudden rush of disputes, and there are doubts about how well it is going to handle them. The first problem is the absence of adjudication. Paul Taylor, a partner at lawyer HBJ Gateley Wareing, says: “Unlike in the UK, there is no quick fix in Dubai. Here, arbitration and litigation, are the only ways to get your money.” Even worse, arbitration in Dubai takes up to two years – even longer than in the UK.

Another problem is certification. Of course, getting an engineer’s certificate proving you have done the work and are therefore entitled to be paid is an important piece of ammunition in the fight for your fee. However, in Dubai, Taylor says many contracts include a clause saying that an engineer cannot approve a piece of work without the client’s sign off. “These clauses are being disputed, but it’s still tough.”

People are looking at alternative methods of resolving disputes. Next month a “mediation centre” is being set up that will fast-track dispute resolution through an independent party. Taylor says it is a mid step between amicable settlement and arbitration and could resolve a dispute in two or three weeks. The problem, though, is that it will only work if both parties voluntarily accept the verdict.

Most projects are on the FIDIC contract. The 1999 version contains a clause that allows the use of a dispute resolution board, which can take six to 12 weeks. Earlier versions of the contract do not tend to offer this option.

Even if you do resolve a dispute to your satisfaction, then you have the problem of enforcing the decision. Taylor recommends a “more commercial” way of tackling a dispute. “Knock on the client’s door and try to explain your difficulties face to face. And get your local sponsor to act as an intermediary.” As a last resort, you can threaten to terminate the work you’re doing for the client – an approach that will only work if the project is continuing.

Monday, 30 March 2009

From Oz: Gulf friends look to us as Iran flexes its muscles

From the Sydney Morning Herald 31 March '09. The author of the article, Peter Hartcher, the Herald's international editor, travelled to the UAE as a guest of the Lowy Institute for International Policy.

Australia has a new friend in the Middle East. It's not the prettiest regime in the world but as Arab autocracies go, it's about as good as it gets. In this case the real estate adage applies - as far as Australia is concerned it's about location, location, location.

The Federal Government has moved to permanently base Australia's various Middle Eastern regional military assets in the United Arab Emirates. In return, Australia has about 30 personnel in the UAE training its fast-growing special forces troopers.

Behind the details of the arrangement are the two countries' larger needs. Australia has decided to stop pretending. Instead of pretending that we are occasional visitors to the Middle East, only rushing in when the US decides to go to war there and rushing out again when it finishes, Australia is now acknowledging that it has permanent interests in the area.

The UAE is a small, young, vulnerable state trembling on the lower lip of the Persian Gulf, anxious for the reassurance of friends and influence.

Both countries are now girding for the coming crisis with Iran, which lies just across the Gulf from the UAE.
The United Arab Emirates is an authoritarian country with a population of 4 million, of whom only 800,000 are locals. The rest are foreign workers, most living in squalid conditions, who can never become citizens.

It's a federation of seven sheikdoms, forged in 1971 when the British withdrew from the region. The silliest of these seven sisters is Dubai, which has become famous worldwide for its flashy extravagance, building lavish hotels and snowfields in the desert.

It's so extravagant that its debts became insupportable the moment the world's lenders decided to tighten credit standards last year. Dubai's bigger, richer, more prudent sister, Abu Dhabi, came to its rescue. Abu Dhabi, also the capital of the UAE, made an initial payment of $US10 billion to keep the emirate of Dubai from insolvency. More payments are on the way.

The source of the UAE's wealth is oil. It is one of the world's 10 biggest producers, pumping about 2.5 million barrels a day, more than Iraq. It has the sixth biggest proven reserves in the world, about 98 billion barrels, more than Russia. The global recession, and the collapse in the price of oil, has dealt the UAE a blow. Its government budget, usually in surplus, is expected to be in deficit this year, and its economy in recession. Still, it will be one of the world's better-performing economies.

Although it is an authoritarian state, it is a relatively liberal one. There is opportunity for women at all levels except, of course, the ruler's. Freedom of religion is guaranteed. The UAE is leading a UN campaign against trafficking in people. The gateway to the compound of the Sandhurst-educated Crown Prince of Abu Dhabi is decorated with a metallic artwork - the word "tolerance" spelled out in metre-high letters. All this is enough to have the UAE considered a highly dubious country by its fundamentalist Wahabi Muslim neighbours in Saudi Arabia.
And its foreign policy is pro-US. This simplifies Australia's relationship with the UAE, but it creates tension with the UAE's big northern neighbour, Iran. As the Iran crisis approaches, the UAE leadership is increasingly fearful. Iran continues to develop its nuclear capacity in defiance of the UN Security Council. Although Tehran swears that it is for peaceful purposes only, the rest of the world is unconvinced, and Israel is terrified.

Israel and the US are weighing options for bombing Iran's known nuclear facilities before it is able to produce a nuclear weapon. Speculation centres on the second half of this year or early next. If this should happen, the UAE fears it will be one of the subjects of Iranian retaliation. Specifically, the UAE expects Iran could fire missiles into its cities and activate Hezbollah terrorist cells among the 400,000 Iranian workers living in the UAE.
This helps explain why the emirates are so keen for Australia's help in developing their special forces, the front line in rebuffing any Iranian attack.

The UAE has built special forces of about 2000 men, about the same number as Australia's, and is trying to increase this to 5000 over the next few years. But special forces are the most specialised and training intensive of troops. There is a shortage of eligible emirates recruits for the forces and a shortage of skilled trainers to equip them for their task.
The urgent build-up of the UAE's special forces is a key priority of the Crown Prince of Abu Dhabi, himself a former special forces trooper.

The UAE Minister of State for Foreign Affairs, Dr Anwar Mohammed Gargash, last week set out his understanding of Iran's positioning: "A large part of Iran's behaviour is connected to how they see the international system.
"They think that this is the twilight of the unipolar world" ruled by the US, "and that we are entering a period where US power will be less and less relevant, and there is room for Iran to do two things - one, to be maximalist in its demands; and, two, to increase its influence in the world.

"Australia, the US and others have to emphasise that if Iran sees this shift, it doesn't mean it will be replaced by another system, but by a system of mores and rules that must be abided by."

As the Iran crisis approaches, Australia and the UAE will be facing it together.

Dubai outlines plan to escape doldrums

(The photo's a Dubai "out with the old, in with the new" shot from SZR near what used to be Defence Roundabout. The demolished building was home to the best fish 'n' chip shop in Dubai.)

From the Fin Times 29 March '09

Dubai will this week outline borrowing terms to government-related companies in need of assistance as it seeks to inject much of its $10bn borrowing into the domestic economy to help lift the emirate from its economic malaise.

The government is about to appoint a financial adviser to hammer out loan terms for companieswanting credit lines from the $10bn loaned in February by the United Arab Emirates central bank to the city-state, which is suffering in the global crisis.

The first half of a $20bn government bond programme aims to help the emirate's corporate giants pay off roughly $75bn (€56.4bn, £52.4bn) debt and meet commitments, especially in the troubled real estate sector, where some state developers have failed to pay large invoices for the past nine months.

The slowdown has affected finance, trade and tourism in the region's commercial hub, now also threatened by an expatriate exodus. EFG-Hermes forecasts 17 per cent of the population could leave by the year's end.

The government is positive about refinancing its obligations over the next month and says it wants the cash to act as a stimulus to help revive economic activity. "We want [most] of the money to feed back here," said Nasser al-Shaikh, director-general of the department of finance. "They will have international obligations but we would like to see most injected into the local economy."

The Supreme Fiscal Committee, which includes Mr Shaikh, was set up a few years ago to co-ordinate the emirate's debt position. It is now in talks with "several companies" over disbursing the aid.

The committee will not necessarily publicly identify those companies that will draw down from the facility, though it will reveal how much cash it has injected. The five-man body will also leave the companies to manage themselves but will make sure they are in a position to repay the loan.
Beyond the state-linked giants to be targeted by the $10bn package, the department of economic development will also unveil a stimulus package for small and medium sized enterprises.

But the government will likely keep some of the $10bn in reserve for perhaps the biggest refinancing challenge of the year, Nakheel's $3.5bn Islamic bond, which matures in early December.

Analysts expect the offshore developer, or sister companies within the government's Dubai World stable, to be one of the first to tap the facility.

Dubai announced that it would accept federal support in February after the refinancing of a $3.4bn loan for Borse Dubai, the government exchanges group, ran into trouble, forcing the government to intervene.

If needed, Dubai will tap the second $10bn tranche, which has already been underwritten by the federal government, but that will depend on how much debt can be refinanced and the size of the cash calls made by government-linked companies.

The next two refinancing challenges are upcoming maturities on the state utilities company's $2.2bn Islamic loan and $1bn for the civil aviation authority, but officials say talks are going well for what are essentially stable, cash-generative businesses.

Still, some bankers expect the second tranche of $10bn to be drawn as early as May or June.

UAE work visas may be extended after redundancy

From Arabian Business 30 March '09

Dubai, along with federal government, 'working on' visa extensions for those workers made redundant.

Individuals whose work visas have been cancelled, following redundancy, may soon be able to stay in the UAE for a longer period of time to find work, according to a report in Emirates Business.

At present, UAE labour and immigration laws require expats who have lost their jobs, to find work within one month - or leave.

The newspaper quoted Hani Rashid Al Hamli, Dubai Economic Council (DEC) Secretary-General, who said Dubai, along with the federal government, is "working on" stretching the grace period for holders of cancelled visas. The length of the likely extension wasn’t given.

The report added that the new policy, which may be announced in the first half of this year, is expected to address the potential cases of job cuts due to the financial crisis. "This is one of the top and urgent issues that we are tackling at the Dubai branch and at the federal level - to have a longer (grace) period. They are working on that, I can assure you of that," Al Hamli told the newspaper. Al Hamli, when asked whether the new policy would take affect in the second half of the year, indicated it would be earlier than that, perhaps in one month or two months, although he couldn’t go into specifics due to the government having to upgrade the immigration laws, which will take a measure of time.

Sunday, 29 March 2009

Out of the Pod: 29 March '09

The first song out of the Pod today is pure gold. First, I have no idea where it came from, it must have been in someone's collection when we swapped Playlists at some stage. I turned on the iPod, pressed shuffle and this little gem of a song played first up. I loved it and played three more times. As it was listed "Unknown Track/Unknown Artist" I had to get onto Goggle to find out who sang it but the words were easy to remember so it popped up quickly. Its by '5 Guys Named Moe' and the song's a cautionary tale titled "There ain't nobody here but us chickens":

"There ain't nobody here but us chickens,
There ain't nobody here at all
So stop that fuss and raisin' dust
There ain't nobody here but us".

Even BB King has done a version. Though its pouring with rain today (I thought we were living in the desert) this song will cheer you up.

Saturday, 28 March 2009

Dubai sets its own rules as foreigners flee hard times

An article from the other side of the world, New Zealand Herald Saturday March 28 '09.
Dubai is still in the stratosphere of the most-expensive cities but it's no longer a property feeding frenzy.

To someone not used to its grandiose ways, Dubai's downsizing might not look so bad.

Construction cranes still tower over the city, though a bit fewer. Hummers still crowd the highways, though some now have "for sale" signs taped to their tinted windows.

But one brief phrase shows how heavy a blow Dubai has suffered from the world economic crisis.
The words "leaving Dubai, must sell" now dot classified ads as departing foreign workers try to dump furniture, cars and kitchen appliances. Look further, and once red-hot office space and apartments stand empty.

Dubai's self-crafted dynamo image - big profits and bigger dreams - has taken a direct hit. First, the economic freefall quieted Dubai's white-hot growth.

Then, it took another swipe at the boomtown's swagger: setting off an exodus of workers that could cut the population by at least 5 per cent by some estimates.

Dubai's leadership has tried hard to portray the shifting fortunes as just a temporary pause in the city-state's relentless expansion. Others see a mixed blessing - a chance to simply catch their breath.

For many who endured years of living with Dubai's high-rolling rules, the slowdown offers a moment of reflection after a decade of watching sand dunes give way to skyscrapers.

Foreigners, who outnumber Emirati Arabs 8-to-1, are seeing the first cooldown of Dubai's sky-high cost of living in years.

Some local Arab leaders, meanwhile, are finding the downturn is an opportunity to voice a cultural claim to their country - where they feel traditional Arab values have been steamrolled by a Western-friendly lifestyle of nightlife, bars and sexual permissiveness.

In one sign of the evolving priorities, Dubai has launched a new public decency decree that sets guidelines for conduct in public, particularly frowning on risque clothing.

Mustafa Alani at Gulf Research Centre describes the humbling of Dubai as "an attitude adjustment that covers everything from plans for huge projects to the small daily interactions in life".

Michal Mroz, a real estate broker whose office overlooks new apartment towers with massive "For Rent" signs, said: "During the boom years, the Dubai way was: 'Take it or leave it. There will always be someone willing to pay the price'. Now people are leaving it."

Residents are finding that excesses they once took as a fact of Dubai life have now changed. A year ago, landlords demanded - and often got - a year's rent in advance.

Today, renters have the leverage and a standard month-by-month payment is possible.
Real estate prices could drop by up to 60 per cent by the end of the year compared with the peak in mid-2008, a report by the Dubai-based Shuaa Capital financial services group said. That keeps Dubai in the stratosphere of most-expensive cities - with US$5000 ($8660)-a-month rents for two-bedroom apartments still out there - but it's no longer a property feeding frenzy.

Proleads, a market research firm, said in a February report that nearly 53 per cent of the Emirates' construction projects have been put on hold and more may be frozen this year.
At the opening of an international property show last week in Dubai, the show's organiser, Dawood Al Shirawi, even used a word that many Dubai officials have scrupulously avoided: recession. "This was a big challenge to organise this exhibition during recession times," he was quoted as saying.

The same belt-tightening mood is found almost anywhere. A report last week by the Jones Lang LaSalle consultants showed the supply of empty office space in Dubai has doubled to 16 per cent over the past six months. Standard & Poor's this month cut the credit ratings of six Dubai government-backed entities and a leading property developer. Other nearby cities, too, are cooling off after years of sizzling growth. But Dubai's main rivals - Abu Dhabi and Qatar's capital Doha - have deeper pockets with vast oil reserves.

"Dubai has been the poster boy for globalisation and the free flow of globalised capital," said Mahdi Mattar, author of the Shuaa Capital report. "It built a reputation as a city run like a company. You see what happens to companies when globalised capitalism begins to fall apart."

Friday, 27 March 2009

The Dubai traffic hazard

In NZ we have to slow down for flocks of sheep but in Dubai the traffic hazard is a herd of camels. This clip was taken today on the D40, a road which runs through Margham between the Hatta Road and Al Ain Road. I was using my little Canon camera so its a bit fuzzy - http://www.youtube.com/watch?v=FIR6Peiyg-g

Thursday, 26 March 2009

Is your wifi secure?

This article is from the Sydney Morning Herald's Digihub on 23rd March. Its a very timely reminder to do something about a wifi password if its never changed from the default that came with the router initially.
It's astounding how many people leave their digital front door wide open.

I was sitting in a doctor's waiting room the other day, getting a little work done while I waited thanks to the complimentary wifi. I hoped it was a complimentary service, because surely a doctor wouldn't accidentally have his wireless network open to the world.

Surely a doctor wouldn't set up his office so anyone could electronically walk in off the street, steal his internet access and snoop around his files. Not when he's got people's medical records siting around. Like mine. Surely of all people you could trust a doctor to spend an extra 60 seconds enabling encryption when setting up his wireless network.
A quick chat to the staff confirmed my worst fears. It seemed the doctor and his staff had No Fricken Idea about wireless security and every computer in the building was linked to the one open wireless network. Meanwhile the neighbours had probably cancelled their home DSL accounts, because anyone nearby could steal internet access from this doctor for free.

The doctor's office is also located on a busy main road, so it was only a matter of time before it was discovered by war-drivers - people who like to drive around the streets with a notebook looking for open wireless networks. Next thing you know they're sitting in a car outside the office late at night, downloading pirate movies and god knows what else (you know, the kinds of things Senator Conroy would frown upon).

In an effort to be a good digital citizen, I spent a few minutes explaining the problem to staff and showing them how to fix it. A quick check revealed the wireless router was still using the default login and password, so anyone could let themselves in and wreak havoc with the network. Of all the potential risks I explained to staff, it was fear of a massive internet bill that concerned them most.

If you've got a wireless network, it's essential that you enable encryption and change the default password for accessing your wireless gateway's configuration pages. The manual or installation CD should walk you through this, it only takes a minute. Unfortunately wireless encryption is usually not enabled by default, so when people plug in their new wireless router and it works straight away they assume that's all there is to it and don't bother to set a password.

If you're setting up a wireless network, take care when selecting the type of wireless encryption. Forget WEP as it's easily broken (if that's all your router supports, do yourself a favour and throw it in the bin). Opt for the stronger WPA or WPA2 encryption standard. When choosing a password, avoid words in the dictionary or other easy to guess words such as your name. A long pass-phrase, such as a movie title, is safer but still susceptible to a dictionary attack. Dictionary attacks also allow for leet speak, such as substituting 0 for O or 4 for A.

The strongest password is a seemingly random string, including upper and lower case letters along with numbers. If you want a random password that's still easy to remember, try using the first letters of the words in a phrase. For example, MhAlLiFwWaS looks random but is easy to remember if you know the words to Mary Had A Little Lamb. Once you've set the password you'll need to enter it into every computer that you want to access the network. The computer will remember the password, so you won't need to enter it every time you start up the computer.
It will only cost you 60 seconds of your time to set up your wireless network securely, but it could cost you a hell of a lot more if you don't.

Tuesday, 24 March 2009

Doing the Hokey Pokey in Dubai

Great news for Kiwis, Hey Pesto on the ground floor of building 1 at Emaar Square, (the office blocks next to Dubai Mall) sells real 'Made in New Zealand' style hokey pokey ice cream! Its there for eating in or taking away. True to memory there was creamy vanilla icecream with reasonable sized pieces of crunchy toffee - at 16 dirhams per scoop its not cheap, but what the heck. I owe this great discovery to an Australian (can you believe it, but thanks Maree).

There's been an article in the NZ Herald about hokey pokey, apparently its available in different flavours now.

Monday, 23 March 2009

Out of the Pod this week

Thanks for asking about the lack of an Out of the Pod posting this week. I was at a conference so I couldn't post. Its great to know people are interested in the "Out of the Pod" posting. Let's all play - let me know what's your first tune Out of the Pod next week.

Thursday, 19 March 2009

From the World Champions of "Deny, deny, deny"

Following the publication of the Dubai Code of Conduct, the media in Dubai attempted to contact the issuing authority for clarification and more information. Alarabiya reports that this is the response they received:

Nasser al-Hamali, Dubai Executive Council said, "We are not authorized to give any interview now and do not have any comment on this issue. We don't care what is published in newspapers," he told AlArabiya.net.

"Let the press and the people talk." (Thereby contravening Rule 4.4 which states " Spreading false news, statements or rumours....[is] punishable by law")

But an official government source familiar with the matter who requested anonymity because they were not authorized to discuss the matter denied that such guidelines had been issued and said that if the report were true other newspapers would have received a copy of it.


The Code of Conduct was first published in an Arabic language newspaper in Dubai after being "leaked".
Now that the Code's English translation has reached the outside world (where all the hand-holding tourists and investors live) we seem to be seeing another Great Dubai Turn-Around.

Monday, 16 March 2009

Lawyers claim taking bribes on property deals not prohibited

From Arabian Business 16 March '09

Taking bribes and commission on property deals was not prohibited under UAE law, according to lawyers on Sunday who were defending seven former real estate executives charged with corruption.

The lawyers made the statement as five of their clients appeared before the Criminal Court of First Instance in Dubai accused of taking illegal commissions from the sale and resale of land owned by the government.

Four of the five in court were former employees of Sama Dubai, the property arm of the government-owned Dubai Holding, and the fifth was a former employee of Damac, one of the UAE’s largest private property developers.

The five pleaded not guilty to the charges and Judge Fahmi Mounir granted a defence application for an adjournment.

However, all five men were denied bail. The hearing will resume on Sunday, according to UAE daily The National.

Meanwhile, in a separate trial the two other defendants – former employees of Nakheel, the Dubai development company - were also charged with accepting illegal commissions.

The allegedly took an extra two percent for themselves on the sale of land on the Palm Jebel Ali development.

They both pleaded not guilty and were denied bail. The trial was adjourned until Mar. 29.

The two court cases are the first of many due to be heard after a widespread corruption investigation in the UAE, which has resulted in up to 30 executives from several companies being arrested and held in custody.

However, most of those taken in for police questioning have yet to be charged, despite some being arrested more than 10 months ago.

During the two trials the court heard some details of the alleged business practices unearthed by the investigation, such as an alleged AED5m ($1.36m) cash bribe being delivered to a defendant’s home in a black suitcase.

The Dubai Code of Conduct (full version)

The "Rules of Conduct in Dubai" were prepared by the Executive Council under the direction of HH Sheikh Hamdan Bin Mohammed Bin Rashid al Maktoom, Crown Prince and Chairman of the Council.

The aim of this document:
This guide aims at setting the standards for social ethics and mutual respect that shall be followed by all of Dubai's citizens, residents and visitors in respect of the Emirate's culture, religion and habits.

Dubai's culture is rooted in Arabic and Islamic tradition
Dubai is built on foundations that are rich in history and tradition. Dubai is a forward- looking society that is equally bound to its culture and heritage. Its religion is Islam, the timeless values of which lie at the heart of Dubai's living heritage, providing strength and inspiration that touch all aspects of everyday life. Dubai holds the family as the most important institution in society and the cornerstone of societal life.
Dubai is a city that is proud and rich in its tradition, with its remarkable combination of the traditional values of the East, in terms of modesty, and the technologies of the West, in terms of development.
Dubai is keen on protecting and promoting its traditions as conveyed by Islam, as well as its Arab identity and culture. This makes Dubai a traditional and socially conservative yet progressive, open and tolerant city.

Dubai has always been renowned for its tolerant outlook
Dubai has built a reputation for being open to new ideas and ways of doing things. This has enabled Dubai to become a global centre for innovation, tourism and business.
Living and working in an environment of open-mindedness and tolerance has encouraged many to have the confidence to discover their true calling in life, knowing that they will be supported and nurtured in their endeavours. This has enriched life in Dubai, just as Dubai's spirit of freedom has enriched the lives of so many individuals.
From a business point of view, the reason why so many international companies have chosen to invest in Dubai is again Dubai's pragmatic, open attitude. Thousands of companies have flourished in the Emirate's free zones and commercial centres operating to global standards of governance and efficiency.
In line with Islam's tradition of tolerance and openness, freedom of faith and practice is a reality in Dubai. This has allowed other belief systems to flourish in Dubai, a demonstration of Dubai's respect for diversity.

Dubai is a city with style and charisma
Dubai has successfully fused sophistication with charm. It has redefined the meaning of luxury with its stunning hotels, award-winning restaurants and its position as an international shopping destination.
Dubai provides an open environment where talented professionals can build their careers and entrepreneurs can create exciting opportunities on the back of world-class infrastructure and continuous government-led innovation. Tourists and residents alike can experience the finest service, state-of-the-art technology and exquisite luxury.
Dubai has also brought the meaning of sophistication to life by attracting worldwide media attention and high society, in addition to an ever-expanding list of sophisticated and stylish cultural, social, economic and sports events.

Dubai has an aura of vitality and a get-up-and-go spirit
Visitors are struck by the ingrained optimism and spirit of adventure and innovation that permeates through all layers of the community. To a holidaymaker, a business traveler or a resident, Dubai is a place where there is always something exciting to see and do.
This energy gives people from around the world the opportunity to make their ambitions a reality. Many artists, entrepreneurs and engineers come to Dubai to seek inspiration and new ways of looking at things.
They are also attracted by Dubai's unique entrepreneurial spirit. Since the days of the pearl diving industry, Dubai has been a place of successful trade. Traders have therefore learnt to be skilful and shrewd, to anticipate global changes and use them to their local advantage. This can-do spirit is an important driving force that filters through the 'open for business' culture.

Dubai aims to bring together the best in people
Dubai's success is based on the vision and commitment of its leadership, the generosity and aspirations of its people and the contribution of many people from different parts of the world, many of whom have chosen to make Dubai their permanent home. This creates a blend of many cultures that coexist peacefully.
With over 150 nationalities, Dubai is a rich melting pot that provides opportunities for people to meet, discuss ideas, innovate and forge new business relationships. Dubai's streets and shopping malls are alive with numerous languages, customs and cultures.
Dubai also brings together tradition and modernity, as the past, present and future live harmoniously together, each drawing strength from the other. As such, Dubai is an international symbol of how different cultures can achieve mutual enrichment through sharing their ideas and experiences.
Therefore respect for one another's values and cultures is intrinsic to Dubai's residents who assimilate courteously into the community by adopting a spirit of tolerance.

Dubai's doors are open to everyone
Hospitality is central to the soul of Arabian culture and is deep rooted in Arabia's history. In the past, desert travellers yearned for areas inhabited by Arabs, because the Arabs' hospitality meant that the travellers could eat and stay with their hosts for as long as they chose to. Hospitality in the desert started as a custom, and has now grown into a social grace.
Dubai has always looked outwards towards the wider world. It has welcomed traders and visitors with tolerance and compassion. In turn, it has adopted an approach to foreign affairs that is compatible with its own identity.

Dubai has always looked towards the future
Dubai has always played a pioneering role in encouraging its people to excel in an environment where the impossible is possible. The wisdom and perseverance of Dubai's leadership and people have transformed what was once a small fishing community into a world-class commercial capital at the heart of the Arabian Gulf.
An early example of Dubai's visionary heritage can be drawn in the1950s from the late Sheikh Rashid bin Saeed Al Maktoum. He recognized then that Dubai's future was firmly linked to trade from overseas and that careful development of its ports would be central to its long-term success.
Today, evidence of this vision can be seen in every aspect of the Emirate's development, from embracing the latest technology, to multi-billion dollar investments in infrastructure, government services and security.

Dignity is a cornerstone of Dubai's culture
Based on the philosophy of respecting oneself before expecting others to respect you, Dubai has always encouraged its residents to behave in a humble and courteous manner. Therefore, in every part of life, whether it is the clothes people wear, the way they talk or their general behaviour in public, self-respect is vital.

As the Gulf region and Dubai are borne out of a tribal society, the behaviour of one's friends and companions can also reflect on the way a person's dignity and self-respect are seen by others. It is therefore equally important to treat others outside this circle in a way that honours their sense of dignity and respect. Speaking calmly and courteously to others, behaving in a serious and controlled manner in public places, and always honouring your word, are important examples of demonstrating this respect for others.

It is entrenched in Arabian tradition, passed down from generation to generation, that every human being must be treated with dignity. Dubai's culture and laws are all designed to ensure that the dignity and self-respect of everyone are upheld to the highest standards, regardless of where people come from.

1. Social Ethics:
Dubai is characterised by the interaction of a large number of cultures and nationalities. However, the culture, customs and traditions of the United Arab Emirates and its people shall be respected by adopting courtesy and moderation and avoiding all types of improper behaviour in the Emirate.

1.1. The symbols of the state:
It is the duty of every citizen, resident and visitor to show respect for the symbols of the United Arab Emirates' rulers, flag and national emblem. The abuse of any of those symbols is a crime punishable by law.

1,2. Decency:
An official business or business casual dress code shall be adopted by all visitors of Dubai's official government buildings as well as business buildings and office towers. Access to Dubai's official and business buildings may be denied if dress code is considered inappropriate.
In all other public places such as streets, shopping malls and restaurants, shorts and skirts shall be of appropriate length. Moreover, clothing shall not indecently expose parts of the body, be transparent, or display obscene or offensive pictures and slogans.

1.3. Beaches:
Beachgoers — men and women — shall wear conservative swimwear that is acceptable to Dubai's culture. Swimwear shall not be worn outside the beach, as decent dress is the rule in the rest of the city. Nudity is strictly forbidden in every part of the city and is liable to be punished by imprisonment or deportation.

1.4. Public displays of affection:
Displays of affection among couples — whether married or not — in public places does not fit the local customs and culture. Holding hands for a married couple is tolerated but kissing and petting are considered an offence to public decency.
Public displays of affection, as well as sexual harassment or randomly addressing women in public places is liable to be punished by imprisonment or deportation.

1.5. Dancing and music:
Loud music and dancing are forbidden in public places like parks, beaches or residential areas and must be restricted to licensed venues only.

1.6. Public facilities:
Public facilities (i.e. public parks, benches, bus stops, etc.) shall be kept in good conditions. Concerned authorities must be informed of any damages.

2. Substance abuse:
The consumption of alcohol as well as any other drug or psychotropic substance is strictly prohibited in Islam and is punishable by law. Due to the large diversity of cultures and nationalities present in Dubai, alcohol consumption is closely regulated.

2.1. Drugs:
Holding, consuming, buying or selling any kind of drug — in any quantity — as well as being tested positive to any drug by the authorities in the UAE is considered a crime.

2.2. Alcohol consumption:
Alcohol consumption shall be confined to designated areas (i.e. licensed restaurants and venues that serve alcohol to their clients). Being caught under the effect of alcohol outside these places (even in light doses) can lead to a fine or incarceration.

2.3. Driving and alcohol:
The UAE has adopted a zero-tolerance policy in terms of driving under the effect of alcohol. Being caught driving with even the smallest dose of alcohol can lead to a fine, incarceration or deportation.

2.4. Purchasing alcohol:
Buying and selling alcohol is controlled by very strict laws. Alcohol is exclusively sold by specialised licensed stores. It can only be bought by holders of an alcohol-purchasing license (this license is only attainable by non-Muslims). Buyers shall respect the local culture by carrying their alcohol in paper bags such that it cannot be seen.

2.5. Smoking:
Smoking is not allowed in government facilities, offices, malls and shops. Smoking outside designated areas is subject to fine.

2.6. Prescriptions for some medicines:
Some medicines containing psychotropic substances are forbidden in the UAE. Their holders must carry a prescription from a UAE-licensed medical doctor. Visitors shall verify that their medicines are allowed in the UAE before entering the country.

3. Driving safely:
Traffic on Dubai roads is increasingly becoming a major issue for commuters. Following simple security and courtesy rules can make the roads safer and more user-friendly.All road users shall demonstrate respect and consideration for one another.

3.1. Speeding:
Speed limits are clearly signposted and must be respected in order to ensure the general safety of all road users. Car racing is extremely dangerous and shall be avoided. Driving below speed on fast lane is also dangerous.

Most of Dubai roads are monitored by radars and fines are high.

3.2. Tailgating and lane discipline:
Driving fast behind other cars and flashing headlights at them as well as jumping from lane to lane and overtaking are dangerous practices that can lead to fines.

3.3. Safety belt:
Drivers and passengers must wear their safety belt. Not buckling up is subject to fine. Children shall be seated in the backseat.

3.4. Mobile phone:
The use of a mobile phone whilst driving is illegal. Phones must be turned off before starting the car or unless a hands-free kit or headset is available.

3.5. Police, fire trucks and ambulances:
When sirens are heard, drivers shall give way as soon as possible.

3.6. Accidents:
Drivers may not stop or reduce speed to look at a traffic accident out of curiosity, which can lead to traffic obstruction. In case of involvement in a light accident, drivers shall clear the way to avoid danger and traffic obstruction.

3.7. Parking:
Drivers shall park their cars considerately in designated areas only and must avoid parking on special needs parking spaces.

3.8. Pedestrians:
Drivers shall stop for pedestrians and respect their rights at pedestrian crossings. On the other hand, pedestrians must use the designated zebra crossings when crossing the road.

3.9. Bicycles and motorbikes:
Motorbike drivers shall carry a special driving license, wear their helmet and remain on car routes. They shall avoid speeding and reckless driving.

Cycling is considered a healthy and green way to circulate. Nevertheless, for their own safety, cyclists must commit to cycling paths. Not committing to cycling paths is subject to fine.

3.10.Weather conditions:
Drives should be aware of the occurrence of abnormal weather conditions such as thick fogs and sand storms and avoid high speeds.

4. Mutual respect:
Personal freedoms in Dubai are guaranteed to all. However, freedom stops when it endangers people's lives, health, security or liberty. Moreover, the exercise of these freedoms shall be governed by the laws of the UAE.
Islam does not differentiate between nationalities and races. Therefore, respect for cultural differences and equal treatment of people regardless of their origins is the base of the community of Dubai where security and peace prevail.

4.1. Insults:
Swearing, profanities, insults and all kinds of vulgar language are strictly forbidden in Dubai and are legally reprehensible in case of complaint. All kinds of aggressive or offensive gestures are considered a public offence and are subjected to fines or imprisonment.

4.2. Queuing:
Queuing patiently for one's turn to be served rather than pushing in ahead of others is common courtesy. Queues must be respected patiently and not jumped over. Priority shall be given to the elderly, people with special needs and pregnant women.

4.3. Loudness:
Basic rules of courtesy impose on people to respect public places' calm and quietness by avoiding loud conversations or answering their phones where it might disturb others, e.g. in movie theatres, conference rooms, quiet shops and restaurants, hospitals, etc.

4.4. Rumours:
Spreading false news, statements or rumours and malicious propaganda that disturb public security and harm public interest are serious crimes punishable by law.

4.5. Photography:
Photos of people — and especially photos of women and families — in public places shall not be taken without their permission. Taking photos of people is a sensitive issue in Dubai's local culture.

4.6. Begging and street vendors:
Begging is forbidden in all parts of Dubai. Selling any kind of goods or services without a license from the competent authorities is illegal.

5. Environment:
In the global context of climate change, it is everybody's duty to try their best to protect environment,- reducing waste and saving resources.

5.1. Resource consumption:'
Considering the desert surrounding cities in the UAE and the lack of natural fresh water sources it is crucial to conserve water and avoid abusing this precious resource. It is also crucial to save energy by avoiding keeping air conditioning or other electrical appliances on when not in use.

5.2. Reducing waste:
Whenever possible, waste should be reduced through recycling. Green behaviour and the use of recycled products is encouraged.

5.3. Respect for nature:
Preservation of the marine environment: All practices that threaten the marine environment or the safety of marine life through any type of pollution are prohibited. Fishing is only allowed with a license from the competent authorities.
Preservation of the desert environment: Hunting all kinds of wild animals or birds or threatening wildlife and biodiversity is prohibited. Camping in the desert is only allowed with a license from the competent authorities.
Throwing waste and causing pollution to the desert or marine environments is subject to fine.

5.4. Pet management:
Pet owners are responsible for fixing any damage caused by their animals. They are also responsible for cleaning up any remnants their animals leave on the pavements or any other public place. Dogs are forbidden in parks and beaches; they must remain on leash in public places.

5.5. Littering and spitting:
Spitting in public and littering waste or cigarette butts in public areas are considered an offence and are subjected to fines.

6. Respect for religion:
In line with Islam's great tradition of tolerance and openness, religious values are widely respected in the UAE. Therefore, committing blasphemy or sacrilege against any religion is considered deeply offensive. Islam being the official religion of the UAE, some simple rules shall be followed in order to show respect and avoid misunderstandings.

6.1. Prayer time:
Muslims pray five times a day. Each prayer is announced from the mosques by a call to prayer. When the call to prayer is heard, music shall be turned off in all public places and cars, and Muslims shall be allowed to perform their prayer duty.

6.2. Ramadan:
During the month of Ramadan, Muslims fast from dawn to sunset. Throughout this month, eating, drinking or smoking in public spaces during daylight is considered a public offence and is punishable by law.

6.3. Religious activities and celebrations:
Any type of religious activity — Islamic or not — is forbidden without a licence from the competent authorities.


Appendix I: Offence and penalty table:

Public display of affection
Warning or fine (in case of severe breach can lead to jail and/or deportation)

Alcohol consumption outside designated areas
Fine or jail

Buying alcohol without,an alcohol ficence
Fine or jail

Drive under the effect of alcohol or any other drug
Fine, jail and/or deportation — car

Drug consumption or possession
Fine, jail and deportation

Lack of respect for Islam's customs and symbols
Fine, jail and deportation

Lack of respect for other religions' customs and symbols
Fine or jail

Vulgar language
Fine or jail

Littering and spitting
Warning or fine

Pet fouling public areas
Warning or fine

Damaging public facilities

Respect for environment
Warning or fine (cf. Federal Law No. 24/1999 on the protection and development of environment)

Sunday, 15 March 2009

The Dubai Code of Conduct

A new Code of Conduct for citizens, residents and vistors to Dubai has been issued by the Executive Committee under the guidance of Sheikh Hamdan (Sheikh Mohammed's son). This is not a definitive summary, just a few high (and low) lights:

1. Social Ethics. 1.4 - Displays of public affection among couples - whether married or not - in public places does not fit the local customs and culture. Holding hands for a married couple is tolerated but kissing and petting are considered an offence to public decency. Public displays of affection, as well as sexual harassment or randomly addressing women in public places is liable to be punishable by imprisonment or deportation. There are also new clothing rules and a person can be refused entry to a government building if their clothing is considered immodest.

1.5 - Dancing is forbidden in public places.

2. Substance Abuse. 2.2 - Alcohol consumption shall be confined to designated areas (i.e. licensed restaurants and venues that serve alcohol to their clients). Being caught under the effect of alcohol outside these places (even in light doses) can lead to a fine or incarceration. This would seem to rule out having a quiet drink with friends at your house. Also rules out drinking in a restaurant unless you're planning to stay the night there.

2.6 Some medicines containing psychotropic substances are forbidden in the UAE. Visitors shall verify that their medicines are allowed in the UAE before entering the country. The banned drugs include Xanax, Zolfot, Roaccutane, Actifed cough syrup and hormonal compounds that could assist women with the symptoms of menopause.

3. Driving Safely. 3.4 - The use of a mobile phone whilst driving is illegal. Phones must be turned off before starting the car or unless a hands-free kit or headset is available.

I think everyone who drives in Dubai will cheer for this one: 3.2 - Driving fast behind other cars and flashing headlights at them as well as jumping from lane to lane and overtaking are dangerous practices that can lead to fines.

3.9 - Motorbike drivers shall wear their helmet.....This I've got to see. There aren't enough bike helmets in all of Dubai for everyone to have one each!

4. Mutual Respect. 4.4 - Spreading false news, statements or rumors and malicious propaganda that disturb public security and harm public interest are serious crimes punishable by law. Just today the head of Dubai's immigration department announced in the press that there have been NO mass visa cancellations in Dubai, NO cars have been left at the airport by fleeing expats and NO expat has been refused exit from Dubai because of supposed unpaid debts. Under the new laws anyone who says different will be liable to "punishment by law".

5. Environment 5.3 Camping in the desert is only allowed with a license from the competent authorities. A big change! Can you imagine the process that will be required to get a camping licence??

6. Respect for religion When the call to prayer is heard, music shall be turned off in all public places and cars. This is a change to the practice in the big malls in Dubai where, currently, the call to prayer is played over the PA, there's a brief break and then the shops continue playing their own music.

Out of the Pod this week: 15 March '09

Today’s first song out of the Pod was “I Surrender" by David Sylvian. I know nothing about Mr Sylvian, never heard of him before. “I Surrender” has a laid-back jazz feel, and would make a good background song while smoking a quiet shisha on a lazy Friday afternoon. The first 3 minutes of “I surrender” were mellow and I enjoyed it. After 4 minutes the mood becomes dark as he sings about mothers crying under the southern skies or something. After 5 minutes he starts waffling on about some girl who’s going to “throw burning books into the sea”. After 6 minutes I hoped he was going to jump in after her. After 7 minutes there was a trumpet solo. Trumpet? After 7 minutes? However, as I’ve promised to play the first song out of the Pod in its entirety no matter what, I gritted my teeth. But why trumpet? There’d been no hint of trumpet anywhere in the song previously, maybe a trumpet playing session musician wandered into the wrong studio, played a bit then wandered out again. Finally after 9 minutes 43 seconds the whole thing, thankfully, shuddered to a halt. I don't believe I'll listen to any more of Mr Sylvian's music without an anaesthetic.

Thank goodness the next song was straightforward and unpretentious: “Iron Horse” by Motorhead. Yea Lemmy!

Thursday, 12 March 2009

Bargain prices on the Palm

From BI-ME and Dow Jones Newswires, 12 March '09

Once the best-known symbol of Dubai’s explosive growth, Palm Jumeirah now looks to be one of the biggest victims of the Emirate’s property slump.

Dubai’s Palm Jumeirah, the self-proclaimed ‘eighth wonder of the world’, has become a symbol of the Emirate’s economic vulnerability as plummeting real estate prices unravel its boom town image.

Leading brokers say that prices on the development have slumped 50% since September, while local newspaper classifieds list hundreds of luxury villas and apartments on its 16 fronds as owners try to off-load unwanted homes. A four-bedroom garden home now lists for AED 6.5 million (U$1.8 million), down from AED 14.0 million last July.

“Palm Jumeirah was one of the catalysts of the Dubai real estate boom,” said Edward Carnegy, a surveyor for CB Richard Ellis Middle East. “But the gap in the prices investors were willing to pay, say in mid-2008, compared to the finished article was huge and needless to say, unsustainable.”

Once the best-known symbol of Dubai’s recent, explosive growth, Palm Jumeirah now looks to be one of the biggest victims of the emirate’s property slump.

Dredged from the seabed of the Arabian Gulf at a cost that rose to more than US$12 billion, the vast Palm Island project helped catapult Dubai into the ranks of the world’s most desirable locations. That status is now under threat as real estate prices plummet and the government struggles to cope with US$80 billion of debt.

Last week, some brokers said prices on Palm Jumeirah dipped below AED 1,000 per square foot for the first time since prices began to fall last year.

At the height of the boom, some of island’s signature villas sold for US$12 million, while a penthouse in the planned Trump International Hotel & Tower reportedly sold for a Dubai record of more than US$30 million in June.

Since then, the US$1.1 billon hotel and apartment tower, being built in partnership with US real estate magnate Donald Trump, has been put on hold, leaving a gaping construction hole at the centre of the Palm’s trunk.

And as the value of properties on the Palm sink, so to do the fortunes of its developer, government-owned Nakheel. The company, part of the business empire of the Ruler of Dubai Sheikh Mohamed bin Rashid al-Makhtoum, is being forced to take drastic action to keep its business afloat.

Recent steps to cut costs include cutting 10% of its workforce and delaying construction work at two other offshore developments, the Palm Jebel Ali and the Palm Deira. The company denies that Palm Jumeirah is suffering any downturn from the global economic crisis.

“Palm Jumeirah is one of Dubai’s most recognisable icons. Its success as a residential community and tourist destination will continue to grow,” says Johann Schumacher, Palm Jumeirah’s Managing Director.

True enough, the development has attracted some of the biggest names in entertainment with sporting celebrities such as British soccer players David Beckham and Michael Owen, and former Grand Prix racing driver Michael Schumacher said to be amongst the list of celebrity owners of its luxury villas.

“Palm Jumeirah was extremely well promoted at its launch with celebrities buying property there and a lot of glamour surrounding the project. Prices there rose very fast as a result and are now seeing a correction along with the rest of the Dubai market,” said David Camp director of Economic Research Associates, an international real estate consulting firm.

To be sure, many investors still view the Palm as the Beverly Hills of the Gulf region.

Simon Murphy, a 42-year old Briton and former hedge fund advisor, was lured into buying property on the palm by its celebrity kudos. He was part of an initial wave of investors to snap up property on the huge man-made, palm-shaped island.

“There’s a certain snob value to living on the Palm and people here are justifiably proud to have a pretty cool postcode,” he said. (Dubai has postcodes? Since when?)

He bought his ground floor shoreline apartment over the telephone for AED 870,000 without seeing a floor plan or any other information about the property. At the height of Dubai’s property boom in July 2008, Murphy received offers of up to AED 6 million for the apartment, but refused to sell.

Despite the uncertainty surrounding the future of the Palm Jumeirah, Murphy says he’s not too concerned. He points to the near 600% increase in average prices on the Palm between 2002 and the Summer of 2008, before the current downturn set in.

Also feeling the squeeze, is the US$1.5 billion Atlantis Palm Hotel, a joint venture between Kerzner International Holdings and Nakheel, which sits at the crest of the mammoth development.

Just months after a US$20 million lavish opening party, which saw a 2,000-person, star-studded guest list and the world’s largest fireworks display, the hotel where rooms start at US$800 a night and go up to US$25,000, is struggling to attract guests.

Property flippers start to spin

From Arabian Business, 11 March 09

If you want to hear positive news about the housing market, ask an estate agent.The Middle East is hamstrung at the moment with a lack of reliable facts on which to base house buying decisions.For example, Ryan Mahoney, managing director of estate agent Better Homes, was not alone on Tuesday when he painted a rosy, but misleading picture of the market.

He says that buyers are coming back to the Dubai real estate market, leading in one case to an “unprecedented” 16 viewings of a single property one day last week.I have no reason to doubt his statement is true, but he fails to say whether the property in question actually sold. I suspect not.In fairness to Mr. Mahoney, he goes on to say that there is a lot of shopping around, and appears to concede that most people are only browsing rather than buying right now. This is inevitable in a market where the credit crunch prevents virtually everybody from securing the mortgage they need to buy a home, and prices are still falling.

Mr. Mahoney needs to be careful that his marketing messages do not overstep the line into counterproductive spin. His assessment that property prices have fallen by up to 50 percent in some parts of Dubai is a helpful guide from somebody with firsthand knowledge of the market. But going on to say that buyers can secure up to 15 percent more off the asking price as they close a deal shows an estate agent’s classic instinct for self-service. The fact is that lowball offers of 50 percent below asking prices are being offered and accepted, even in today’s market that has already seen prices halve since their peaks last summer. Better Homes would be shocked and delighted if a mere 15 percent discount was all that was required to seal a deal.

Any economic recovery will be delayed while there is a vacuum of reliable information. Nobody wants to invest in a declining market, but money could flood back once the economy finds a solid floor.Mr Mahoney needs to be careful that his faux-optimism doesn’t elongate the current downturn and should speak sincerely if he wants to stimulate sustainable demand.

Wednesday, 11 March 2009

Seven charged over alleged $501m Dubai fraud

From the Financial Times 9th March '09

Dubai's public prosecution has charged seven businessmen with crimes related to an alleged scheme to defraud Dubai Islamic Bank of $501m, official records show.

The bill of indictment, seen by the Financial Times, alleges the crimes were committed between 2004 and 2007 by two former employees of the bank and five businessmen linked to trade finance company CCH and a real estate project in Dubai, the Plantation.

The case, expected to go to court soon, is likely to become a high-profile test for the emirate's judicial system as questions swirl about the rule of law in the Gulf's commercial centre, hit hard by the global financial crisis.

The move, after an investigation of more than a year, lays the ground for the long-awaited conclusion of the DIB fraud case, central to a broader clean-up at state-linked companies, including DIB's real estate arm Deyaar.

International censure has mounted against the government's decision to hold without charge some executives for almost a year. Zack Shahin, former chief executive of Deyaar, has via US lawyers complained about his extended detention, claiming he had been tortured and was being victimised to protect senior locals.

The Dubai authorities countered saying the investigations have been carried out according to United Arab Emirates law.

The public prosecution document accuses Charles Ridley and Ryan Cornelius, both Britons, and Erin Nil, a Turk, of forging documents to defraud the bank of $501m via CCH, a trade finance company owned by Mr Nil and linked to Messrs Ridley and Cornelius.

The document alleges that the two former DIB executives, Rafatul Islam Usmani and Omair Mooraj, both Pakistanis, solicited and received bribes of $950,000 and $750,000, respectively, to facilitate the alleged embezzlement. The public prosecution document also claims that Zia Usmani, a US citizen, defrauded DIB of $2m.

Arthur Fitzwilliam, the British developer behind the polo-themed Plantation, is accused by the prosecution of aiding Messrs Nil, Ridley and Cornelius to carry out their alleged fraud. Mr Mooraj, who was working for JPMorgan when he was detained last year, is represented by Habib al-Mulla, who said: "We deny the accusations as matter of fact and law. We are going to defend him vigorously with all legal means."

Rafatul Islam Usmani's lawyer declined to comment. None of the other defence lawyers could be reached for comment.

Mr Mulla expects the cases to be heard at a Dubai court soon, but no date has been set. Two of the suspects, Mr Nil and Zia Usmani, have left the country, the document says.

DIB yesterday said it had made impairment provisions of Dh496m ($135m, €106m, £97.8m) related to its exposure to "CCH and related individuals". The bank said it had foreclosed on the Plantation and was pursuing other securities related to this transaction.

Other cases are moving to trial, lawyers say, including alleged financial irregularities at Sama Dubai and Mizin, property developers owned by Dubai Holding.

The road to Damascus

Five wonderful days in Syria: http://carolynn-in-dubai.smugmug.com/

Kuwait travel ban for expats with unpaid loans

From Arabian Business, 10 March '09

Kuwaiti ministers are drawing up plans to stop expatriates leaving without paying off their loans.
Expatriates living in Kuwait could be banned from travelling out of the country unless they can prove they have paid all their debts, it was reported on Tuesday.The new rule is part of plans being drawn up between the Ministry of Communications (MoC) and the Ministry of Interior, according to a senior official at the MoC in an interview with Kuwait daily Kuwait Times. The move comes in the wake of an Audit Bureau report that accused the MoC of negligence in collecting debts owed by a number of corporate companies and domestic customers.

Zakariya Mohammed Al Ansari, the head of the MoC’s accounting and commercial services department confirmed to the newspaper that the two ministries were working closely on plans that wold ensure expatriates did not leave the country without repaying their loans. But he rejected the bureau’s report findings that estimated debts exceeded KD120m ($408m), saying the sum was nearer to KD9m.The department had collected KD117m in unpaid debts in 2008 alone, as well as 98 percent of the amount owed to the ministry by local embassies, Al Ansari added.

[No doubt the UAE is looking at something similar thereby formalising what is already happening here ie companies informing the banks when a person is made redundant. The banks in turn are informing the immigration department who are then refusing exit visas. I've heard of a 22 year old who, when he arrived in Dubai a year or so ago, bought a car but has now been made redundant. He's done the right thing, tried to get another job, tried to sell the car both non-starters in the current economy. When he attempted to fly out of Dubai he was told at the airport that he couldn't leave the country until he "sorted it out". How he'll "sort it out" with no job and no income I have no idea.]

Wednesday, 4 March 2009

Dubai debate on the net

There's a sad lack of thoughtful comment on the net regarding the rise/fall of Dubai but if you click here you'll be taken to a forum debate that's thought provoking, attacks the intellectual point rather than the poster and, best of all, is completely without contributions from the "If you don't like it, get out" brigade.

The initial article is from an architect and the comments on Dubai are, to put it mildly, scathing eg here's the first paragraph:

"Short of opening a Radio Shack in an Amish town, Dubai is the world’s worst business idea, and there isn’t even any oil. Imagine proposing to build Vegas in a place where sex and drugs and rock and roll are an anathema. This is effectively the proposition that created Dubai - it was a stupid idea before the crash, and now it is dangerous. "

No matter what reaction you may have, its worth reading the full article and continuing through the replies.

The "Sus Laws" come to Dubai

Police to do spot checks on UAE residency visas
From Arabian Business, 3rd March '09 by Joanna Hartley

Residents should carry their visas, or a copy, at all times.

Police spot checks of residency visas are to increase as part of a UAE government crackdown on illegal immigrants, it was reported on Tuesday. Residents should carry their visas and labour cards, or copies, at all times as officers will be doing random checks on the streets of the Emirates, the Ministry of the Interior has warned, according to UAE daily The National.

However, there would be no road blocks, said Brig Gen Nasser Al Minhali, the acting director general of the federal Department of Naturalisation and Residency.

“This is not a one-time campaign but a new mission that will be entrusted to each police station to catch those living illegally in the country,“ he said. “The details will depend on each police station, but officers will be doing these random checks for documents as they patrol the streets.

The point is not to disrupt daily life, but to catch those living here illegally,” Al Minhali added.The strategy, which has seen a number of measure to stop people living int eh country illegally, also sets out a plan to set up more police stations in populated areas Al Minhali said. Iris scanning has prevented more than 300,000 deportees from re-entering the country under false names, while an amnesty for illegal workers in 2007 helped legalise the status of more than 176,000 workers.

(Despite having a UAE residence visa I've been iris scanned coming into Sharjah Airport. I was told to go and stand in a separate line, the only female, with assorted blokes from the subcontinent and a contingent of Eastern European gents none of whom appeared to have a neck and would have done any front row proud. As I approached, the guys in the line all looked at me with the same expression which said "We *know* we look dodgy, but you're a boring middle aged female whitey - they must know something about you and you must be really bad!" Like the parting of the Red Sea, they all moved away from me en masse. So there I stood, alone but giggling at the irony of the whole thing, while a group of blokes on one side of me glanced furtively (one even pointed at me) while muttering in Hindi and on the other side of me the huge Eastern Euro blokes were giving me the beady like I was a cross between a serial killer and a used car salesman with BO.)

Tuesday, 3 March 2009

Emirati redundancy case ends amicably

From Arabian Business 3rd March 2009

A group of Emiratis who lost their jobs last month as a result of the global downturn have settled the case.

A group of 20 Emiratis who had filed a complaint with the Ministry of Labour over their redundancy from a private company accepted a financial deal to close the case, it was reported on Tuesday.The former employees of Al Sha'afar General Contracting (ASGC) were offered a month's salary in bonus, after demanding compensation for termination of their contracts in the wake of the global crisis.The complaint and subsequent settlement makes it the first-ever economic crisis linked redundancy case involving Emiratis, according to UAE daily Gulf News.

The case coincided with the introduction of new legal regulations by the UAE government that effectively bans private companies from making job losses among nationals for “flimsy” reasons, including the global crisis.

Introduced on Feb. 18 this year the amendment to the labour laws states that companies must endevour to do everything in their power to retain local employees, and can only terminate a contract with the permission of the Ministry of Labour. Any company must be able to prove that the worker is inefficient or has violated labour laws, the ministry said at the time.

On Monday, Mariam Azmy, human resource director at ASGC, said the ministry had acknowledged that the company's hand had been forced by the global financial downturn, and that the company had not sought to terminate the services of the said group arbitrarly. "We decided to give one month's salary to each one of them as a [token of] appreciation from us and taking into account their financial situation," said Azmy. Ex-employee Mariam Al Baloushi, a mother of four who worked for ASGC for a year, said she was satisfied with the settlement since she wanted to avoid time-consuming court proceedings.

However, Latifa Mohammad, another ex-employee, said "the decision was unfair" since the ministry did not give them desired level of support.

Monday, 2 March 2009

Sunland executive "not arrested" says company owner

Employee of development company Sunland Group is there as bribery witness, says owner
Article from: AAP, 2nd March '09
A development company part-owned by James Packer denies one of its employees has been arrested in Dubai over a bribery scandal, saying he's simply acting as a witness in the investigation.

Fairfax reported three property industry heavyweights were among a number Australians arrested in Dubai over property-related allegations.

One of the men named in the report, David Brown, is the Middle East head of the Sunland Group, a development company part-owned by Mr Packer, while the others, Marcus Lee and Matthew Joyce, worked for the state-owned Nakheel development company.

According to Fairfax, the allegations involve millions of dollars in consultancy payments by Sunland to Nakheel and another party over the purchase of a waterfront property.

But Sunland on Monday denied Mr Brown had been arrested, saying no allegations had been made against the company or its executives in relation to the scandal.

"Sunland advises its chief operating officer - Middle East, Mr David Brown, is a witness to the authority's investigation," a statement from the company said.

"He is not the subject of investigations, nor has he been arrested or detained as is stated in the press articles."

Sunland managing director Sahba Abedian said the firm supported the Dubai investigation.

"Sunland fully supports the Dubai government's commitment to ensure the region's property market is transparent," Mr Abedian said in the statement.

"We will continue to provide assistance where required.

"Maintaining the highest ethical standards in all our dealings has long been a core value of Sunland."

A lawyer for two of the men arrested said both had denied any wrongdoing.

Australian lawyer Martin Amad said his two clients, whom he would not name but were believed to be Mr Lee and Mr Joyce, had been held in solitary confinement without charge since their arrests on January 25.

"I put in a phone call to DFAT (the Department of Foreign Affairs and Trade) last week and I'm awaiting a return call from them," he told ABC Radio today.

"Hopefully we can meet with them to see what, if anything at all, the Australian government can do about two of its citizens in a foreign jail where they are being kept for investigation without charge."

DFAT on Monday said a report that 13 Australians had been detained in connection with the property scandal was wrong.

"It is not correct to say that the large majority of the Australians are being detained due to the building industry collapse," a DFAT spokeswoman said.

"Australians in UAE under detention/arrest are charged with a range of offences, from relatively minor to relatively serious.

"Some of the cases remain under investigation by local authorities and date back to February 2007."

DFAT said the number of Australians detained or arrested by local authorities in the UAE can fluctuate on a daily basis.

Burj Dubai Classic Car Show

Here are some photos taken at the Burj Dubai Classic Car Show which was held over the weekend. I'm told by someone who was at the prizegiving ceremony at the close of the show, that a toe-to-toe slanging match which almost became a stand up fist fight broke out between the 1st and 2nd placegetters.

Sunday, 1 March 2009

Now 13 Aussies arrested in Dubai collapse

From the front page of the Sydney Morning Herald
March 2, 2009

THREE property industry high-flyers, including the senior agent of a company part-owned by James Packer, are among 13 Australians under arrest in Dubai as its supposed property miracle has succumbed to the global financial crisis.

Legal sources in Dubai have confirmed that among those in jail or in effect under house arrest over property-related bribery allegations are:

■ David Brown, architect and the middle eastern head of the Sunland Group, a Queensland development company which is part-owned by Mr Packer. Mr Brown has been interrogated at least eight times and has had his passport confiscated in relation to a bribery investigation.

■ Marcus Lee, until recently a senior executive with the Dubai Government-controlled Nakheel development company. He is a former executive with the local property companies Jones Lang LaSalle and Investa. Mr Lee is in jail, without charge, and is facing investigation over alleged bribery.

■ Mr Lee's Nakheel colleague Matthew Joyce, former managing director of the Dubai Waterfront project, is also in jail without charge over alleged bribery.

Until now, only the arrests of Mr Joyce and an unnamed colleague had been made public.

The three executives are of particular concern to lawyers and the Australian embassy because of the seriousness of the allegations and the uncertainty of their future. United Arab Emirates law allows suspects to be held indefinitely without charge.

It is understood the bribery allegations involve millions of dollars in consultancy payments by Sunland to Nakheel and a third party over a waterfront property purchase. Nakheel is one of four development companies linked to the Dubai Government and its ruler, Sheik Mohammed bin Rashid al-Maktoum.

Mr Lee and Mr Joyce have been held in solitary confinement since January 25. They have been allowed only limited access to lawyers and family.

Mr Joyce's and Mr Lee's Melbourne lawyer, Martin Amad, refused to identify Mr Lee by name or discuss details of the cases. But he said he was anxious for both men as they enter their second month in custody without charge.

"We're concerned for the welfare of the accused in custody where they've been kept in solitary confinement," he said. "Their physical and mental health has deteriorated. We are becoming increasingly frustrated at the time it seems to be taking for the prosecution authorities to investigate the matter."

Commenting on the 13 Australians under arrest in Dubai, a Department of Foreign Affairs and Trade spokesman said: "The United Arab Emirates legal system is different to the Australian legal system. People who are under investigation can be held in detention for long periods of time without bail."

Some fear people are being made scapegoats. "There is a lot of face-saving to be done," said one Melbourne property player well versed in business in Dubai. "The sheik can never be responsible, so somebody else has to be."

Sunland's managing director in Australia, Sahba Abedian, confirmed Mr Brown had been interviewed by police but insisted his company was not "implicated in the investigation".

Out of the Pod this week: 1 March '09

Shuffle! The first song out of the 'pod this week is "I Die, You Die" by some totally depressed guys called the Magnetic Fields. If anyone ever wants to put together a CD of "Music to top yourself by" then this song has got to be on the playlist. Here are some of the doom laden lyrics:

They crawl out
Of their holes for me
And I die you die
Hear them laugh
Watch them turn on me
And I die you die
See my scars
They call me such things
Tear me, tear me, tear me

I know its written by Gary Numan taking a shot at the music press in the UK but its not an uplifting way to start the working week. Only 27,687 songs to go.