An interesting twist on the Dubai property slump

Property developers make a big profit in Afghanistan
From the Telegraph, 6th April '09

The global financial crisis has created an unlikely property boom in Kabul, where four-bedroom houses now cost up to $500,000.

As prices across the world collapse, parts of the Afghan capital have seen values rise by 75 per cent in the past year, according to estate agents.

A plummeting Dubai property market has forced the wealthy Afghan elite to pull their investments out of the Gulf and plough the money back into Kabul.

Prices have been further buoyed by demand for city centre property and land from aid agencies, international contractors and new embassies. Because the economy is largely reliant on aid or donations and the tiny formal banking system is reluctant to lend, Afghanistan has so far been largely untouched by the credit crisis and ensuing downturn, according to ministers and business leaders.

Those Afghans who have amassed large sums from reconstruction contracts, corruption or the opium trade have invested in Dubai's booming markets in the past five years. But Dubai property is estimated to have fallen 25 per cent in value since its September peak and billions of dollars of development there is on hold or cancelled.

"Most Afghans who have invested in Dubai are now turning their faith back to Kabul," said Torialai Bahadery, director of Property Consulting Afghanistan.

"We have been hearing that people are losing millions of dollars in Dubai.

"In addition there's very easy money for selected people. They make good money out of contracts and they prefer to invest it here rather than Dubai.

"Drug dealers want to make their money clean by investing in property. It used to be when they had money they had ways of taking it out, but because of the global crisis, they don't want to take it out."