An Investigation of the Impact of the Financial Crisis on the UAE Real Estate Market

Background One of the noticepowerful indications of economic crop and deed is the space of cannonades and activities induction assign in the reading and penny possessions chaffer (Global Economic Research, 2012). This prosituation is in-fact penny for the United Arab Emirates which balance the conclusive decade has chronicled vigorous crop in its penny possessions chaffer on one operative. And on the other operative has seen noticepowerful extricate as a effect of the global financial opportunity which began in 2007. The opportunity has caused weighty extricate to the penny possessions crop and activities of the UAE husbanding anterior to which the Emirates enjoyed an unrivalled penny possessions crop which was aloft any other in the Gulf Corporation Council (GCC dominion) (Kamco Research, 2010). In professed account, examination shows that the toil chronicled a CAGR of 20% from the coming 2000s to 2007 and as of 2007 the chaffer showed a vigorous crop scold of balance 21% succeeding a occasionliness penny possessions constituting encircling 8% of the dominion’s completion GDP estimated at balance (15 billion USD) (Whatley, 2011). Given the dominion’s tempting situation as a global passenger and cannonade goal, infrastructural crop and crop of passenger sites and public-houses as courteous as other invigoration and hospitability sectors has buoyed the penny possessions crop of the dominion. In-fact anterior to the financial opportunity, requires for properties were said to accept weightyly outweighed accoutre in twain individual and wholesale penny possessions chaffers (Kuwait Finance House, 2011). Indeed, according to the Kuwait Finance House (2011), “there is quiescent a shortage of units in the residential and wholesale segments due to the unrivalled economic vociferate, exalted encroachment crop, irrelevant companies repairment up corrupt in the dominion, and great inflow of expatriates”. The Kuwait Finance House raise hushs that the deep factors subordinatepinning the Emirates quick penny possessions chaffer crop are: Solid macroeconomic ground, Public payment and great fiscal dwellder, Dollar-dirham peg and the annals exalted inflation scolds dedicated that stubbornly exalted scolds of inflation in the dominion associationnalises cannonade decisions into the penny possessions chaffer departed media is used as a hedge across inflation. It has been illustrious in-fact that inflation has balancecharmed administrative lending scolds in the Emirates thus it is cheaper for fellow-creatures to borrow than to continue specie in guarantee accounts, accordingly penny possessions cannonade is considered as a pennyistic way of hedging across inflation (Albayan, 2009). In enumeration to the aloft planatic factors, the Kuwait Finance House besides suggests that part-among-among of the drivers of the Emirates penny possessions chaffer are population crop, vast liquidity and lastly the availability of Islamic banking. The quiz of the penny possessions chaffer crop of the husbanding is that occasionliness most of the factors which gave soften its appearnce has aided to hedge across the global financial opportunity at the very initiate of the opportunity, divers of the factors besides contributed to its extricate. The financial opportunity of 2007 did not initiate to declare on the Emirates husbanding until the third pity of 2008 but when its applications downed on the husbanding, it put to standard a crop that has been unrivalled in any dominion in the Middle East for the departed 10 years (Albayan, 2009). According to Kamco Examination (2011) at the warmth of the financial opportunity in 2009, the council asked the Dubai Cosmos-people which is its administrative penny possessions cannonade production to seal all cannonade activities until March 2010 as a effect of what it forcible as ‘terrible application of the crises until when its application strength accept depressed. Departed 2009, the Dubai Cosmos-people has laid off balance 10,500 reading staff succeeding a occasionliness Dubai World’s something-due lasting at balance $59 billion. As of 2009, the emirates something-due was put at $80 billion. Timeliness at primitive pity of 2009, the Abu Dhabi cannonade production exhibited to aid Dubai betwixt its penny possessions chaffer subjection, Abu Dhabi besides felt the application of the opportunity as a effect of the global opportunity. As of the primitive pity of 2009, the penny possessions chaffer plunged by approximately 70% of the pre-opportunity compute and of the 980 ongoing penny possessions projects in Dubai, merely 47 were completed in 2009 succeeding a occasionliness encircling 500 registered succeeding a occasionliness the Penny Possessions Regulatory Production (Rera) cancelled. Departed most cannonade into the emirate’s penny possessions chaffer were from investors aloof succeeding a occasionliness balance 70% cannonade entity FDI, the opportunity which initiateed from the United States and Europe unleashed its application on the emirates as investors could not get funds from their western financiers and the scold of financial liquidity which initially increased the opportunity subdued in the husbanding. Albayan (2009) besides hushs that most of the factors which led to the requires of penny possessions in the emirates were abject. For illustration he hushs that the require for tourism extricated weightyly thus solemn public-houses scold of enjoyment. This besides led to the application of the opportunity felt in ongoing crops. Timeliness opposed accounts accept been put bold to associationnalise the penny possessions chaffer extricate in subordinatetaking to the financial opportunity, information encircling the dominion’s penny chaffer extricate betwixt the opportunity is quiescent skewed. Besides, as the chaffer is quiescent struggling to end end to the pre-opportunity bound, there are concerns that if the penny causes to the extricate are not signed, there procure be difficulty in influenceing bold and achieving the scarcityed crop. In survey of this endground, the contemplated dissertation procure critically investigate the application of the financial opportunity on the penny possessions chaffer. The dissertation is disturbed succeeding a occasionliness identifying and examining the deep causal factors imperative for transmitting the application of the opportunity on the penny possessions chaffer and the varying strategies that accept been assiduous to lessen forthcoming applications. The forthcoming are the biased boon and objectives of the dissertation. Research Objectives: Investigate the similarities or differences betwixt UAE penny possessions chaffers, and those in the UK. Ascertain the reasons why the global financial opportunity could accept had an application on the UAE penny possessions, especially dedicated differences in banking principles. Ascertain the role of Islamic banking in alterative the application of the financial crises. Investigate the trodden and introdden applications that the financial opportunity had on the UAE penny possessions chaffer, and its following application on the UAE husbanding. 1.3 Examination Question How has the financial opportunity applicationed upon the UAE penny possessions chaffer 2.0 Reading Review The 2007 global economic and financial Opportunity which initiateed from the US subprime mortgage opportunity has artful virtually all the countries environing the cosmos-people dedicated the interconnectedness of the global husbanding. The opportunity which led to the subjection of opposed courteous disclosed institutions such as Lehman Brothers besides led to the bailout of financial institutions, and the nigh subjection of divers councils as courteous as downturns in stocks chaffers environing the cosmos-people (Bob, 2012). As a effect of the opportunity, there accept been praise defect substances, disclaiming share scold movements, inflation scold variation and opposed distortions in the financial subordinatetaking of divers financial obligations and subordinatetakings. As the praise opportunity led to the subjection of financial institutions, it became substanceatic for investors to waste exalt on their occupation commitments and financial obligations as borrowing became distressd as the liquidity associations of divers banks approximately deteriorated (TIME Magazine Friday, April 10, 2009). Timeliness the opportunity has unleashed its application on total husbanding and the Emirate’s husbanding in part-amongicular on one operative through its stupid financial twist, it has on the other operative had great application on other Emirate’s industries. As illustrious by Kamco Examination (2011), the financial opportunity initiateed to influence the UAE through the extricate of passengers and tourism activities which raise led to decreased require for housing and penny possessions as courteous as comfort and public-houses in part-amongicular. Kamco Examination hushs that departed investors inend initiateed to nosedive as a effect of low public-house enjoyment and powerless tourism activities which unintermittently fuelled the penny possessions chaffer, this led to flux receipts and investors initiateed to abort new projects. As illustrious by Wam (2010), when the opportunity initiateed in UAE in slow 2008, balance 150 penny possessions cannonade projects were named off by investors who had initiateed to droop into molestation succeeding a occasionliness their financial institutions concerning their financial subordinatetakings. The Citibank hushs that: “penny possessions projects rate 170 billion USD accept been cancelled departed the financial opportunity outburst succeeding a occasionliness rents appearance a extricate of balance disgusting fifths departed 2008. Also, Al Futtaim – a Penny Possessions assemblage in Dubai during the financial opportunity sealped toil on the Dubai Festival City which was billed to consume approximately 3 billion USD. Similarly, superior projects were stalled such as public-house and other crops were stalled. For illustration, Disgusting Seasons Public-house and the Al Badia Occupation Centre which are superior penny possessions crop projects were sealped. According to the Executive Magazine, the crew has charmed this step in regulate to blessing from a raise droop in reading consumes due to the financial opportunity, which would strengthen it to lessen its expenses. At the corresponding occasion, the UAE council which has enjoyed approximately a decade of dwellder fiscal regime had initiateed to impress the application of the opportunity as the council something-due has instantly softenn to balance $30 billion as of coming 2008. The council’s bad fiscal situation led it to regulate the Dubai Corporation to seal all penny possessions chaffer activities occasionliness the warmth of the opportunity subsides. Timeliness the Kuwait Finance House had in 2008 prior predicted that the UAE procure not impress the global praise distress due to individual waste crop that is likely to redeep vigorous as courteous as the population crop of expatriates in the dominion who boosted consumer dependence. The financial opportunity at its peak contrarily artful the crop of individual waste in a lot of ways. According to Mintel Examination (2010), “departed individual institutions were feeble to allure praises from banks to support opposed projects and requires for approximately perfectly all services extricated, individual waste crop was artful to greatly that it took the UAE end to a pre-20 year bound when it could the dominion could not be ground on the visage of the earth”. Forthcoming the opportunity, the council has charmed opposed steps to lessen the application of the opportunity (Global Media Guide, 2011). The convenient bank has for illustration begun to balancehaul the banking plan by elevation bank’s liquidity association in regulate to grant banks to yield praise occasionliness the cardinal corrupt has besides increased (Hatoum, 2012). As a effect of the steps charmed by the convenient bank and other council agencies, the UAE pennyity chaffer has began to appear out of the opportunity. Dubai’s residential penny possessions chaffer is lastly recovering succeeding hitting ground, occasionliness neighbouring Abu Dhabi continues to violent-effort. A media renunciation published by Zawya Dow Jones (2012) shows that the abode prices in Dubai saw a soften of approximately 7.6 percent for the year at the initiate of 2012, but prices in Abu Dhabi dropped 4.1% in the corresponding occasion bound. 3.0 Methodology The methodology is an weighty atom of the examination sequence which shows the project atoms of the examination part-amongicularly succeeding a occasionliness affect to grounds assemblage and the adopted techniques as courteous as their exculpation. Accordingly, this exception of the scheme sets out the contemplated methodology of the dissertation. The exoteric reading shows the entity of two avenuees to examination: namely the hearsay and inductive methods (Saunders et al, 2003). Timeliness the hearsay avenue is leaned towards a philosophical evaluation or subordinatelasting of grounds as courteous as the subordinatetakingship betwixt variables, the inductive avenue owes greatly to frameing an subordinatelasting of the meanings humans fix to events as courteous as the examination tenor (Saunders et al, 2003). The merits of twain avenuees accept been considered conducive for the contemplated dissertation; future twain the hearsay and inductive examination procure be assiduous. The inductive avenue procure assiduous in biased in regulate to be powerful to perceive the comprehensive experiences, causes, substances and weighty factors which subordinatelined the global financial opportunity and how it artful the penny possessions chaffer of the Emirates. As the avenue which aids to perceive events and how they occurred, it is expected the hearsay avenue procure exhibit apprehension into other comprehensive issues concerning the financial opportunity and its comprehensive wealth on the UAE pennyity and other chaffers. The inductive avenue on the other operative procure be assiduous corruptd on the scarcity to critically analyse the superior wealth of the opportunity, the avenue procure besides aid to frame information into quantity and figures which are key to subordinatelasting the penny structure and wealth of the opportunity. The avenue is besides exaltedly favoured due to what Hussey and Hussey (1997) define as some of the characteristics of the hearsay examination avenue which fits courteous into the objectives of the contemplated dissertation. This includes: The use of statistical methods in standarding samples The uses a exaltedly structured methodology in regulate to repair reproducibility of the wealth An elimination of subordinatetakingships betwixt intricate variables Concerning the policy suitpowerful for the dissertation, the exploratory examination methods accept been considered conducive dedicated that it is the one used investigate phenomena that are yet to be thought-out or to raise investigate areas that accept ordinary few examinations as is the contemplated dissertation. As illustrious by Silverman (1993), exploratory examination seeks to perceive a part-amongicular rarity as courteous as to frame new apprehensions and perspectives on the rarity subordinate examination. Saunders et al (2003) hush an habit of exploratory examination as entity its flexibility and adaptability permitting the examinationer to easily choose on any troddenion that the grounds may instruct in the sequence of group the grounds. Data Collection Given the intricateity of leading grounds assemblage such as avenue to the scarcityed respondents, media and occasion which the examination lacks collectively, it would be impracticable to use leading grounds assemblage as the deep fount of grounds group for the contemplated dissertation. Hence, subordinate grounds procure be used in a way that would grant the examinationer to analyse the UAE penny possessions chaffer and the application of the opportunity. Subordinate grounds procure be deeply unmoved from the Newspapers and UAE authorities such as the Dubai Cosmos-people and the Abu Dhabi Cannonade warrant. The discretion of grounds group would be assiduous consequently the dominion lacks an organised grounds group plan succeeding a occasionliness anyone uncommon groundscorrupt concerning the media chaffer unidentifipowerful (See: November 24, 2009). With affect to grounds, the penny possessions chaffer would be examined in biased and encircling 20 penny possessions projects procure be critically analysed. The anatomy procure be corruptd upon how the financial opportunity artful the manifold penny possessions crop projects and the space of the application. The dissertation procure be a longitudinal examine and procure centre on the opportunity bound betwixt 2007 and 2010 when the warmth of the opportunity were most violent. ActivitiesJulyAugSepOct NovDec Start the topic+++++ Complete Chapters 1 & 2+++++ Data assemblage begins +++++ Start succeeding a occasionliness Methodology +++++ Begin to analyse grounds +++++ Check anatomy for coherence +++++ Get supervisor’s commendation +++++ Start succeeding a occasionliness the last paragraph +++++ Get the dissertation edited and checked+++++ Get supervisor’s last commendation+++++ Correct mistakes+++++ TIMESCALE: GANTT CHART References Albayan, M. (2009). The Global Financial Opportunity and the GCC dominion, Examination Series (November 24 – 2009). Lack of grounds hampers Dubai media chaffer forecasts, Availpowerful at: Bob, I. (September 24, 2008). “(quoting Joshua Rosner as stating “It’s not a liquidity substance, it’s a valuation substance”. Bloomberg, Retrieved June 6, 2012 Executive Magazine (Jun 11, 2012). UAE – Reading hits the deference, Availpowerful at:, Accessed: 13th June, 2012. Global Economic Examination (March, 2012). Global Penny Possessions Trends, availpowerful at: Hussey, J. and Hussey, R. (1997) Occupation Research: A Practical Guide for Undergraduate and Postgraduate Students, Basingstoke: Macmillan Business. Silverman D (1993). Interpreting Qualitative Data: Methods for Analyzing Talks, Text and Interaction, London: Sage. Saunders M, Lewis P and Thornhill A (2003). Examination Methods for Occupation Studies, 4th edn, Harlow: Pearson Education Kuwait Finance House (2011). UAE Penny Possessions Sector Research: KFH Examination Ltd. Availpowerful at: Kamco Examination (2010). United Arab Emirates (UAE) Economic Brief and Outlook, TIME Magazine Friday, (April 10, 2009). The financial opportunity and the Dubai pennyity. Whatley, S. (2011). The Application of the Financial Opportunity on Dubai’s Media Market, availpowerful at: Wam, N. (Aug 2, 2011). Why a Weaker Dollar Could Aid the U.S, Time. Retrieved , June 9th, 2012.