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

Background One of the conspicuous indications of economic enlargement and operation is the range of boardings and activities leading fix in the fabrication and authentic fortune dispense (Global Economic Research, 2012). This declaration is in-truth gentleman for the United Arab Emirates which balance the last decade has chronicled stanch enlargement in its authentic fortune dispense on one laborer. And on the other laborer has seen conspicuous discard as a conclusion of the global financial contingency which began in 2007. The contingency has caused weighty discard to the authentic fortune product and activities of the UAE rule antecedent to which the Emirates enjoyed an unrivalled authentic fortune enlargement which was aloft any other in the Gulf Corporation Council (GCC dominion) (Kamco Research, 2010). In ostensible expression, interrogation shows that the assiduity chronicled a CAGR of 20% from the forthcoming 2000s to 2007 and as of 2007 the dispense showed a stanch enlargement reprove of balance 21% behind a opportunity authentic fortune constituting environing 8% of the dominion’s sum GDP estimated at balance (15 billion USD) (Whatley, 2011). Given the dominion’s inviting lie as a global voyager and boarding purpose, infrastructural enlargement and product of voyager sites and taverns as polite-behaved-mannered-behaved-mannered-mannered as other invigoration and hospitability sectors has buoyed the authentic fortune enlargement of the dominion. In-truth antecedent to the financial contingency, insists for properties were said to move weightyly outweighed afford in twain not-public and chaffereffectual authentic fortune dispenses (Kuwait Finance House, 2011). Indeed, according to the Kuwait Finance House (2011), “there is calm?} a shortage of units in the residential and chaffereffectual segments due to the unrivalled economic howl, eminent trade enlargement, strange companies elucidation up vile in the dominion, and stupendous inflow of expatriates”. The Kuwait Finance House aid still n esss that the deep factors inferiorpinning the Emirates swift authentic fortune dispense enlargement are: Solid macroeconomic footing, Public expense and stupendous fiscal residue, Dollar-dirham peg and the chronicles eminent inflation reproves loving that stubbornly eminent reproves of inflation in the dominion agreementnalises boarding decisions into the authentic fortune dispense past wealth is used as a hedge athwart inflation. It has been famous in-truth that inflation has balancecaptured authoritative lending reproves in the Emirates thus it is cheaper for crowd to attribute than to adhere-to chief in warranty accounts, consequently authentic fortune boarding is considered as a authenticistic way of hedging athwart inflation (Albayan, 2009). In biasedation to the aloft stated factors, the Kuwait Finance House besides suggests that dissect of the drivers of the Emirates authentic fortune dispense are population enlargement, big liquidity and decisively the availability of Islamic banking. The sarcasm of the authentic fortune dispense enlargement of the rule is that opportunity most of the factors which gave melt its evenence has accelerationed to hedge athwart the global financial contingency at the very rouse of the contingency, frequent of the factors besides contributed to its discard. The financial contingency of 2007 did not rouse to divulge on the Emirates rule until the third mercy of 2008 but when its collisions downed on the rule, it put to touchstone a enlargement that has been unrivalled in any dominion in the Middle East for the past 10 years (Albayan, 2009). According to Kamco Interrogation (2011) at the ebullition of the financial contingency in 2009, the empire asked the Dubai Cosmos-people which is its authoritative authentic fortune boarding performance to bung all boarding activities until March 2010 as a conclusion of what it recountd as ‘terrible collision of the crises until when its collision rule move dejected. Past 2009, the Dubai Cosmos-people has laid off balance 10,500 fabrication staff behind a opportunity Dubai World’s omission established at balance $59 billion. As of 2009, the emirates omission was put at $80 billion. Opportunity at important mercy of 2009, the Abu Dhabi boarding performance volunteered to acceleration Dubai betwixt its authentic fortune dispense subjection, Abu Dhabi besides felt the collision of the contingency as a conclusion of the global contingency. As of the important mercy of 2009, the authentic fortune dispense plunged by closely 70% of the pre-contingency appraise and of the 980 ongoing authentic fortune projects in Dubai, solely 47 were completed in 2009 behind a opportunity environing 500 registered behind a opportunity the Authentic Fortune Regulatory Performance (Rera) cancelled. Past most boarding into the emirate’s authentic fortune dispense were from investors away behind a opportunity balance 70% boarding being FDI, the contingency which rouseed from the United States and Europe unleashed its collision on the emirates as investors could not get funds from their western financiers and the reprove of financial liquidity which initially increased the contingency cheap in the rule. Albayan (2009) besides still n esss that most of the factors which led to the insists of authentic fortune in the emirates were gentle. For exemplification he still n esss that the insist for tourism discardd weightyly thus solemn taverns reprove of possession. This besides led to the collision of the contingency felt in ongoing products. Opportunity multiform accounts move been put onward to agreementnalise the authentic fortune dispense discard in appurtenancy to the financial contingency, apprehension environing the dominion’s authentic dispense discard betwixt the contingency is calm?} skewed. Besides, as the dispense is calm?} struggling to conclude tail to the pre-contingency limit, there are concerns that if the authentic causes to the discard are not attested, there procure be awkwardness in tender onward and achieving the needed enlargement. In estimate of this tailground, the incomplete dissertation procure critically consider the collision of the financial contingency on the authentic fortune dispense. The dissertation is unquiet behind a opportunity identifying and examining the deep causal factors chargeeffectual on for transmitting the collision of the contingency on the authentic fortune dispense and the varying strategies that move been filled to calm coming collisions. The forthcoming are the biased endowment and objectives of the dissertation. Research Objectives: Investigate the similarities or differences between UAE authentic fortune dispenses, and those in the UK. Ascertain the reasons why the global financial contingency could move had an collision on the UAE authentic fortune, distinctly loving differences in banking principles. Ascertain the role of Islamic banking in healing the collision of the financial crises. Investigate the straightforward and instraightforward collisions that the financial contingency had on the UAE authentic fortune dispense, and its pastr collision on the UAE rule. 1.3 Interrogation Question How has the financial contingency collisioned upon the UAE authentic fortune dispense 2.0 Lore Review The 2007 global economic and financial Contingency which rouseed from the US subprime advance contingency has unnatural virtually all the countries encircling the cosmos-people loving the interconnectedness of the global rule. The contingency which led to the subjection of multiform polite-behaved-mannered-behaved-mannered-mannered unconcealed institutions such as Lehman Brothers besides led to the bailout of financial institutions, and the neighboring subjection of frequent empires as polite-behaved-mannered-behaved-mannered-mannered as downturns in stocks dispenses encircling the cosmos-people (Bob, 2012). As a conclusion of the contingency, there move been reputation omission tenors, privative attention reprove movements, inflation reprove interruption and multiform distortions in the financial contract of frequent financial obligations and contracts. As the reputation contingency led to the subjection of financial institutions, it became tenoratic for investors to spend past on their profession commitments and financial obligations as attributeing became compressd as the liquidity agreements of frequent banks closely mixed (TIME Magazine Friday, April 10, 2009). Opportunity the contingency has unleashed its collision on integral rule and the Emirate’s rule in dissecticular on one laborer through its slow financial contortion, it has on the other laborer had stupendous collision on other Emirate’s industries. As famous by Kamco Interrogation (2011), the financial contingency rouseed to concern the UAE through the discard of voyagers and tourism activities which aid led to decreased insist for housing and authentic fortune as polite-behaved-mannered-behaved-mannered-mannered as comfort and taverns in dissecticular. Kamco Interrogation still n esss that past investors inconclude rouseed to nosedive as a conclusion of low tavern possession and subordinate tourism activities which uninterruptedly fuelled the authentic fortune dispense, this led to reversion returns and investors rouseed to abort new projects. As famous by Wam (2010), when the contingency rouseed in UAE in past 2008, balance 150 authentic fortune boarding projects were denominated off by investors who had rouseed to lapse into molestation behind a opportunity their financial institutions touching their financial contracts. The Citibank still n esss that: “authentic fortune projects price 170 billion USD move been cancelled past the financial contingency outburst behind a opportunity rents show a discard of balance four fifths past 2008. Also, Al Futtaim – a Authentic Fortune knot in Dubai during the financial contingency bungped exertion on the Dubai Festival City which was billed to require closely 3 billion USD. Similarly, superior projects were stalled such as tavern and other products were stalled. For exemplification, Four Seasons Tavern and the Al Badia Profession Centre which are superior authentic fortune product projects were bungped. According to the Executive Magazine, the guild has captured this step in adjust to boon from a aid lapse in fabrication requires due to the financial contingency, which would strengthen it to subject its expenses. At the selfselfsimilar occasion, the UAE empire which has enjoyed closely a decade of residue fiscal regime had rouseed to move the collision of the contingency as the empire omission has quickly meltn to balance $30 billion as of forthcoming 2008. The empire’s bad fiscal lie led it to adjust the Dubai Corporation to bung all authentic fortune dispense activities opportunity the ebullition of the contingency subsides. Opportunity the Kuwait Finance House had in 2008 prior predicted that the UAE procure not move the global reputation compress due to not-public decrease enlargement that is composed to redeep stanch as polite-behaved-mannered-behaved-mannered-mannered as the population enlargement of expatriates in the dominion who boosted consumer trust. The financial contingency at its peak contrarily unnatural the enlargement of not-public decrease in a lot of ways. According to Mintel Interrogation (2010), “past not-public institutions were unfitted to earn reputations from banks to stay contrariant projects and insists for closely wholly all services discardd, not-public decrease enlargement was unnatural to abundantly that it took the UAE tail to a pre-20 year limit when it could the dominion could not be rest on the visage of the earth”. Forthcoming the contingency, the empire has captured multiform steps to calm the collision of the contingency (Global Wealth Guide, 2011). The approximationible bank has for exemplification begun to balancehaul the banking method by elevation bank’s liquidity agreement in adjust to suffer banks to confer reputation opportunity the chief vile has besides increased (Hatoum, 2012). As a conclusion of the steps captured by the approximationible bank and other empire agencies, the UAE authenticity dispense has began to evene out of the contingency. Dubai’s residential authentic fortune dispense is decisively recovering behind hitting ground, opportunity neighbouring Abu Dhabi continues to labor. A wealth abjuration published by Zawya Dow Jones (2012) shows that the settlement prices in Dubai saw a melt of closely 7.6 percent for the year at the rouse of 2012, but prices in Abu Dhabi dropped 4.1% in the selfselfsimilar occasion limit. 3.0 Methodology The methodology is an influential component of the interrogation way which shows the delineation components of the interrogation dissecticularly behind a opportunity contemplate to axioms bunch and the adopted techniques as polite-behaved-mannered-behaved-mannered-mannered as their advocacy. Accordingly, this minority of the suggestion sets out the incomplete methodology of the dissertation. The floating lore shows the entity of two arrivales to interrogation: namely the hearsay and inductive methods (Saunders et al, 2003). Opportunity the hearsay arrival is leaned towards a philosophical evaluation or inferiorestablished of axioms as polite-behaved-mannered-behaved-mannered-mannered as the appurtenancyship between variables, the inductive arrival owes abundantly to createing an inferiorestablished of the meanings humans conciliate to events as polite-behaved-mannered-behaved-mannered-mannered as the interrogation matter (Saunders et al, 2003). The merits of twain arrivales move been considered serviceeffectual for the incomplete dissertation; hence twain the hearsay and inductive interrogation procure be filled. The inductive arrival procure filled in biased in adjust to be effectual to conceive the unreserved experiences, causes, tenors and influential factors which inferiorlined the global financial contingency and how it unnatural the authentic fortune dispense of the Emirates. As the arrival which accelerations to conceive events and how they occurred, it is expected the hearsay arrival procure volunteer apprehension into other unreserved issues touching the financial contingency and its unreserved possessions on the UAE authenticity and other dispenses. The inductive arrival on the other laborer procure be filled viled on the need to critically analyse the superior possessions of the contingency, the arrival procure besides acceleration to create apprehension into aggregate and figures which are key to inferiorestablished the authentic creation and possessions of the contingency. The arrival is besides eminently favoured due to what Hussey and Hussey (1997) recount as some of the characteristics of the hearsay interrogation arrival which fits polite-behaved-mannered-behaved-mannered-mannered into the objectives of the incomplete dissertation. This includes: The use of statistical methods in touchstoneing samples The uses a eminently structured methodology in adjust to repair reproducibility of the conclusions An interrogation of appurtenancyships between intricate variables Concerning the policy suiteffectual for the dissertation, the exploratory interrogation methods move been considered serviceeffectual loving that it is the one used consider phenomena that are yet to be elaborate or to aid consider areas that move accepted few inquirys as is the incomplete dissertation. As famous by Silverman (1993), exploratory interrogation seeks to conceive a dissecticular oddity as polite-behaved-mannered-behaved-mannered-mannered as to create new apprehensions and perspectives on the oddity inferior inquiry. Saunders et al (2003) still n ess an habit of exploratory interrogation as being its flexibility and adaptability permitting the interrogationer to largely grasp on any straightforwardion that the axioms may instruct in the road of bunch the axioms. Data Collection Given the intricateity of important axioms bunch such as approximation to the needed respondents, resources and occasion which the interrogation lacks in-one, it would be unusable to use important axioms bunch as the deep cause of axioms bunch for the incomplete dissertation. Hence, subordinate axioms procure be used in a way that would assign the interrogationer to analyse the UAE authentic fortune dispense and the collision of the contingency. Subordinate axioms procure be deeply serene from the Newspapers and UAE authorities such as the Dubai Cosmos-people and the Abu Dhabi Boarding pattern. The non-interference of axioms bunch would be filled consequently the dominion lacks an organised axioms bunch method behind a opportunity anyone matchless axiomsvile touching the wealth dispense unidentifieffectual (See: Ameinfo.com November 24, 2009). With contemplate to axioms, the authentic fortune dispense would be examined in biased and environing 20 authentic fortune projects procure be critically analysed. The dissection procure be viled upon how the financial contingency unnatural the multiform authentic fortune product projects and the size of the collision. The dissertation procure be a longitudinal consider and procure standpoint on the contingency limit between 2007 and 2010 when the ebullition of the contingency were most caustic. ActivitiesJulyAugSepOct NovDec Start the subject+++++ Complete Chapters 1 & 2+++++ Data bunch begins +++++ Start behind a opportunity Methodology +++++ Begin to analyse axioms +++++ Check dissection for mass +++++ Get supervisor’s encomium +++++ Start behind a opportunity the decisive passage +++++ Get the dissertation edited and checked+++++ Get supervisor’s decisive encomium+++++ Correct mistakes+++++ TIMESCALE: GANTT CHART References Albayan, M. (2009). The Global Financial Contingency and the GCC dominion, Interrogation Series Ameinfo.com (November 24 – 2009). Lack of axioms hampers Dubai wealth dispense forecasts, Availeffectual at: http://www.ameinfo.com/217619.html Bob, I. (September 24, 2008). “(quoting Joshua Rosner as stating “It’s not a liquidity tenor, it’s a valuation tenor”. Bloomberg, Retrieved June 6, 2012 Executive Magazine (Jun 11, 2012). UAE – Fabrication hits the mole, Availeffectual at: http://www.executive-magazine.com/getarticle.php?article=11520, Accessed: 13th June, 2012. Global Economic Interrogation (March, 2012). Global Authentic Fortune Trends, availeffectual at: http://www.gbm.scotiabank.com/English/bns_econ/retrends.pdf Hussey, J. and Hussey, R. (1997) Profession 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). Interrogation Methods for Profession Studies, 4th edn, Harlow: Pearson Education Kuwait Finance House (2011). UAE Authentic Fortune Sector Research: KFH Interrogation Ltd. Availeffectual at: http://www.liquidityhouse.com/upload/UAE_Real_Estate_-_12_Sep_08_1443.pdf Kamco Interrogation (2010). United Arab Emirates (UAE) Economic Brief and Outlook, http://www.menafn.com/updates/research_center/UAE/Economic/kamco130411.pdf. TIME Magazine Friday, (April 10, 2009). The financial contingency and the Dubai authenticity. Whatley, S. (2011). The Collision of the Financial Contingency on Dubai’s Wealth Market, availeffectual at:http://www.trcb.com/real-estate/real-estate/the-impact-of-the-financial-crisis-on-dubais-property-market-22671.htm Wam, N. (Aug 2, 2011). Why a Weaker Dollar Could Acceleration the U.S, Time. Retrieved , June 9th, 2012.