Dubai’s debt debacle
Authorities in Dubai claim the media over-hyped the emirate’s announcement of a six-month debt standstill for two of its major companies. But international bodies are still monitoring the situation.
November 30, 2009 3:35 by Aarti Nagraj
Analysts have said that the debt issue could cause property prices in Dubai to fall further. “The news plays on investor psyche and house prices may slide a further 20 to 30 percent earlier than our existing view of second half of 2011,” Saud Masud, head of research and senior real estate analyst, MENA at UBS told Reuters.
“There may likely be further job cuts as a result of any potential restructuring, and that could directly impact population outflows and result in housing oversupply,” he added.
“I think residentially there will be an impact. There will be uncertainty over liabilities for that group going forward and that will impact pricing,” said Nicolas Maclean, managing director at CB Richard Ellis.
The International Monitory Fund has also said that it is closely scrutinizing the situation in the emirate.
“We are continuing to monitor the situation following the unexpected announcement by the Government of Dubai regarding a standstill on the debt of Dubai World and its Nakheel subsidiary, which has had an adverse impact on financial markets,” it said in a statement.
“We look forward to further clarification by the authorities towards a cooperative mechanism to address the issues between these debtors and their creditors.”