A consultant study estimated global sovereign wealth funds control $5 trillion and are “adopting a very cautious investment approach to world markets” and diverting funds to their home countries. Borse Dubai received the necessary financial support from a “geographically diverse group of investors,” including banks from China, India and Europe. Abu Dhabi’s participation was remarkably slight. UAE Central Bank head stated instead of worrying how to fix the global financial system he “would rather … take initiatives to become a more insulated country.”
Aside Vietnam’s prime minister, Dubai World’s chairman announced a partnership with the Vietnamese state-owned Tan Thuan Industrial Promotion Company and participation in a $550 million Vietnamese resort development. Qatar initiated investment talks with Panama. Paris’ mayor visited the Emir of Qatar to discuss economic and cultural cooperation, including a performance by Qatar’s Philharmonic Orchestra in Paris. UAE-based Etisalat announced a four-year marketing partnership with FC Barcelona. Iraq’s National Investment Commission received a $1.2 billion offer from an Iranian company to build 5,000 housing units in Basra.
India’s labor ministry proposed a $2 million fund for distressed Gulf returnees. Approximately 4.8 million Indians work in the Gulf, of which about a third are in the UAE. Five months after its grandiose opening, Dubai’s latest luxury landmark Atlantis laid off 70 employees. UAE labor ministry moved to protect Emiratis from being fired. A UAE citizen can only be fired for exceptional misbehavior, like stealing or being drunk at work. An HR development official stated, “We are not saying Emiratis cannot be sacked, but to sack an Emirati giving the financial crisis as an excuse is not an option.”
An Arab research center predicted “more Islamic parties will be born” as a result of the global crisis. Abu Dhabi reported a 5% increase of people converting to Islam. People visiting Saudi Arabia to perform the Umrah this year are expected to inject about $4 billion into the local economy. Saudi Arabia revealed plans for a $4 billion “sports city” outside Jeddah and allocated $3 billion for road construction through 2010 that will result in a national road network quadrupled in length in just over fifteen years.
The UAE’s 52 banks alone currently make up 45% of Gulf bank debt, having seen their external debt quadruple in 3 years. Dubai developers reported up to 40% of buyers have fallen behind on payments. UBS estimated that payment defaults in Dubai might total $25 billion this year and that as much as 30% of Dubai’s residential properties may be vacant by the end of 2010. Union Properties offered buyers a 10% discount on remaining balances. Nakheel offered buyers at the “delayed” Trump Tower to transfer their purchase to other properties. Industry experts admitted Ajman has no less than 900 towers on schedule to be built by 2012, compared to Dubai’s 648. UAE officials assured a residency visa law for freehold property owners within the year. After a decade of being drafted, Saudi Arabia’s first mortgage law is expected by the end of 2009.
Two thirds of construction-sector companies responded in a survey that GCC development will shift this year toward Abu Dhabi, Qatar and Saudi Arabia. Moody’s Investors Service maintained Oman’s A2 investment-grade sovereign ratings as a result of the country’s banks “which seem to have little direct exposure to the global financial crisis.” Passenger traffic through Muscat International Airport increased 18% to about 3.2 million in 2008; the new $1.4 billion airport will accommodate around 12 million annual passengers.
“Dubai will be the fastest city to recover from the impact of the ongoing credit crunch,” according to the head of Dubai Land Department. Officials announced work to extend the Dubai Creek from Business Bay across Sheikh Zayed Road and back to the Gulf is imminent. The extension will nearly double the creek’s length and transform a large swath of the city into an island. A UN researcher stated Dubai’s coast will never be the same again, as Palm Jebel Ali takes shape on a formerly protected marine sanctuary. Kerman, a landlocked city in Iran, released its plans for the world’s largest artificial beach. The Crown Prince of Abu Dhabi personally donated over $32 million to protect endangered animals and plants.
Despite the crisis, Dubai’s power demand is expected to grow by 6% this year. A French firm met with Kuwait officials to discuss developing nuclear power to meet demand for electricity and water desalination in Kuwait. Kuwait’s utility agency announced it will cut power supply to apartments rented by single male expatriates in areas assigned to family residences.