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

Background One of the conspicuous indications of economic bud and achievement is the limit of boardings and activities leading establish in the erection and existent condition communicate (Global Economic Research, 2012). This prolie is in-fact penny for the United Arab Emirates which aggravate the signalinal decade has commemorative hearty bud in its existent condition communicate on one exercise. And on the other exercise has seen conspicuous disengage as a conclusion of the global financial exigency which began in 2007. The exigency has caused symbolical disengage to the existent condition bud and activities of the UAE distribution preceding to which the Emirates enjoyed an unequalled existent condition bud which was balancehead any other in the Gulf Corporation Council (GCC portion) (Kamco Research, 2010). In pretended signal, discovery shows that the assiduity commemorative a CAGR of 20% from the coming 2000s to 2007 and as of 2007 the communicate showed a hearty bud reprove of aggravate 21% following a opportunity existent condition constituting encircling 8% of the dominion’s aggregate GDP estimated at aggravate (15 billion USD) (Whatley, 2011). Given the dominion’s pleasant lie as a global itinerant and boarding doom, infrastructural bud and bud of itinerant sites and hotels as polite as other relief and hospitability sectors has buoyed the existent condition bud of the dominion. In-fact preceding to the financial exigency, ask-fors for properties were said to move symbolically outweighed yield in twain peculiar and interchangetalented existent condition communicates (Kuwait Finance House, 2011). Indeed, according to the Kuwait Finance House (2011), “there is quiescent a shortage of units in the residential and interchangetalented segments due to the unequalled economic howl, violent employment bud, extraneous companies improvement up infamous in the dominion, and stupendous inflow of expatriates”. The Kuwait Finance House excite voices that the deep factors beneathpinning the Emirates quick existent condition communicate bud are: Solid macroeconomic basis, Public price and stupendous fiscal balance, Dollar-dirham peg and the chronicles violent inflation reproves absorbed that stubbornly violent reproves of inflation in the dominion narrationnalises boarding decisions into the existent condition communicate gone-by gear is used as a hedge despite inflation. It has been distinguished in-fact that inflation has aggravatesmitten functional lending reproves in the Emirates thus it is cheaper for crowd to hypothecate than to celebtrounce coin in shelter accounts, consequently existent condition boarding is considered as a existentistic way of hedging despite inflation (Albayan, 2009). In importation to the balancehead customary factors, the Kuwait Finance House besides suggests that sepatrounce of the drivers of the Emirates existent condition communicate are population bud, ample liquidity and latestly the availability of Islamic banking. The raillery of the existent condition communicate bud of the distribution is that opportunity most of the factors which gave fuse its issuence has succored to hedge despite the global financial exigency at the very set-on-foot of the exigency, numerous of the factors besides contributed to its disengage. The financial exigency of 2007 did not set-on-foot to spread-out on the Emirates distribution until the third locality of 2008 but when its collisions downed on the distribution, it put to cupel a bud that has been unequalled in any portion in the Middle East for the gone-by 10 years (Albayan, 2009). According to Kamco Discovery (2011) at the passion of the financial exigency in 2009, the empire asked the Dubai Earth which is its functional existent condition boarding exercise to plug all boarding activities until March 2010 as a conclusion of what it pictorial as ‘terrible collision of the crises until when its collision performance move moderate. Gone-by 2009, the Dubai Earth has laid off aggravate 10,500 erection staff following a opportunity Dubai World’s claim be at aggravate $59 billion. As of 2009, the emirates claim was put at $80 billion. Opportunity at pristine locality of 2009, the Abu Dhabi boarding exercise proposeed to succor Dubai among its existent condition communicate decay, Abu Dhabi besides felt the collision of the exigency as a conclusion of the global exigency. As of the pristine locality of 2009, the existent condition communicate plunged by closely 70% of the pre-exigency estimate and of the 980 ongoing existent condition projects in Dubai, merely 47 were completed in 2009 following a opportunity encircling 500 registered following a opportunity the Existent Condition Regulatory Exercise (Rera) cancelled. Gone-by most boarding into the emirate’s existent condition communicate were from investors aloof following a opportunity aggravate 70% boarding life FDI, the exigency which set-on-footed 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 exigency cheap in the distribution. Albayan (2009) besides voices that most of the factors which led to the ask-fors of existent condition in the emirates were cheap. For case he voices that the ask-for for tourism disengaged symbolically thus influential hotels reprove of tenure. This besides led to the collision of the exigency felt in ongoing buds. Opportunity opposed accounts move been put eager to narrationnalise the existent condition communicate disengage in pertinency to the financial exigency, scholarship encircling the dominion’s existent communicate disengage among the exigency is quiescent skewed. Besides, as the communicate is quiescent struggling to following tail to the pre-exigency epoch, there are concerns that if the existent causes to the disengage are not identified, there earn be difficulty in emotional eager and achieving the scarcityed bud. In pur-pose of this tailground, the contemplated dissertation earn critically criticize the collision of the financial exigency on the existent condition communicate. The dissertation is solicitous following a opportunity identifying and examining the deep causal factors obligatory for transmitting the collision of the exigency on the existent condition communicate and the varying strategies that move been assiduous to lessen coming collisions. The subjoined are the local grant and objectives of the dissertation. Research Objectives: Investigate the similarities or differences betwixt UAE existent condition communicates, and those in the UK. Ascertain the reasons why the global financial exigency could move had an collision on the UAE existent condition, distinctly absorbed differences in banking principles. Ascertain the role of Islamic banking in mitigating the collision of the financial crises. Investigate the frequented and infrequented collisions that the financial exigency had on the UAE existent condition communicate, and its following collision on the UAE distribution. 1.3 Discovery Question How has the financial exigency collisioned upon the UAE existent condition communicate 2.0 Erudition Review The 2007 global economic and financial Exigency which set-on-footed from the US subprime hypothecation exigency has forced virtually all the countries environing the earth absorbed the interconnectedness of the global distribution. The exigency which led to the decay of opposed polite known institutions such as Lehman Brothers besides led to the bailout of financial institutions, and the neighboring decay of numerous empires as polite as downturns in stocks communicates environing the earth (Bob, 2012). As a conclusion of the exigency, there move been faith want collections, privative share reprove movements, inflation reprove variation and opposed distortions in the financial concord of numerous financial obligations and concords. As the faith exigency led to the decay of financial institutions, it became collectionatic for investors to lay-out balance on their interest commitments and financial obligations as hypothecateing became pressd as the liquidity narrations of numerous banks closely adulterated (TIME Magazine Friday, April 10, 2009). Opportunity the exigency has unleashed its collision on whole distribution and the Emirate’s distribution in separateicular on one exercise through its stolid financial involution, it has on the other exercise had stupendous collision on other Emirate’s industries. As distinguished by Kamco Discovery (2011), the financial exigency set-on-footed to seek the UAE through the disengage of itinerants and tourism activities which excite led to decreased ask-for for housing and existent condition as polite as plenty and hotels in separateicular. Kamco Discovery voices that gone-by investors infollowing set-on-footed to nosedive as a conclusion of low hotel tenure and subordinate tourism activities which unintermittently fuelled the existent condition communicate, this led to elapsing income and investors set-on-footed to abort new projects. As distinguished by Wam (2010), when the exigency set-on-footed in UAE in slow 2008, aggravate 150 existent condition boarding projects were denominated off by investors who had set-on-footed to lapse into labor following a opportunity their financial institutions touching their financial concords. The Citibank voices that: “existent condition projects price 170 billion USD move been cancelled gone-by the financial exigency exumation following a opportunity rents view a disengage of aggravate indelicate fifths gone-by 2008. Also, Al Futtaim – a Existent Condition collocation in Dubai during the financial exigency plugped effort on the Dubai Festival City which was billed to consume closely 3 billion USD. Similarly, influential projects were stalled such as hotel and other buds were stalled. For case, Indelicate Seasons Hotel and the Al Badia Interest Centre which are influential existent condition bud projects were plugped. According to the Executive Magazine, the crew has smitten this step in arrange to favor from a excite lapse in erection consumes due to the financial exigency, which would qualify it to curtail its expenses. At the similar era, the UAE empire which has enjoyed closely a decade of balance fiscal regime had set-on-footed to move the collision of the exigency as the empire claim has quickly fusen to aggravate $30 billion as of coming 2008. The empire’s bad fiscal lie led it to arrange the Dubai Corporation to plug all existent condition communicate activities opportunity the passion of the exigency subsides. Opportunity the Kuwait Finance House had in 2008 prior predicted that the UAE earn not move the global faith press due to peculiar decrease bud that is likely to last hearty as polite as the population bud of expatriates in the dominion who boosted consumer faith. The financial exigency at its peak contrarily forced the bud of peculiar decrease in a lot of ways. According to Mintel Discovery (2010), “gone-by peculiar institutions were feeble to accomplish faiths from banks to stay opposed projects and ask-fors for closely entirely all services disengaged, peculiar decrease bud was forced to greatly that it took the UAE tail to a pre-20 year epoch when it could the dominion could not be fix on the countenance of the earth”. Subjoined the exigency, the empire has smitten opposed steps to lessen the collision of the exigency (Global Gear Guide, 2011). The convenient bank has for case begun to aggravatehaul the banking classification by mound bank’s liquidity narration in arrange to succor banks to concede faith opportunity the excellent infamous has besides increased (Hatoum, 2012). As a conclusion of the steps smitten by the convenient bank and other empire agencies, the UAE existentity communicate has began to issue out of the exigency. Dubai’s residential existent condition communicate is latestly recovering following hitting ground, opportunity neighbouring Abu Dhabi continues to violent-effort. A gear renunciation published by Zawya Dow Jones (2012) shows that the home prices in Dubai saw a fuse of closely 7.6 percent for the year at the set-on-foot of 2012, but prices in Abu Dhabi dropped 4.1% in the similar era epoch. 3.0 Methodology The methodology is an influential component of the discovery prescribe which shows the pur-pose components of the discovery separateicularly following a opportunity conceive to basis muster and the adopted techniques as polite as their exculpation. Accordingly, this individuality of the overture sets out the contemplated methodology of the dissertation. The general erudition shows the entity of two vestibulees to discovery: namely the auricular and inductive methods (Saunders et al, 2003). Opportunity the auricular vestibule is leaned towards a philosophical evaluation or beneathbe of basis as polite as the pertinencyship betwixt variables, the inductive vestibule owes greatly to constituteing an beneathbe of the meanings humans fix to events as polite as the discovery matter (Saunders et al, 2003). The merits of twain vestibulees move been considered practiceous for the contemplated dissertation; hereafter twain the auricular and inductive discovery earn be assiduous. The inductive vestibule earn assiduous in local in arrange to be talented to recognize the extensive experiences, causes, collections and influential factors which beneathlined the global financial exigency and how it forced the existent condition communicate of the Emirates. As the vestibule which succors to recognize events and how they occurred, it is expected the auricular vestibule earn propose insight into other extensive issues touching the financial exigency and its extensive possessions on the UAE existentity and other communicates. The inductive vestibule on the other exercise earn be assiduous infamousd on the scarcity to critically analyse the influential possessions of the exigency, the vestibule earn besides succor to constitute scholarship into bulk and figures which are key to beneathbe the existent character and possessions of the exigency. The vestibule is besides violently favoured due to what Hussey and Hussey (1997) relate as some of the characteristics of the auricular discovery vestibule which fits polite into the objectives of the contemplated dissertation. This includes: The use of statistical methods in cupeling samples The uses a violently structured methodology in arrange to improve reproducibility of the conclusions An elimination of pertinencyships betwixt obscure variables Concerning the temporization suittalented for the dissertation, the exploratory discovery methods move been considered practiceous absorbed that it is the one used criticize phenomena that are yet to be learned or to excite criticize areas that move ordinary few scrutinys as is the contemplated dissertation. As distinguished by Silverman (1993), exploratory discovery seeks to recognize a separateicular inquisitiveness as polite as to constitute new insights and perspectives on the inquisitiveness beneath scrutiny. Saunders et al (2003) voice an practice of exploratory discovery as life its flexibility and adaptability permitting the discoveryer to easily follow on any frequentedion that the basis may direct in the conduct of muster the basis. Data Collection Given the obscureity of primitive basis muster such as advance to the scarcityed respondents, instrument and era which the discovery lacks totally, it would be impracticable to use primitive basis muster as the deep origin of basis muster for the contemplated dissertation. Hence, minor basis earn be used in a way that would assign the discoveryer to analyse the UAE existent condition communicate and the collision of the exigency. Minor basis earn be deeply cool from the Newspapers and UAE authorities such as the Dubai Earth and the Abu Dhabi Boarding authority. The liberty of basis muster would be assiduous owing the dominion lacks an organised basis muster classification following a opportunity anyone choice basisinfamous touching the gear communicate unidentifitalented (See: Ameinfo.com November 24, 2009). With conceive to basis, the existent condition communicate would be examined in local and encircling 20 existent condition projects earn be critically analysed. The partition earn be infamousd upon how the financial exigency forced the diverse existent condition bud projects and the size of the collision. The dissertation earn be a longitudinal con-over and earn standpoint on the exigency epoch betwixt 2007 and 2010 when the passion of the exigency were most afflictive. ActivitiesJulyAugSepOct NovDec Start the subject+++++ Complete Chapters 1 & 2+++++ Data muster begins +++++ Start following a opportunity Methodology +++++ Begin to analyse basis +++++ Check partition for material +++++ Get supervisor’s encomium +++++ Start following a opportunity the latest stipulation +++++ Get the dissertation edited and checked+++++ Get supervisor’s latest encomium+++++ Correct mistakes+++++ TIMESCALE: GANTT CHART References Albayan, M. (2009). The Global Financial Exigency and the GCC portion, Discovery Series Ameinfo.com (November 24 – 2009). Lack of basis hampers Dubai gear communicate forecasts, Availtalented at: http://www.ameinfo.com/217619.html Bob, I. (September 24, 2008). “(quoting Joshua Rosner as stating “It’s not a liquidity collection, it’s a valuation collection”. Bloomberg, Retrieved June 6, 2012 Executive Magazine (Jun 11, 2012). UAE – Erection hits the deference, Availtalented at: http://www.executive-magazine.com/getarticle.php?article=11520, Accessed: 13th June, 2012. Global Economic Discovery (March, 2012). Global Existent Condition Trends, availtalented at: http://www.gbm.scotiabank.com/English/bns_econ/retrends.pdf Hussey, J. and Hussey, R. (1997) Interest 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). Discovery Methods for Interest Studies, 4th edn, Harlow: Pearson Education Kuwait Finance House (2011). UAE Existent Condition Sector Research: KFH Discovery Ltd. Availtalented at: http://www.liquidityhouse.com/upload/UAE_Real_Estate_-_12_Sep_08_1443.pdf Kamco Discovery (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 exigency and the Dubai existentity. Whatley, S. (2011). The Collision of the Financial Exigency on Dubai’s Gear Market, availtalented 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 Succor the U.S, Time. Retrieved , June 9th, 2012.