Financial updates

Sorry about the lack of updates, I've been really busy the past couple of weeks. I had a two hour presentation to prepare for work and on top of that I had to get my car inspected in order to get it to be registered. That in itself is a long story that I'll probably get to next post.

So how's the financial crisis doing in the Middle East? Well in Qatar the Government announced another support package to the local banks, buying out their real estate portfolios. This package is to the tune of 15 billion riyal (US$4 billion). And this for a country of around 1.5 million people! Needless to say this should keep the local banks out of trouble. Maybe the government was being generous because oil has climbed above $65 a barrel. I think the country created its budget for 2009 based on an oil price of around $40 a barrel so they must now be looking at a decent surplus this year.

In Dubai it is still more doom and gloom. It is hard to say what is the truth with all of the media reports coming out, one article has an "expert" saying everything has bottomed out and the real estate market will now climb, meanwhile UBS just announced it expects another 40% drop in real estate prices there before everything levels out -- and there have even been estimates that by the end of 2010 one in three properties in Dubai could be empty. I have seen a number of estimates that the population there will decrease 5-10%, with the biggest estimate being 17%. Imagine what your town would be like if 17% moved out over the next year! Anyway, all of these predictions seem to be just stabs in the dark, we will have a better idea in September when all of the expats return from summer holidays and put their kids in school. Once the school year starts it will become apparent just how many expats returned. Rumours of a " mass exodus" from Dubai in the summer still circulate but I think it has reached a stage where it is overhyped and will probably not be as bad as rumour makes it out to be (don't get me wrong it will still be bad but not as bad as the rumours think it will be). Qatar is not going through a downturn anywhere near as bad as what is happening in Dubai, and one report estimates Qatar will have the highest GDP growth in the world this year.

I guess I am kind of fascinated with what is happening in Dubai because it is like watching a train wreck in slow motion that you knew was going to happen. Property speculation can be nasty if you're not careful, basing a large part of an economy on property speculation is downright dangerous.