Attention people in Dubai

... you should read my blog more often.

I warned you that there was a huge property bubble.
I warned you that rents and property prices would crash.
and I warned you that the debt load of the emirate was shocking


Granted, I wasn't expecting Dubai to default/restructure/delay payment so early, and on so much debt. It's been rippling through the financial markets all over the world. You can't just announce to people that you would like to hold off on payments on your $60 billion of loans and not create a big fuss.

Most people are of the opinion that oil-rich neighbour Abu Dhabi will eventually bail them out. Possibly, if the debt problem causes the entire UAE to suffer then they will have to step in, but not without Dubai paying a price. It already looks like Abu Dhabi is stepping up to eclipse Dubai as the finance/tourism hub of the country. Tourism ads for Abu Dhabi are all over the international networks now (like CNNi).

Well I have one more prediction about this mess. Call it a hunch.



The size of the debt has been underestimated.


The $80 billion figure that keeps getting battered around as Dubai's total debt load I believe comes from a Government announcement a number of months ago when people were asking about transparency regarding the total Government liabilities. I'm not sure whether that figure can be believed. Dubai PR machine was busy in the last few months making announcements about how the worst was over and things were picking back up again, so I'm not sure about their track record on announcements. I think the total debt load is bigger than $80 billion, not grossly bigger, maybe another $20 billion, but in the months to come we will probably hear about some more debt and the total debt load will be revalued.

Let's see how I do on this one.