When the flashy Emirate of Dubai asked for a six-month moratorium on its debt obligations just over a year ago, the world trembled. In reality, the problems of Dubai had been well-known in the region for over a year: unfinished developments, redundancies with expatriates returning to their home countries and the collapse of the property market.
According to international real estate agent Jones Lang La Salle, total real estate transaction values in Dubai plunged 65 percent in 2010. And while demand fell, oversupply kept on rising as builders completed their contracts. As the region’s centre for finance, Dubai is regarded as the barometer for the region’s real estate sector and so it’s no surprise the bleak scenario is replicated in varying degrees throughout the United Arab Emirates (UAE).
Today, the UAE finds itself caught between being the centre of economic opportunity in the Gulf Cooperation Council (GCC) and at the same time surrounded by the political turmoil in the Middle East. The UAE’s stability could prove to be an incentive for businesses and investors to re-locate there – thereby providing a ready-made solution to the real estate crash. But there are still a few obstacles in the way.
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