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<nettime> Sonia Verma:Driven down by debt, Dubai expats give new meaning
Patrice Riemens on Mon, 9 Feb 2009 21:00:47 +0100 (CET)


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<nettime> Sonia Verma:Driven down by debt, Dubai expats give new meaning to long-stay car park


X-posted from Sarai Reader list/ Lalitha Kamath


February 5, 2009

Driven down by debt, Dubai expats give new meaning to long-stay car park

Sonia Verma in Dubai



For many expatriate workers in Dubai it was the ultimate symbol of their
tax-free wealth: a luxurious car that few could have afforded on the money
they earned at home.

Now, faced with crippling debts as a result of their high living and Dubai's
fading fortunes, many expatriates are abandoning their cars at the airport
and fleeing home rather than risk jail for defaulting on loans.

Police have found more than 3,000 cars outside Dubai's international airport
in recent months. Most of the cars - four-wheel drives, saloons and "a few"
Mercedes - had keys left in the ignition.

Some had used-to-the-limit credit cards in the glove box. Others had notes
of apology attached to the windscreen.

"Every day we find more and more cars," said one senior airport security
official, who did not want to be named. "Christmas was the worst - we found
more than two dozen on a single day."

When the market collapsed and the emirate's once-booming economy started to
slow down, many expatriates were left owning several homes and unable to pay
the mortgages without credit.

"There were a lot of people living the high life, investing in real estate
and a lifestyle they couldn't afford," one senior banker said.

Under Sharia, which prevails in Dubai, the punishment for defaulting on a
debt is severe. Bouncing a check, for example, is punishable with jail.
Those who flee the emirate are known as skips.

The abandoned cars underscore a worrying trend. Five years ago the Emir,
Sheikh Mohammed bin Rashid Al Maktoum, embarked on an ambitious plan to
transform Dubai into a hub for business and tourism. A building boom fuelled
double-digit growth, with thousands of Westerners arriving every day, eager
to cash in on the emirate's promise of easy living and wealth.

Many Westerners invested in Dubai's skyrocketing real estate market, buying
and reselling homes before building was even complete. But, as the recession
took effect, property and financial companies made thousands of workers
redundant and banks tightened lending. Construction companies have delayed
or cancelled projects and tourism is slowing.

There are increasing signs that the foreigners who once flocked to Dubai are
leaving. "There is no way of tracking actual numbers, but the anecdotal
evidence is overwhelming. Dubai is emptying out," said a Western diplomat.

International schools are having to be flexible on fees as expatriate
parents run out of cash. Louise, a single mother from Britain, said that her
son's school had allowed her to pay a partial fee until she found a new job
after her redundancy in December. "According to the headmaster, a lot of
people had come into the school saying they had lost their jobs so the
school was trying to be a bit more flexible," she said.

Most of the emirate's banks are not affiliated with British financial
institutions, so those who flee do not have to worry about creditors. Their
abandoned cars are eventually sold off by the banks at weekly auctions.
Those recently advertised include BMWs, Porsches and Mercedes.

Simon Goldsmith, a spokesman for the British Embassy in Dubai, said that
that there were approximately 100,000 Britons living in Dubai last year.
However, the embassy has no way of tracking how many have fled back to the
UK. "We've heard stories, but when somebody makes that kind of decision,
they generally keep it to themselves," he said.

Police have issued warrants against owners of the deserted cars. Those who
return risk arrest at the airport.

Heading home

3.62 million expatriates in Dubai

864,000 nationals

8% population decline predicted this year, as expatriates leave

1,500 visas cancelled every day in Dubai

62% of homes occupied by expatriates 60% fall in property values predicted

50% slump in the price of luxury apartments on Palm Jumeirah

25% reduction in luxury spending among UAE expatriates

Sources: arabbusiness.com ; Times database


Related Links


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<http://business.timesonline.co.uk/tol/business/markets/the_gulf/article5663602.ece>
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<http://business.timesonline.co.uk/tol/travel/news/article5607619.ece>
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<http://business.timesonline.co.uk/tol/business/markets/the_gulf/article5226
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Dubai lifts veil of secrecy to assuage fears





Cross posted from Debate
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