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

Background One of the noticeconducive indications of economic enlargement and deed is the class of bombardments and activities vestibule fix in the compose and actual rank trade (Global Economic Research, 2012). This announcement is certainly gentleman for the United Arab Emirates which aggravate the decisive decade has commemorative cogent enlargement in its actual rank trade on one operative. And on the other operative has seen noticeconducive refuse as a stopder of the global financial exigency which began in 2007. The exigency has caused weighty refuse to the actual rank outaugmentation and activities of the UAE management preceding to which the Emirates enjoyed an unequalled actual rank enlargement which was balancehead any other in the Gulf Corporation Council (GCC empire) (Kamco Research, 2010). In suppositious promise, scrutiny shows that the diligence commemorative a CAGR of 20% from the present 2000s to 2007 and as of 2007 the trade showed a cogent enlargement rebuke of aggravate 21% succeeding a opportunity actual rank constituting environing 8% of the empire’s whole GDP estimated at aggravate (15 billion USD) (Whatley, 2011). Given the empire’s captivating pose as a global itinerant and bombardment goal, infrastructural enlargement and outaugmentation of itinerant sites and taverns as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as other food and hospitability sectors has buoyed the actual rank enlargement of the empire. Certainly preceding to the financial exigency, ask-fors for properties were said to detain weightyly outweighed provide in twain peculiar and wholesale actual rank trades (Kuwait Finance House, 2011). Indeed, according to the Kuwait Finance House (2011), “there is quiescent a shortage of units in the residential and wholesale segments due to the unequalled economic boom, violent holding enlargement, strange companies setting up corrupt in the empire, and stupendous inflow of expatriates”. The Kuwait Finance House aid melodys that the deep factors inferiorpinning the Emirates quick actual rank trade enlargement are: Solid macroeconomic footing, Public payment and stupendous fiscal residue, Dollar-dirham peg and the annals violent inflation rebukes fond that stubbornly violent rebukes of inflation in the empire bearingnalises bombardment decisions into the actual rank trade gone media is used as a hedge opposing inflation. It has been famed certainly that inflation has aggravatefascinated functional lending rebukes in the Emirates thus it is cheaper for mass to attribute than to detain relevant in assurance accounts, consequently actual rank bombardment is considered as a actualistic way of hedging opposing inflation (Albayan, 2009). In conjunction to the balancehead managely factors, the Kuwait Finance House besides suggests that part-among-among of the drivers of the Emirates actual rank trade are population enlargement, bulky liquidity and terminally the availability of Islamic banking. The satire of the actual rank trade enlargement of the management is that opportunity most of the factors which gave ascend its appearnce has aided to hedge opposing the global financial exigency at the very set-out of the exigency, numerous of the factors besides contributed to its refuse. The financial exigency of 2007 did not set-out to expand on the Emirates management until the third district of 2008 but when its contacts downed on the management, it put to ordeal a enlargement that has been unequalled in any empire in the Middle East for the elapsed 10 years (Albayan, 2009). According to Kamco Scrutiny (2011) at the intensity of the financial exigency in 2009, the council asked the Dubai Universe which is its functional actual rank bombardment production to plug all bombardment activities until March 2010 as a stopder of what it related as ‘terrible contact of the crises until when its contact faculty detain gentle. Gone 2009, the Dubai Universe has laid off aggravate 10,500 compose staff succeeding a opportunity Dubai World’s claim established at aggravate $59 billion. As of 2009, the emirates claim was put at $80 billion. Opportunity at primeval district of 2009, the Abu Dhabi bombardment production proffered to aid Dubai among its actual rank trade decay, Abu Dhabi besides felt the contact of the exigency as a stopder of the global exigency. As of the primeval district of 2009, the actual rank trade plunged by approximately 70% of the pre-exigency appraise and of the 980 ongoing actual rank projects in Dubai, solely 47 were completed in 2009 succeeding a opportunity environing 500 registered succeeding a opportunity the Actual Rank Regulatory Production (Rera) cancelled. Gone most bombardment into the emirate’s actual rank trade were from investors aloof succeeding a opportunity aggravate 70% bombardment substance FDI, the exigency which set-outed from the United States and Europe unleashed its contact on the emirates as investors could not get funds from their western financiers and the rebuke of financial liquidity which initially increased the exigency shameful in the management. Albayan (2009) besides melodys that most of the factors which led to the ask-fors of actual rank in the emirates were inaudible. For persuasion he melodys that the ask-for for tourism refused weightyly thus solemn taverns rebuke of possession. This besides led to the contact of the exigency felt in ongoing outgrowths. Opportunity diverse accounts detain been put impertinent to bearingnalise the actual rank trade refuse in aspect to the financial exigency, cognizance environing the empire’s actual trade refuse among the exigency is quiescent skewed. Besides, as the trade is quiescent struggling to follow tail to the pre-exigency era, there are concerns that if the actual causes to the refuse are not identified, there earn be inaptitude in concerning impertinent and achieving the deficiencyed enlargement. In examination of this tailground, the intented dissertation earn critically inspect the contact of the financial exigency on the actual rank trade. The dissertation is solicitous succeeding a opportunity identifying and examining the deep causal factors obligatory for transmitting the contact of the exigency on the actual rank trade and the varying strategies that detain been industrious to alleviate forthcoming contacts. The subjoined are the restricted grant and objectives of the dissertation. Research Objectives: Investigate the similarities or differences among UAE actual rank trades, and those in the UK. Ascertain the reasons why the global financial exigency could detain had an contact on the UAE actual rank, especially fond differences in banking principles. Ascertain the role of Islamic banking in mitigating the contact of the financial crises. Investigate the trodden and introdden contacts that the financial exigency had on the UAE actual rank trade, and its posterior contact on the UAE management. 1.3 Scrutiny Question How has the financial exigency contacted upon the UAE actual rank trade 2.0 Learning Review The 2007 global economic and financial Exigency which set-outed from the US subprime advance exigency has fictitious virtually all the countries encircling the universe fond the interconnectedness of the global management. The exigency which led to the decay of diverse courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved unconcealed institutions such as Lehman Brothers besides led to the bailout of financial institutions, and the close decay of numerous councils as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as downturns in stocks trades encircling the universe (Bob, 2012). As a stopder of the exigency, there detain been trustworthiness failure quantitys, denying profit rebuke movements, inflation rebuke interruption and diverse distortions in the financial compact of numerous financial obligations and compacts. As the trustworthiness exigency led to the decay of financial institutions, it became quantityatic for investors to lay-out past on their matter commitments and financial obligations as attributeing became pressd as the liquidity bearings of numerous banks approximately impaired (TIME Magazine Friday, April 10, 2009). Opportunity the exigency has unleashed its contact on perfect management and the Emirate’s management in part-amongicular on one operative through its oppressive financial coil, it has on the other operative had stupendous contact on other Emirate’s industries. As famed by Kamco Scrutiny (2011), the financial exigency set-outed to concern the UAE through the refuse of itinerants and tourism activities which aid led to decreased ask-for for housing and actual rank as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as plenty and taverns in part-amongicular. Kamco Scrutiny melodys that gone investors infollow set-outed to nosedive as a stopder of low tavern possession and powerless tourism activities which uniformly fuelled the actual rank trade, this led to flux returns and investors set-outed to abort new projects. As famed by Wam (2010), when the exigency set-outed in UAE in advanced 2008, aggravate 150 actual rank bombardment projects were named off by investors who had set-outed to drop into vexation succeeding a opportunity their financial institutions respecting their financial compacts. The Citibank melodys that: “actual rank projects excellence 170 billion USD detain been cancelled gone the financial exigency explosion succeeding a opportunity rents representation a refuse of aggravate foul-mouthed fifths gone 2008. Also, Al Futtaim – a Actual Rank cluster in Dubai during the financial exigency plugped performance on the Dubai Festival City which was billed to consume approximately 3 billion USD. Similarly, main projects were stalled such as tavern and other outgrowths were stalled. For persuasion, Foul-mouthed Seasons Tavern and the Al Badia Matter Centre which are main actual rank outaugmentation projects were plugped. According to the Executive Magazine, the assembly has fascinated this march in manage to use from a aid drop in compose consumes due to the financial exigency, which would strengthen it to weaken its expenses. At the similar conclusion, the UAE council which has enjoyed approximately a decade of residue fiscal regime had set-outed to reach the contact of the exigency as the council claim has immediately ascendn to aggravate $30 billion as of present 2008. The council’s bad fiscal pose led it to manage the Dubai Corporation to plug all actual rank trade activities opportunity the intensity of the exigency subsides. Opportunity the Kuwait Finance House had in 2008 prior predicted that the UAE earn not reach the global trustworthiness press due to peculiar decay enlargement that is slight to redeep cogent as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as the population enlargement of expatriates in the empire who boosted consumer trust. The financial exigency at its peak contrarily fictitious the enlargement of peculiar decay in a lot of ways. According to Mintel Scrutiny (2010), “gone peculiar institutions were unconducive to accomplish trustworthinesss from banks to support irrelative projects and ask-fors for approximately wholly all services refused, peculiar decay enlargement was fictitious to greatly that it took the UAE tail to a pre-20 year era when it could the empire could not be ground on the visage of the earth”. Subjoined the exigency, the council has fascinated diverse marchs to alleviate the contact of the exigency (Global Media Guide, 2011). The mediate bank has for persuasion begun to aggravatehaul the banking arrangement by amelioration bank’s liquidity bearing in manage to acceleration banks to yield trustworthiness opportunity the relevant corrupt has besides increased (Hatoum, 2012). As a stopder of the marchs fascinated by the mediate bank and other council agencies, the UAE actuality trade has began to appear out of the exigency. Dubai’s residential actual rank trade is terminally recovering succeeding hitting deep, opportunity neighbouring Abu Dhabi continues to labor. A media abjuration published by Zawya Dow Jones (2012) shows that the abode prices in Dubai saw a ascend of approximately 7.6 percent for the year at the set-out of 2012, but prices in Abu Dhabi dropped 4.1% in the similar conclusion era. 3.0 Methodology The methodology is an relevant atom of the scrutiny way which shows the intent atoms of the scrutiny part-amongicularly succeeding a opportunity heed to basis store and the adopted techniques as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as their maintenance. Accordingly, this exception of the prproffer sets out the intented methodology of the dissertation. The general learning shows the entity of two modees to scrutiny: namely the circumstantial and inductive methods (Saunders et al, 2003). Opportunity the circumstantial mode is leaned towards a or-laws evaluation or inferiorestablished of basis as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as the aspectship among variables, the inductive mode owes greatly to compeling an inferiorestablished of the meanings humans tie to events as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as the scrutiny composition (Saunders et al, 2003). The merits of twain modees detain been considered beneficial for the intented dissertation; future twain the circumstantial and inductive scrutiny earn be industrious. The inductive mode earn industrious in restricted in manage to be conducive to discern the liberal experiences, causes, quantitys and relevant factors which inferiorlined the global financial exigency and how it fictitious the actual rank trade of the Emirates. As the mode which aids to discern events and how they occurred, it is expected the circumstantial mode earn prproffer recognition into other liberal issues respecting the financial exigency and its liberal proceeds on the UAE actuality and other trades. The inductive mode on the other operative earn be industrious corruptd on the deficiency to critically analyse the main proceeds of the exigency, the mode earn besides aid to compel cognizance into gum and figures which are key to inferiorestablished the actual naturalness and proceeds of the exigency. The mode is besides violently favoured due to what Hussey and Hussey (1997) relate as some of the characteristics of the circumstantial scrutiny mode which fits courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved into the objectives of the intented dissertation. This includes: The use of statistical methods in ordealing samples The uses a violently structured methodology in manage to repair reproducibility of the stopders An exploration of aspectships among complicated variables Concerning the strategy suitconducive for the dissertation, the exploratory scrutiny methods detain been considered beneficial fond that it is the one used inspect phenomena that are yet to be thought-out or to aid inspect areas that detain ordinary few inquirys as is the intented dissertation. As famed by Silverman (1993), exploratory scrutiny seeks to discern a part-amongicular celebrity as courteous-behaved-mannered-behaved-behaved-mannered-behaved-behaved as to compel new recognitions and perspectives on the celebrity inferior inquiry. Saunders et al (2003) melody an usage of exploratory scrutiny as substance its flexibility and adaptability permitting the scrutinyer to amply siege on any troddenion that the basis may propose in the continuity of group the basis. Data Collection Given the complicatedity of important basis store such as appropinquation to the deficiencyed respondents, media and conclusion which the scrutiny lacks totally, it would be impracticable to use important basis store as the deep origin of basis group for the intented dissertation. Hence, unimportant basis earn be used in a way that would sanction the scrutinyer to analyse the UAE actual rank trade and the contact of the exigency. Unimportant basis earn be deeply firm from the Newspapers and UAE authorities such as the Dubai Universe and the Abu Dhabi Bombardment pattern. The non-interference of basis group would be industrious owing the empire lacks an organised basis group arrangement succeeding a opportunity anyone sole basiscorrupt respecting the media trade unidentificonducive (See: Ameinfo.com November 24, 2009). With heed to basis, the actual rank trade would be examined in restricted and environing 20 actual rank projects earn be critically analysed. The dissection earn be corruptd upon how the financial exigency fictitious the diversified actual rank outaugmentation projects and the degree of the contact. The dissertation earn be a longitudinal consider and earn nucleus on the exigency era among 2007 and 2010 when the intensity of the exigency were most caustic. ActivitiesJulyAugSepOct NovDec Start the subject+++++ Complete Chapters 1 & 2+++++ Data store begins +++++ Start succeeding a opportunity Methodology +++++ Begin to analyse basis +++++ Check dissection for harmony +++++ Get supervisor’s laudation +++++ Start succeeding a opportunity the terminal chapter +++++ Get the dissertation edited and checked+++++ Get supervisor’s terminal laudation+++++ Correct mistakes+++++ TIMESCALE: GANTT CHART References Albayan, M. (2009). The Global Financial Exigency and the GCC empire, Scrutiny Series Ameinfo.com (November 24 – 2009). Lack of basis hampers Dubai media trade forecasts, Availconducive at: http://www.ameinfo.com/217619.html Bob, I. (September 24, 2008). “(quoting Joshua Rosner as stating “It’s not a liquidity quantity, it’s a valuation quantity”. Bloomberg, Retrieved June 6, 2012 Executive Magazine (Jun 11, 2012). UAE – Compose hits the mole, Availconducive at: http://www.executive-magazine.com/getarticle.php?article=11520, Accessed: 13th June, 2012. Global Economic Scrutiny (March, 2012). Global Actual Rank Trends, availconducive at: http://www.gbm.scotiabank.com/English/bns_econ/retrends.pdf Hussey, J. and Hussey, R. (1997) Matter 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). Scrutiny Methods for Matter Studies, 4th edn, Harlow: Pearson Education Kuwait Finance House (2011). UAE Actual Rank Sector Research: KFH Scrutiny Ltd. Availconducive at: http://www.liquidityhouse.com/upload/UAE_Real_Estate_-_12_Sep_08_1443.pdf Kamco Scrutiny (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 actuality. Whatley, S. (2011). The Contact of the Financial Exigency on Dubai’s Media Market, availconducive 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 Aid the U.S, Time. Retrieved , June 9th, 2012.