Word: reals
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Dates: during 2000-2009
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...kind of Ponzi scheme," he says. What's worse, he then discovered that the company may have sold his property twice. "I thought Dubai looked like the safest place to invest in the Middle East," he says. "They appeared to have laws that would protect investors." But Dubai's real estate regulatory body was set up just two years ago. And Dubai's legal system gives no right to bring class-action suits, leaving Knight and his group drawing names out of a hat to see which of them gets to go first...
Mohamed, the Scottish real estate broker, is thinking of leaving too. His company is declaring bankruptcy, he says, and security guards recently prevented him from removing furniture from his office because of a rent dispute with the landlord. A local bank keeps calling to ask for the whereabouts of a former employee, a male nurse from Edinburgh who came to Dubai, hit the nightclub scene, bought a Porsche convertible, and then fled home after a week on the job, leaving about $115,000 in debt. "What were [they] thinking, loaning ?80,000 to a 24-year-old with no stable...
...some ways, the boom became captive to a "mine is bigger than yours" syndrome. Competing states embarked on advertising campaigns and hired in public-relations firms to tout their wares. Developers and rulers alike pushed artificial islands (Dubai, Abu Dhabi, Qatar, Bahrain, Kuwait), and in many places real estate became the main economic activity. Officials promoted their cities as financial hubs as a way to diversify away from oil. Hundreds of millions of dollars were poured into national air carriers and airports, which were seen both as a source of national pride and as another way to expand the energy...
...remembered the bad days of low oil revenues. That meant that when the oil gushers were turned up again, money was saved and not aggressively spent as elsewhere in the region. The nation's wealth was also placed in very liquid investments, predominantly U.S. government paper assets, rather than real estate. While other regional investment funds were buying into international banks, Saudi Arabia was purchasing U.S. government bonds, or paying down its debt. The country can tap into those liquid assets while its neighbors are struggling to sell their investments in banks, equities and companies - Saudi's debt now stands...
Fourth, the banking sector, thanks to its experience during the 1990s, has taken a conservative approach to lending, and remains highly unleveraged. Importantly, real estate in Saudi Arabia did not experience the same bubble that occurred in the country's neighbors; as a result consumers and lenders have been protected...