Fallout: The Financial Crisis

Dubai financially dry as expats leave

Stephen Beard Mar 5, 2009
Fallout: The Financial Crisis

Dubai financially dry as expats leave

Stephen Beard Mar 5, 2009


Tess Vigeland: For much of the last decade, Dubai was synonymous with financial success and extravagant consumption. Swanky real estate, posh shopping malls. The tiny emirate has drawn rich tourists and investors from around the world. But these days, even Dubai is hurting. Property prices are plunging. Tens of thousands of expats are scurrying out of town. And in a country where more than 90 percent of the population is from somewhere else, that could mean trouble.

From Dubai, Marketplace’s Stephen Beard has the first of two reports.

STEPHEN BEARD: In a car park under one of Dubai’s gleaming skyscrapers, Raja Khouri, a 27-year-old from Lebanon, shows me his new sports car with mixed feelings.

RAJA KHOURI: So this is her. She purrs nicely and was a symbol of where I was going. Now it’s a symbol of where I didn’t go.

Raja was drawn to Dubai 18 months ago by the glamourous, freewheeling lifestyle. He got a job with a real estate firm, was promoted, and borrowed $25,000 to buy the car. A few weeks later he was laid off.

KHOURI: So now, instead of being able to enjoy my fast car, I am instead desperately trying to get it off my hands. And it was one of the reasons that I am unfortunately at the moment having a lot of financial difficulties.

Revving up in the car park, Raja admits he’s going nowhere fast. He can’t find another job, and is having trouble selling the car. Raja should be worried, says Mohammed Ghoubash of the local Human Rights Association. Dubai has some old-fashioned ideas about debt.

MOHAMMED GHOUBASH: If I default on my car loan, I go to jail. I think it’s utterly stupid, and we really should change these practices. It is such draconian, old laws that we really need to reform.

That might explain why several thousand expats have reportedly fled the emirate, abandoning their part-paid vehicles at the airport. The government denies that story. But there’s little doubt that expats here are no longer “Living the Dream.”

DUBAI AD: Dubai has created a haven for property buying. No income tax. No capital gains. . . .

Hundreds of thousands of foreigners have been enticed to settle here. But now the economy is turning down they’re discovering another harsh fact of life in Dubai. If they lose their jobs, their visas will be canceled, and they’ll have to get out in 30 days.

The government won’t confirm how many visas have been revoked or how many expats have left. But it feels as if many thousands have gone.

[Sound of traffic.]

I am on the city’s main drag — Sheik Zayed Road. It’s rush hour. Traffic is whizzing past. A year ago this would have been a gigantic jam. There are clearly far fewer cars on the road. Many Dubayan citizens seem happy about that. And even human rights activist Mohammed Ghoubash is relaxed about expats being told to leave.

GHOUBASH: If the country doesn’t have the jobs anymore, what else can it do but to ask everyone to go back home until the economy improves and then conditions are there for them to come back.

But some of the expats who’ve been laid off and then turfed out, like this Indian advertising copywriter, say they are very unlikely to return:

INDIAN LADY: I don’t think I would like to come back here because to not feel wanted is a feeling that you’d really can’t get rid of so easily. It will be a difficult decision for me to come back here.

And Raja Khouri, the expat from Lebanon, says Dubai attracted young, talented people from all over the world. It was a haven of hope in the economically stagnant Middle East. It will never be the same again.

KHOURI: Dubai had such a hot image to it; such a good, global image in terms of the place for people to go. It’s the New World, you know. The new model, you know, for successful markets. The idea that Dubai is this haven is gone. And I do not see it coming back.

The shopping malls are quieter. Sleek, young, male Dubayans sashay through wearing their immaculate white gowns. They seem more confident now that many of the foreigners are leaving. Some of them say, “We’re getting our country back.” But Dubai’s prosperity depends on the expats. They bought or rented the luxury flats, filled the shops, patronized the restaurants, ran the economy. If too many of them leave, the emirate really could be in trouble.

In Dubai, this is Stephen Beard for Marketplace.

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