Everyone knows Dubai has been having real problems with falling real estate prices, but now it appears to have reached crisis point. Much of Dubai’s exponential growth has been funded by international borrowing and a large chunk of that is due this year. The Wall Street Journal reported this week that the Dubai government is issuing $20 billion in long term bonds with the first installment ($10 billion) being subscribed by the U.A.E’s central bank.
The bond is reported to be unsecured, fixed rate and offering a yield of a piddly 4%, with a 5 year maturity.
Apparently this will ease Dubai’s immediate problems but really doesn’t address the core issues. Projects currently in the works are left sitting there, those finished sit empty waiting for buyers who are not there. International workers are leaving in droves and the NY Times reports that cars left by fleeing foreigners sit abandoned at Dubai airport.
The government, predictably, isn’t providing any data on how bad the situation really is. They are actually drafting a law at the moment which would make it a crime to damage the country’s reputation or economy – essentially gagging local media who may wish to comment on the real situation over there.
