LAHORE: The real estate industry’s collapse in Dubai has caused more damage to the Pakistani elite than the losses they are facing in their industries in Pakistan. Around $72.35 billion worth of property projects are stated to have stalled in Dubai.
Rumours are ripe in Dubai that these projects, undertaken by some renowned real estate developers, have been put to an indefinite hold. There is no official word from the developers about the stoppage of work but those who visit Dubai could see that work on over 50 building projects costing $3.8 million to $70 million has come to a standstill. Out of this, cancellation of work on real estate projects worth $3.275 billion has been confirmed.
Investors from around the globe had booked apartments in these projects by paying advance payments to the developers. They do not know whether they would get back their investment. Most of the capital flight from Pakistan in the recent past landed in Dubai for investment in real estate. The flight of capital during the past 12 months has been admitted even by the Adviser to Prime Minister on Finance, Shaukat Tarin.
There is no real figure about the exact investment by Pakistani entrepreneurs in Dubai’s real estate. The money was sent through back channels and the Federal Investigation Agency estimates a minimum outflow of over $3 billion during the first few months of the current government, which sent the rupee to over Rs83 against the dollar. The recovery of the rupee started after International Monetary Fund’s standby arrangement in November last year.
Dubai has remained a favoured destination for Pakistani investors. However, until a year ago only the richest invested their resources in the most enterprising Gulf state. Last year, even medium-sized entrepreneurs panicked by deteriorating economic conditions in the country rushed to invest in real estate in Dubai which was booming at that time.
The Dubai government then introduced the condition of one apartment for one family. Under this rule, the definition of family was husband, wife and children. Sisters, brothers or other relatives were not permitted to stay in the same apartment. This caused turmoil in the real estate business in Dubai as these apartments were occupied by a large number of workers who shared high rent. Individual workers could not afford to pay for separate apartments and vacated them causing a sharp decline in rents and real estate prices.
The investors are in a fix. Those who got possession of their property find the rent very low but cannot dispose of the property because prices are very low. However, most of them who invested in real estate during the last one year have not even got possession of their property and now construction of most of the projects is on hold with real possibility that these would be abandoned.
The cancelled projects in Dubai include $1.3 billion Nad El Sheeba race course which was being built by Mayden LLC. The $680 million Falcon City of Wonders undertaken by ETA Star has also been scrapped. The Dubai Exhibition City project worth $450 million has also been cancelled. Desert Gate Hotels and Towers being built at an estimated cost of $350 million by Bawadi LLC has been abandoned. Pikington Emirates has announced cancellation of its $200 million Float Glass Factory project. Walter’s Edge (Business Bay), a $125 million project of Damac Properties, has also been called off. The same builder has stopped a $100 million Dolphin Tower project. Nadra Tower (Business Bay), a project of Tanweel, has also been cancelled. It was to be built at an estimated cost of $70 million
Sorce: The News