January
The New Year dawned in Dubai with the realisation that the emirate was not likely to escape the consequences of the global financial crisis unscathed. Prop-erty developer Nakheel broke the news that the 1km high tower it had announced just a short while ago at Cityscape 2008 would go on hold, while Jumeirah Group delayed its first hotel in China, the Dubai Government said the year's budget would see a $1.1 billion deficit, the first ever, and the news came that house prices had dropped eight per cent in the last quarter of 2008.
February
The Dubai Government had already made a number of moves to help ease liquidity and support the economy. This month, it announced the sale of $10 billion in bonds to the UAE central bank, the proceeds of which would go into a fund to support Dubai companies, and added that this $10 billion would be followed by a further $10 billion when required. Emaar Properties said its profits had fallen 54 per cent in 2008 on writedowns in the US and Dubai Holding announced a restructuring of operations. But credit was still good for the big firms, as Borse Dubai successfully raised $2.5 billion to refinance its debts.
March
Property research firm Jones Lang LaSalle said that over half the residential and commercial real estate projects in Dubai due for completion by 2012 were put on hold or cancelled due to a lack of funding, job cuts and a falling population, as Union Properties halts construction on the world's first Formula One theme park. As more and more projects are put on hold, surviving projects are subject to rumours, as Nakheel is forced to announce it has no plans to sell the luxury cruise ship, the QE2, after media reports and blogs suggested its renovation was not going to go ahead at all and the liner may be sold.
April
This month saw the start of some better sentiment about Dubai's situation in the global downturn, as the emirate launched low-cost carrier flydubai, and said it would take to the skies in two months. Dubai's ruler also sought to reassure investors and residents that the emirate was still on track. HH Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister and Vice President of the UAE, and Ruler of Dubai said the emirate had seen the worst of the economic crisis and it remained on solid financial footing, while Dubai International Financial Centre Governor Omar bin Sulaiman said that Dubai's economy grew about one per cent in the first quarter of the year.
May
As well as providing funds in various ways to support the Dubai economy, the Dubai Government also starts to shake-up its economic leadership. Nasser Al Sheikh is removed as director of Dubai's Department of Finance and Abdulrahman Al Saleh replaces him. Meanwhile, companies are also restructuring, as Dubai Group announces it will concentrate its business in three business areas - financial services, real estate and emerging market investments.
June
There's a big surprise this month as Dubai Holding announced it is in talks to merge three of its property arms, Sama Dubai, Tatweer and Dubai Properties with Emaar Properties, raising fears of a debt burden on Emaar after the merger. Meanwhile, in one of the highest-profile company collapses, Simon Ford, founder and owner of Blue Banana fled Dubai and his debts leaving an open letter to Dubai residents apologising and blaming the emirate's lack of a structured bankruptcy law and the criminalisation of bounced cheques for his runner.
However, there is also good news, as the emirate's low-cost carrier flydubai took off at the beginning of the month.
July
Emaar Properties continued to claim a high spot on the news agenda, as it announced a $351 million loss for the second quarter of the year. There was also bad news for luxury goods as Tony Jash-anmal, a director of the 90-year old Jashanmal Group of Companies, said sales of luxury items had slumped 45 per cent since the beginning of the global financial crisis. Investor sentiment continued to rise however, as the market index had its biggest one day climb in five months.
August
Dubai named Abdulrahman Al Saleh, the head of the Department of Finance, as chairman for its Dubai Financial Support Fund, which is to give the proceeds of the Government's $20 billion bond issue as loans to government and government-related entities for projects of "strategic and developmental" importance. Meanwhile, Dubai Holding joins the growing list of government-related companies that are restructuring as it plans to focus on four business areas - real estate, hospitality, business parks and investments. Dubai house prices continue to plummet, falling
24 per cent in the second quarter of the year.
September
From the start of the autumn, worries about the creditworthiness of Dubai firms increase. Dubai World has to refute rumours that it may be selling its subsidiary DP World, while its other subsidiary Istithmar struggles with the woes of good deals gone bad, particularly its stake in now troubled Barneys New York. However, despite being over-budget and not quite completed, the Metro opens to much fanfare.
October
In a respite from debt worries, Dubai Holding paid back a $300 million loan in full and later in the month was able to sign a $1.16 billion three-year syndicated loan. In other good news, Emaar Properties got a 53 per cent lift in operating profit from the same period the year before to dhs655 million. The Dubai Government starts the second tranche of its $20 billion bond issue by launching a prospectus for $6.5 billion in bonds. Meanwhile, Dubai World said around halfway through the month that its restructuring was almost finished and it expected to save $800 million over the next three years with its new structure, adding that it had cut its global workforce by 15 per cent to just under 70,000, and its UAE workforce by 25 per cent.
November
The biennial Dubai Airshow, which in 2007 saw some of the biggest aviation contracts in history, is at the beginning of this month and shows the full force of the impact of the global financial crisis as very few deals on new planes are done. Despite the analysts' questions on Dubai's debts, the announcement at the end of the month by the Government that Dubai World will seek a 'standstill' or payment break from its debts is a huge surprise to investors. The situation is exacerbated by the four-day Eid Al Adha holiday, which comes directly after the announcement and leaves investors without any additional details on Dubai World's debt. Global markets show the fragility of investor confidence as this one piece of news sends stocks tumbling worldwide.
December
Confusion over the 'Dubai debt crisis' and speculation amid a dearth of additional information send UAE stocks toppling on reopening after Eid Al Adha and National Day. Some confidence is restored on learning that Dubai World will only restructure $26 billion of debt and only its property subsidiaries Nakheel and Limitless. But investor sentiment soars when Nakheel's $3.52 billion sukuk comes due and the Abu Dhabi Government gives a $10 billion bond to the Dubai Financial Support Fund, which promptly passes this to Dubai World to aid its restructuring, in the most surprising outcome to the two-week panic over debt in Dubai.
© 7Days 2009
