COMMENTARY Dubai Debt Crises May Hit Property Sector
In the here today, gone tomorrow world of breaking news the current Dubai credit crises is without a doubt stirring up the worlds financial markets. With many Middle Eastern powerful SWF (sovereign wealth funds) not intervening such as Abu Dhabi, Qater or the Emirates there remains much nervousness in Asia which has considerable exposure both in trade with Dubai and investments.
Property prices in Dubai has taken a serious hit and in many cases devaluations seen in the region of 40-50%. It's unclear if the crunch will be seen in isolation or create ripples abroad. Interestingly Spain which has an oversupply of 1 million residential units with many of these being holiday or vacation homes yet the impact was not seen on these shores.
Perhaps the most non tangible effect will be in pushing luxury and resort grade property purchasers to the sidelines who worry about not the property markets themselves but a lack of clarity on the impact to the global financial area. As seen from the GFC (global financial crises) sentiment can play often play a larger factor then reality and a small whisper on the continent next door can create a lion's roar on your very own doorstep.