Oct 17, 2009
Well, Dubai is still contracting and Abu Dhabi is still growing and looks undented. (difference of night and day, financially)
Coming three years: Dubai has to refinance $50 billion and it can not be simply expected that Abu Dhabi will pick up the bill without costs for its brother according to Barclay ME analysts.
Expect a slow recovery, the building peak of 2006 will not come back as the whole world drove on a debt-induced growth. Thats over. Some name it the 'new normal' or minimal growth.
Since the Dirham is pegged to the US dollar and US policy is inflationary (debasing the currency by printing money out of thin air) to counter the contracting (deflationary) pressures in the private sector, you can expect a lower purchasing power for the Dirham too.
Mind you, I mean, for example, in relation to the Euro or the RMB (yuan), as those currencies will get stronger in the near future.
Also the average wages in Dubai have declined 30 percent. As you all know, wages are the last thing to pick up.
And last but not least, to be able to foot all the government bills in the future, expect a moderate VAT tax, perhaps even income tax (low) or other fiscal measures to get the government finances in order.
The American dream is over and so is the Dubai expat (income) dream.
Back to a more sustainable business cycle according to my understanding of the financial markets.
Good luck with your decision.