www.dubaipropertycrash.com

Job strife

We’ve been speaking to our friends who are long-term residents in Dubai again.

According to word at ground level the number of expat families that have quit Dubai due to job loss over the past year and a half is around 60,000 already, and the pace of departures has been steadily picking up speed over the last quarter.

The advertising and construction industries are amongst the hardest hit. Last month Nakheel cut 500 workers, and in November Damac dropped 200.

We hear, though not through official channels, that as of this week, upwards of 1000 families per day are going home after losing visas, mostly back to the Indian subcontinent.

The Dubai system is pretty efficient at both ends of the job tunnel. When you first get a job offer then work permits are usually arranged quickly by the employer with minimal fuss. Once you lose that job though, the process is just as efficient. You are given a one month grace period to find another job. After that your “bataqa” (work permit) is withdrawn and you’re on the next flight out. If you delay then you get charged a fine by the hour!

This policy is implemented strictly and robotically. We have a personal story which illustrates this quite well – some years back an uncle of ours who had spent 26 years working in Dubai (without acquiring citizenship rights even after 26 years and kids having been born and brought up there) had to leave with his family after his job as an accountant ended due to retirement. His outbound plane was delayed by 3 hours. The officials at the airport made him pay a fine!!

Business tip – check the Govt car auctions

According to local reports, upwards of 2500 cars have been impounded over the past month, mostly those of foreign workers that have abandoned them at airports, before absconding from Dubai with debts outstanding, including car loans and other loans.

In many cases these loans have been guaranteed by their sponsors, the companies employing them, and they are left to foot the bill. However with companies themselves going bankrupt an increasing amount of debt will be now written off or given to debt collectors to chase, even around the world if the absconder hails from a country with information-sharing links.

Although the number of absconders is already way higher than its ever been, at present its mostly single guys and bachelors who are bailing out. Once the school year ends in the UAE it is likely that there will be another large wave of people skipping, this time many will be families. Families mostly pay school fees up front for the year, so any hard up families contemplating leaving Dubai in this way may well wait until the summer before they uproot.

We were interested to discover that this type of thing is not new, though was previously restricted mostly to criminals. A Hindi phrase often asked about the absconder in such cases is “kitne ka kar ke bhaaga?” which translates as “how large a hit did he do before running?”

Often the mechanics of such ‘hits’ was an individual setting up a legitimate business in Dubai, usually a shop. The shop would trade for some time and gradually build a credit line and accumulate large stocks in the warehouse, perhaps in the millions. Then one fine night the proprietor would call in black market specialists who would happily buy the stock in cash for a bargain price, still leaving the proprietor with an enormous profit. He would then cut and run in the night, leaving an abandoned shop to be discovered the following day!

Health warning – Property losses causing Heart-break

More from our pal in downtown Dubai who is awaiting heart surgery.

His essential, though not emergency, operation has now been put back for the fifth consecutive time by surgeons who have had a sudden increase in their workload. He has been told by the apologetic doctors that there has been an unprecedented number of men who have suffered massive heart attacks requiring emergency bypass surgery after losing in some cases many millions of AED in the property market!

This is both sad and stupid at that same time. Did they really think the market would go up forever and that making money was so easy and risk free? Yes, we’ve heard the adage “You have to speculate to accumulate” but someone should have told them another one: “You don’t speculate with money you cannot afford to lose.”

These wise words are worth remembering for anyone contemplating getting into the market at this time.