Dubai's total debt reached $80bn last year, of which government companies owed some $70bn. Dubai World alone reportedly has $59bn in liabilities.
The fortunes of the city state have changed as the global financial crisis dried up available financing and brought its rapidly growing real estate sector into a shrieking halt.
SHOOT: Real estate all over the place is collapsing. Down the road from where I live, in an affluent suburb of Johannesburg, are huge concrete monstrosities framing a golf course. The last time I saw buildings like that, incomplete concrete wrecks, was when I travelled through Tanzania. Have a look at the picture below for the sheer number of skyscrapers under construction. How many will be completed? Dubai is going based and we're in a recovery? Right.
Dubai has shocked investors by asking for a debt standstill at Dubai World, the government’s flagship holding company that has developed some of the world’s most extravagant real estate projects.
The move raised the spectre of default in the Middle East’s trading hub just as early signs of economic recovery have emerged. During the boom, Dubai rode the wave of easy credit generating phenomenal economic growth but was badly hit by the global credit crisis.
A symbol of Dubai’s pre-crunch excess, the government company has had to cancel plans for the world’s tallest tower and a constellation of reclaimed islands, as collapsing cash flow left the developer on the brink.
Dubai - The government of Dubai said on Wednesday it will ask creditors of its severely cash-strapped Dubai World conglomerate to accept a debt moratorium for at least six months.
Dubai World also owns a number of properties in SA, including the V&A Waterfront in Cape Town and the Shamwari Game Reserve in the Eastern Cape.
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clipped from www.fin24.com
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