Dubai
It took a while, but once
again, I'm sorry to say, I have been proved right. Earlier this year I
even flirted with the idea of buying into the Arab states. I wasn't
interested in Dubai, but thought I'd have a look at the next emirate
along the coast, Ras al-Khaimah. There was a hotel scheme which looked
interesting, but finance was not available, and I was not keen to risk
100% of my money in that part of the world, especially after I had
suggested in these pages that investing there was highly risky.
Several people pooh-poohed my thoughts, and it looked as if I had made
a serious error in judgement. However, with the massive state welfare
programs all dependent upon the high price of oil the countries seemed
headed for a high level of liquidity, that is, while oil prices stayed
high. Since the price of oil has dropped drastically all these welfare
programs are now at risk. Suddenly all these amazing projects appear to
be what they originally were; dreams.
The price of oil has more than halved. The local stock index has
dropped by 70%, and the price of property has crashed by between 25-50%.
I guess one has to expect that a region that thought big and went big,
would crash big. I hope you took my advice and stayed well clear.
This does provide opportunities for those who will be interested in
going in when the dust has settled to see what can be picked up for a
song. The price of oil will go back up. This mess will get sorted out,
and the emirates will rise again. But for the moment keep well out of
it.
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