In another statement of nationalistic behavior, Deyaar, on of Dubai’s major property developers, has affirmed it’s commitment to employ more Emiratis. Deyaar, one of the region’s fastest growing real estate companies, today announced its participation at the ninth annual Careers Show. The event is one of many initiatives through which the company seeks to achieve its target of 20 per cent Emiratisation by the end of 2009.

The 2009 Careers Show is being held at the Dubai International Convention and Exhibition Centre, from March 29-31, 2009. “Events such as this provide an ideal platform for us to present our latest training and development opportunities to the best talent in the country and enable us to meet our objectives for Emiratisation. For 2009, our aim is to increase the number of nationals in the company to 20% of our workforce” said Markus Gliebel, Chief Executive of  Deyaar.

A swathe of job losses in real estate, financial services and tourism is leading to an exodus of expats from Dubai. The UAE’s labor and immigration laws allow for easy corporate cuts, but force foreigners who lose their jobs to find new employment within a month - or leave.

This has turned unemployment into emigration, and economists say the population of the UAE - one of the most lopsided and expatriate-driven economies in the world - could decline over the next two years.

This in turn could pummel consumer spending, cause a rise in delinquent personal loans, hamper recovery and imperil the country’s ambitious long-term growth plans, which are predicated on rosy population growth forecasts, economists say.

“It will make the economy a lot slower to recover. If you leave, you leave, and you’re probably not coming back,” says an economist at an international bank. “Some sectors have been hit very hard, and it’s hard to see a sector that will do OK and create enough jobs to offset the cuts.”

Only about 20% of the UAE’s 4.7m population is local, one of the lowest rates in the world. In the commercial hub of Dubai, Emiratis only make up about a tenth of the inhabitants, according to UBS, the Swiss bank.

Optimism - or Denial? Indian real estate magnate Niranajan Hiranandani does not expect property prices, which have dropped by about 25% in the past year, to decline any further. “Rates have fallen by about 10-25 per cent over the past year-and-a-half. I do not expect rates to fall any further. So, I think people should start buying homes now,” Hiranandani Constructions Managing Director Niranjan Hiranandani said last week.

Niranjan Hiranandani - Calling "bottom" since the downturn began.

Describing ICICI Bank’s step to cut interest rates on new home loans by 0.50 per cent as a “good move”, Hiranandani said demand for property had begun to pick up now. “People do want homes. I think the SBI’s 8 per cent interest rate and the ICICI Bank reducing home-loan rates is a good move. Demand for property has begun to pick up now,” he said. The next three to six months would witness a further rise in demand by around 25 per cent, he said.  However, it would take a “full year” for the residential segment to see a complete revival, he said, adding the sector should begin to perk-up after June. Economic Times India. Just exactly where he gets this time frame from is a mystery and we can only assume that Mr. Hiranandani has some sort of divine inspiration working for him.Either that or this was just a prayer to the property gods.

Property developers have been calling bottom since the downturn began and the reaction to this statement was negative from just about all concerned. My favorite comment is “Mr. Hiranandani, you already lost 82 prospective customers just in 18 hours since this article is published. Make some more such statements and you will loose 1000s of prospective buyers. Then you can keep playing with your ‘Investors’.”

Will Dubailand be canceled?

Small investors in Dubai are forming groups, in an efforts to get their voice heard by the developers. Most developers are simply ignoring contact from individual investors and vigorously pursuing payments on off-plan developments that are now worth a fraction of their original sales prices.  The new interpretation of existing laws by RERA in November 2008 no longer protect them if they default on payments.

At one time, investors were entitled to a minimum of 70% of any money paid to a developer if they defaulted, but RERA’s new interpretation of the law means the developer may keep 30% of the total contract value if an investor defaults. Not quite sure what everybody is not getting about the fact that all the major developers in Dubai are owned by the ruling family - and they write and interpret the laws to suit themselves. Regardless, Dubai is finished as an investment destination unless some progress is made on this front.

The Dubai Property Investors Group, which consists of more than 350 local and international investors, lawyers and smaller real estate developers, have petitioned Dubai’s Real Estate Regulatory Authority to act quickly in forcing developers to cancel projects that they feel are no longer viable to avoid a complete collapse of the property market in Dubai, as  fears about the financial strength of some developers and their ability to deliver more than $1 trillion worth of projects.

The petition also called on the Government to cancel large developments now in their early phase, including Dubailand and Nakheel’s Waterfront, because they were no longer sustainable in the dampened market.

The Dubai Property Investors Group was set up to “discuss the protection of the rights of investors in the Dubai property market by seeking a dialogue with the developers and the government to find sustainable, working solutions in these demanding times”, according to the group’s website.

Another group, The Emaar Investor Group, made up of approximately 200 individual buyers, last week delivered a petition to the Emaar requesting the cancellation or postponement of three developments - Warsan Estate, Asmaran and Maysan. The group is asking Emaar to refund any money paid to date, to transfer any money invested to other Emaar units, or to provide a credit note for an equal amount.

A spokesperson for Emaar, which is building the world’s tallest tower in Dubai, confirmed on Thursday that the company had received the investors’ request and said it “(would) consider their proposals seriously.”

The spokesperson added that “Emaar is committed to upholding the interests of all our customers and stakeholders, especially given the current economic conditions.”

Investors are becoming increasingly nervous as Dubai’s bubble bursts. In recent months, financing has evaporated, sales have slumped, developers and brokers are cutting jobs and prices in some areas have fallen sharply.

“The Warsan Estate, Asmaran and Maysan projects are no longer viable,” the The Emaar Investor Group said in its petition. “There is no demand as many investors have already left the market leaving an oversupply, there is no money available to investors to continue payments, and there is no value in these projects as they are priced far above the market value of similar and better located projects in Dubai.”

As the property market crashes, developers such as Emaar are being forced to review project requirements. Last month, the company said it was putting future real estate projects on hold to stem the oversupply of units in Dubai. As it is, there will be an estimated 70,000 new units released for sale in Dubai in 2009, far more than can reasonably be sold. The company said it would concentrate on completing all projects it has already started to build but added that new launches would depend on supply and demand.

Emaar’s Warsan Estate, Asmaran and Maysan projects were launched in May and June 2008 at the height of Dubai’s real estate boom. At the time, units sold for more than Dh2,000 per square foot, but prices are now around 50% lower. As conditions get worse, disgruntled investors and buyers are becoming more vocal about their concerns.

Many are unable to continue payments thanks to lack of financing, and many have been asked to make payments on developments that are clearly not going to be completed, and those projects that do get pushed through to completion will only depress property values further. Getting money out of a Dubai developer is like getting blood out of a stone - you have to squeeze very hard, and certainly the level of frustration with the developers has been rising for some time. Investors in the Trump Towers project by Nakheel  - which has now been canceled - are being refused refunds and offered an investment in a cheaper alternative instead.

As Donald Trump might say, “See you in Court.”

Developers in Dubai are beginning to face the same issues as other property developers around the world. Falling prices and dried up credit means that customers are not so keen to pay for off-plan developments that are now worth considerably less than the agreed prices.

The Dubai market relied heavily on speculative investment from “flippers,” who planned to sell on their property before completion and certainly had no intention of ever moving in. As the credit crunch takes it’s toll, these flippers are bailing out of agreements. Khalid Esbaitah, Managing Director and CEO at Al Mazaya Holding, mentioned that the recent influence of the global financial crisis has deeply affected the market and rendered debtors unable to pay money owed to Al Mazaya. This has forced Al Mazaya to adapt a series of  measurements, which could affect 2008 returns.

“A number of factors have pushed Al Mazaya to take measurements that may seem hard at the moment, but will, on one hand, definitely be helpful in sustaining the company in the future, while on the other hand will preserve the assets and money needed to complete current and future projects”, said Esbaitah.

Esbaitah is apparently an optimist by nature and feels that the contractual obligations of buyers will save Al Mazaya from the effects of the crisis.  “Strong documentation and contractual obligations protect Al Mazaya from market fluctuations,”he said.

The simple fact is that it is far more cost effective to simply walk away from the deposit than to follow through payments on a property that is umlikely to appreciate in the foreseeable future.The other simple fact is that if a customer cannot get financing, they cannot pay.  This is being seen all over the world at the moment. The lawsuits are starting to fly as the property prices in Vancouver collapse, and the New York luxury condo developers are hastily reaching for their lawyers and chopping prices down to size.