Group members:

1. Geet Sahani 2. Aditya Todi 3. Vishal Timbawala 4. Shivam Mishra 5. Anant Pawar 6. Dhwanil Patel
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ABOUT DUBAI
 Located at the cross-roads of Asia, Europe and Africa  Dubai is well positioned to attract tourists  Sunshine, shopping, seaside, sports and safety - five of the key ingredients that have earned Dubai a growing reputation as one of the world's most attractive and rapidly developing leisure destinations.  Trading and commercial hub of the Middle East
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COMPOSITION OF UAE ECONOMY

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SECTORAL COMPOSITION OF GDP OF DUBAI

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DUBAI FINANCIAL CRISIS

 Dubai was another fallout of the global real estate bubble  With global financial markets plunging after Dubai World,

the government investment company burdened with $59 bn liabilities, requested for deferment of debt to its creditors for six months, on 25th Nov 2009.
 Nakheel has a debt of $26bn[ $3.5 bn islamic bond due to

be paid on 14th Dec 2009.

 The Dubai government s total debt is estimated at $80 bn.  Indian stock markets also plunged with heavy selling

witnessed in banking, infrastructure and realty stocks.

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REASONS FOR THE CRISIS

After 2003- Dubai economic model- More debt & less equity. Advantage of Political and economic openness, Better infrastructure, Trade mark of regional and world business hub. FDI invited Invested in real estate-Infrastructure, Tourism- airway Trade Mismatch between demand and supply. Dubai has accrued debts of approximately US$85-100 billion, or around 200% of GDP. Government restrictions were low. Lax lending standards and low interest rates.
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ROLE OF THE DUBAI GIANTS

Dubai s main development engine- Dubai world and its real estate arm- Nakheel Issued Nakheel bonds- investors ready to invest as it was state owned Today many bonds are due and cash flows not enough to pay them back. Restructuring effect It has a reported US$60 billion in liabilities, offset by a calculated US$40 billion in assets There is a maturity mismatch- the expected revenue is in the future while liabilities, including to contractors and suppliers, are piling up today.
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WHY NOT ABU DHABI

It has oil backing and is loaded with liquid assets. It has a diversified portfolio- investment not locked up in one sector. In real estate, demand is there so construction is done.
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MAJOR IMPACTS OF DUBAI CRISES

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Explanation
1) Impact on Banking.:2) Fall in real estate prices:-

 Those banks which provided finance to  Building dream projects various projects are like the Palm shaped feeling pinch of Dubai islands, a new urban crises . metro, the world's largest tower, a  Understandably their waterfront to the size of shares have fallen since. Hong Kong, a leisure park called 'Dubai land .
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3)Layoffs:4)Drop in demand of Gold: The already reeling construction industry is  Dubai does not produce Gold on its own, it seeks seeing a major freefall. exports from countries Laborers are asked to like India and re-exports go home and whatever them to other little construction countries. projects were on the anvil, are shelved.

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5)Immediate drop in oil prices:There was slight drop in oil prices as oil contributes to 6 % in Dubai economy.  This crisis is a setback pushing Dubai to rely more on oil revenue. Dubai has to pump more oil out to finance its debt. and as OPEC is not expected to increase the production quotas, expecting oil prices to go even lower.


6) Depreciation in Dirham: The valuation of AED (The local currency of Dubai) saw a drop. This means the strengthening of the Dollar, by a bit.

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IMPACT ON STOCK MARKET

Across Asia banking shares plunges down.

 Hangsang  Nikkei  Shanghai composite index  Australian stock exchange  BSE

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3.1% 1.8% 2.36% 3.0% 2.0%

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IMPACT ON REMITTANCES
 About 4.5 M Indians stay and work in Gulf.  Annually remittances coming out around $10b.  Biggest source of capital inflows into India  Dubai is the second largest state, accounts for around 10%-12% of India's inward remittances.
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IMPACT ON INDIA
A large number of Indian workers, especially from Kerala, work in Dubai. Some construction workers are likely to lose their jobs in Dubai. It may have some repercussions on Kerala s economy, which is substantially dependent on Gulf money. Since the global financial meltdown, many low-paid workers in the Middle East have already lost their jobs.
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EFFECTS ON REAL ESTATE

y Present condition of property buyers and realtors. y The Dubai debt crisis may further worsen their

woes. India s property markets have deeper links to Dubai and Indian real estate may bear the brunt of Dubai s financial woes. y Construction companies which carry out contract jobs in Dubai may suffer heavy losses. y New investors are trying to buy properties.
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EFFECT ON IMPORT EXPORT ESTATE

Even gems and jewellery industries

may be impacted negatively with many Indian firms having links to Dubai s world-famous bullion markets. yA substantial portion of India s inward NRI remittances come from UAE.
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IMPACT ON EXPORT
India s Export to UAE 13.1% in FY09 -

 Gems And Jewellery  Petroleum products  Non ferrous metals  Basmati Rice  Machines
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38.38% 17.53% 17.42% 29.4% 16.34%

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INDIAN BANKS IN DUBAI

B.O.B Axis

S.B.I ICICI

HDFC
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INDIAN BANK EXPOSURE

 Indians bank have a Rs 6500 cr exposure in middle east city.  BOB 10000 cr. for Gulf countries.  Counts for 7-8% of total loan book accounts.  Dubai having a half of the exposure .  But these accounts are well maintained.  SBI 1500 cr.  Such loans are issued for very short periods (3-6 months).
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ROLE OF ABU DHABI AS A SAVER

Dubai asked Abu dhabi to bail out from this crises. However , it up to Abu Dhabi, the wealthy capital of the United Arab Emirates how it would like to assist Dubai. Analysts are expecting Abu Dhabi (the senior and controlling Emirate in the UAE) to help soften the blow of this crisis. A recent report by HSBC confirms that Abu Dhabi has the cash liquidity to support its own banks and property companies
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 Therefore, Abu Dhabi is likely to use some of this liquidity and stability to help prevent a complete collapse of markets in Dubai. The UAE Central Bank has already confirmed that its board has discussed plans to launch facilities for supporting real estate lending in Dubai, as well as in the rest of the UAE.

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RAY OF HOPE
Inspite of all these, experts hope that it is possible to recover.It comes out of past experience. Dubai had faced similar economic crisis in 1999.Then Abu dhabi, another emirette in UAE, had helped Dubai by lending a loan of $1,00,000. Abu dhabi is a financially stable country.

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3 LESSONS FROM DUBAI CRISIS

 Diversification is not just a buzzword  Debt does matter ... Eventually  Foreign investing can be risky

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Destroyed the confidence between borrowers and lenders and it has also shaken the confidence about the pace of a global economic recovery."

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