The Dubai Economy Is Going Nuts, And There's A Surprising New Factor That Didn't Use To Be There
Here's a fascinating nugget from SocGen strategist Kit Juckes, who just spent some time in
In the spring of 2010, I managed to get stuck in Dubai thanks to an Icelandic volcano. Dubai World had re-structured its debt, hitting financial markets at the end of November 2009, just days before similar concerns emerged about Greece's finances. That prompted the euro to fall from $1.50 to $1.20 in a matter of months.
This week, as I wandered around the region, I read reports of a 16% y/y increase in rents in Doha, an even bigger annual increase in footfall in Dubai shopping malls, and stories of booming real estate everywhere. It's not a bubble, it's a boom, the papers tell us. At first glance, my assumption was that this was Ben's mad monetary policy at work again as fixed exchange rates and zero Fed Funds, not to mention QE, do their thing. Here we go again, I thought. But there is an additional driver of demand that didn't exist in the mad credit frenzy of 2003-2008 - the influx of money and people that has come as a result of the
This is one of the funny effects of global crises: They can produce bubbles in safe haven countries.
We've seen it in London and Germany, as European peripheral money sought out stable alternatives.
And now it's being seen again as the rich citizens of troubled Arab Spring nations snap up property in the one area that's shown impressive stability and resilience.
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