editor’s note foreword
Band of brothers
One of the consequences of the unravelling of the global econ- omy over the last 18 months has been the need to brush up on one’s knowledge of the chicaneries of the financial giants and federal governments, and rationalise the outcome against our own market sector performance. In an environment of carefully controlled capitalism, the
regional real estate industry hedged its bets off the back of its government-funded cousins whose deep pockets were paired with lofty ambitions to transform liquid wealth into iconic super-structures. And, to a certain degree, we achieved that – on the physical face of it at least.
But with the ramifications of the Dubai World debt revelation
closing out 2009 on a sour note, the twin issues of refinanc- ing and recapitalisation – coupled with an inevitable need for consolidation – has brought the realisation that bailing out the industry is not necessarily a given. Thank goodness then for the
recent announcement of US$9.5 billion from the Dubai government to shore up ailing Dubai World – with the bulk going to its development arm Nakheel for repayment of bonds – of which a healthy chunk is ‘leftover’ funds from an earlier shot- in-the-arm loan from Abu Dhabi. However, while financial support of
this kind is vital to set us back on the road to some altered state of eventual recovery, any cause for rejoicing needs to be tempered by the un assailable fact that the intervention of regional governments is a short-term band- aid on a deeper wound.
Further restructuring both for quasi-governmental devel-
opers, as well as the scores of privately funded companies left on a financial ledge, is doubtless on the horizon, and the sale of assets is also an inevitability. In a Q2 2009 Economist Intelligence Unit report commis-
sioned by Dubai Holding, nearly 70 percent of respondents, polled from 418 global senior executives, supported govern- ment intervention in the banking sector, which would include buying shares and nationalisation. The report, entitled ‘Risk and Regulation: A new era for capitalism’, also found that almost 60 percent of respondents believe that capitalism is enter- ing a new era of lower risk tolerance, higher regulation and slower growth, with the psychological effects lasting well into the next recovery. And while the region is not short of cash per se, the disburse-
ment of funds by local governments to state-owned entities shouldn’t be the only crutch available to the wider industry. Reli- ance on (conditional) assistance offered by a ‘neighbour’ with a long-term position – and the necessary funds – has the potential to band the development community together once more..
Claire Malcolm | Editor
Editor Claire Malcolm Features Writer Oliver Ephgrave Senior Art Director Andrea Tempesta Senior Designers Prachi Bhaumik,
James Jary, Kelly Massie, Tony Santiago Production Coordinator Naveed Aziz Photo Editor Antonie Robertson Photographer Adham Sneeh
Sales Development Manager Victor Soni
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Cover: Yas Hotel, Abu Dhabi
apr-may 2010
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