Leveraged desert real estate (squared)
Dubai’s government, which owes its (now diminished) fortune to a leveraged bet on real estate in the Gulf, decided to diversify by, well, making another leveraged bet on desert real estate.
And Dubai World’s investment in Las Vegas’ real estate doesn’t seem to be working out so well …
Suffice to say that Dubai would have been better off now if hadn’t sunk $4.3 billion into the troubled Vegas City Center project. It could currently use some of those funds to sort out its own problems.
And the desert real estate has deserted the desert masters… thereby serving them just desserts in the form of a huge bill for the leveraged play
Ashes to ashes, dust to dust?
Mr. S.,
My thirty something son is in Dubai so i have been watching it very closely.
All the high rise empty condos are no bid, and no renters, u tube videos abound. The sixty minutes piece was camera running in the street on one of the palm islands. No people and no cars.
One article had a factoid about 3,000 carz being left at airport with keys in ignition by east Indian professionals bailing out.
flipping empty and to be built condos there is much more hazardous than Florida or Vegas, IMHO…
How long for the sea to reclaim the palm islands?
BTY, always appreciate and look for your superior analysis.
I’d like to mention working class people leverage in Kansas.
Going closer to your homeland, any comment on that, Brad?
“State House votes to increase minimum wage
BY JEANNINE KORANDA
TOPEKA – The state minimum wage would increase to $7.25 as of Jan. 1 under a bill that received first-round approval from the House on Wednesday.
It’s been 20 years since Kansas raised its minimum wage, currently $2.65.
About 15,000 Kansans are paid the state minimum wage, said House Assistant Minority Leader Jim Ward, D-Wichita.
Senate Bill 160 will likely come up for final action vote on Thursday, then be sent to the Senate to concur or disagree with changes the House made.
The House amended the bill to tie the state’s minimum wage to the federal limits — meaning Kansas wouldn’t wait another two decades before raising the rate.
Democrats have tried unsuccessfully for several years to raise the minimum wage and listed the effort as one of their top goals this year in the House.
There still is some resistance to the idea.
“Minimum wage legislation is a bad idea. It is lousy economics. It is no economics at all. It is inflationary. It is counterproductive,” said Rep. Mike Kiegerl, R-Olathe. “It hurts those it is intended to help and most of all it destroys jobs.”
The House also amended the bill to exempt lawmakers from the minimum wage increase. Legislators are paid $88.66 for each day they work.”
Let’s the sheiks make their own bets, for good or disaster.
I was alway jealous of the salaries paid to engineers working in Dubia but I never understood the point of it all. So I’m not at all surprised.
We humans love to build. Unfortunately our pleasure in the process easily gets in the way of objective evaluation of the sustainability of the resources we allocate to what we build.
glad to see that Kansas has decided to raise its minimum wage. About time too. MAybe nothing is wrong with kansas after all. If only the jayhawks had played a bit better in the last four minutes of the game last night, i would say things are looking good …
Brad,
It’s clear that you don’t work for Economic Council of Internal Relations.
I’m getting up of so much grey out-sourcing!
But let’s rock paying double for the morning coffee.
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A brokerage report estimates that Dubai’s population has now dropped 17%. More than 90% of the population was expats…them leaving in droves means the economy has little chance recovering. This desert miracle turned out to be a mirage.
Trivia thing: Arab investors have a history of going into casinos. Why? Arab money backed London gambling but more ridiculously the first major development planned (and actually built) by the Palestinian Authority was a casino in Jericho.
BTW, I passed math but not arithmetic.
Brad-
Something off topic, but this certainly puts a smile on my face (as it was a suggestion I had in 2008…). Maybe you can add your thoughts/input on Americas-China relationship later date. I know this is 5* for friends across on 68th:)
“China Plans More Trade, Investment in Latin America, Zhou Says”
http://www.bloomberg.com/apps/news?pid=20601086&sid=aEK3kCAe9wew&refer=latin_america
I am very happy to hear about the Dubai investments in Las Vegas and I am particularly happy that you mention them on your blog.
The world of the richest is a very small place. 40,000 people – worldwide.
I guess I would say : people don’t just invest to make money (especially if they are worth billions – ie so much money that it would be hard to spend it in 100 lifetimes).
In passing : the average US salary is $50k ? In other words, the average American will earn (in 40 years of hard work) – $2 million dollars. Which they use to pay for their house, their food, their kids and everything else. Now get this – many of them actually manage to save a couple of bucks along the way.
So, you can imagine how Americans feel about trillion dollar bailouts for botched banks, hedge funds, et al.
Lots to be said – but Dubai (in my opinion) made excellent investments in Las Vegas. There’s more to life than follow the money? aka friends?
I find it tough to bash them, hindsight is always 20/20. I’m sure they could have been a little more conservative with their investment, but boom in Vegas was too much to avoid, I think.
My kids are going to be p/o’d when they’re older and read about these bailouts in the history books.