Ed's message (6/2)
Written on the 5 March 2009
AS billions of dollars in development is put on hold and foreign investment takes a departing first class ticket on Emirates, the city of Dubai is facing economic readjustment on a mammoth scale.
Once revered as a sister city to the Gold Coast with its skyline similitude, towering residential structures and shared key economic drivers of construction and tourism, the desert city is now in danger of becoming an avaricious ghost town. In this issue we travel to the UAE and discover the property scene in Dubai is in acute correction mode with prices in all sectors falling amid job cuts, particularly in real estate and construction, where around $582 billion has been put on hold.
The challenge now for the Emirate people will be how to attract and retain foreign investment at a time when Dubai is reportedly cancelling 1500 work visas every day. The reality is that real estate prices, which rose dramatically during the city’s six-year boom, have dropped around 30 per cent.
But the crisis in the Middle East doesn’t appear to be having an adverse effect on listed developer the Sunland Group. After posting a $68 million profit for the Y/E 2008, the landmark developer behind Gold Coast hotels Q1 and Palazzo Versace has stepped up its presence in the Gulf following the release of the 80-storey D1 Tower and the new Palazzo Versace Hotel in Dubai, both of which are under construction.
Managing director Sahba Abedian told Gold Coast Business News that the company is ‘not immune’ to current conditions and 2009 will be an uphill battle, but remained philosophical: “People are re-evaluating the way they think and how they live their lives. It will have a significant impact on the way the business community will operate.”
While Sunland is one of the few developers seeking opportunities in the ailing property market, ASX-listed food brand manager Retail Food Group has banked on budget conscious consumerism to lift its revenue by almost 40 per cent to $69.7 million.
RFG chairman John Cowley says the result has exceeded all expectations in a tight retail market, while the sale of its manufacturing base had reduced debt by around $19 million.
The opinion column this month is from BIS Shrapnel chief economist Dr Frank Gelber. While Australia does not have the same issues as other nations, Gelber says the shortage of both debt and equity funding will be disastrous for investment.
Businesses need to survive the current shock but they also need to look beyond it and understand where they fit into the changing structure of the economy.
And finally, despite what Pink Floyd told us many (dark side) of the moons ago, we do need education – and now more than ever as management at all levels looks to up-skill in order to retain jobs. With jobs falling 11 per cent in February the good news is that Queensland is ready to return to the books.
There are nine universities operating in Queensland, educating around 188,000 students and employing 16,500 staff across 26 campuses. Higher education institutions contribute more than $2 billion annually to the Queensland economy.
Back to the drawing board.