Iranians hit by Dubai property slide

Tue Dec 16, 2008 10:09pm EST
 
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By Parisa Hafezi

TEHRAN (Reuters) - Habib Mostofi is one of thousands of Iranians who believed buying property in Dubai would be safer than Iran, isolated by the West over its disputed nuclear plans. But that was before the emirate's property bubble burst.

"I invested all my family savings in property in Dubai. I thought it was near Iran, politically safe and business- friendly," the 43-year-old businessman told Reuters. "How can I tell my family I was so wrong and lost the money?"

The economy of the United Arab Emirates, the world's fifth-largest oil exporter, has surged 50 percent in real terms since 2004, but the tide has turned as slumping oil prices and a global financial meltdown put an end to Dubai's property boom.

In recent years Iranians -- as well as others from Iraq, Pakistan, Somalia, Sudan and Lebanon -- have flocked to Dubai, the Gulf trading hub where construction cranes litter the skyline. For Iranians it was a haven from sanctions over the nuclear work the West says is to make bombs. Tehran denies this.

Many Western banks and export credit agencies have quit Iran and Iranian executives face increasing difficulty opening letters of credit, vital for trade, with an Iranian address.

Some opened Dubai offices to avoid that problem, while others just saw Dubai's property boom as a surefire earner.

At the height of the real estate bonanza, mortgages were easy and property could be sold for profit even before construction was finished -- a practice known as "flipping."

Reza Dabir-Alai, a businessman, 39, bought several apartments that together measured 1,541 square metersin Dubai.   Continued...

 
<p>Businessman Reza Dabir-Alai stands outside his residence at the Arabian Ranches in Dubai in this picture taken December 16, 2008. The economy of the United Arab Emirates, the world's fifth-largest oil exporter, has surged 50 percent in real terms since 2004, but the tide has turned as slumping oil prices and a global financial meltdown put an end to Dubai's property boom. Picture taken December 16. REUTERS/Regi Varghese</p>