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'Suitcases Of Cash' Smash UAE's Residential Loan Restrictions

Tyler Durden's picture





 

Amid growing concern of yet another liquidity-fueled real estate bubble in the UAE (real estate firms up 92% in the last year in USD terms), the government (via bank regulations) have drastically restricted the proportion of loans that can be provided to foreign investors. However, this has had absolutely no impact as Bloomberg reports that increasingly 'suitcases of cash' are being used to pay for the property. With relatively lax capital controls 'cash is king' as the efforts of the UAE central bank to cap speculation in real estate (which saw property prices crash 65% from their peak in 2009) are failing as one local realtor noted "[the market] is increasingly dominated by cash buyers," and UAE real estate stocks are up over 20% in the last month alone. From Russian diamond dealers to Iranian speculators, Morgan Stanley notes that "property prices ... have continued to rise because of ample liquidity given negative real interest rates and nominal mortgage rates below rental yields," as the world's central banks do what they do best - blow bubbles in unintended places.

 

UAE Real Eatate Stock Index are up 92% (in USD terms) in the last year (after falling 65% from its peak in 2009...

 

Charts: Bloomberg

 


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Tue, 01/29/2013 - 12:36 | Link to Comment otto skorzeny
otto skorzeny's picture

pump,pump,pump it up. also-I'm not sure how wise this is when the whole middle east will soon be set ablaze with the onset of WWIII. probably better off buying land in New Zealand-as far from the ME/Zionist/US Neocon lunatics as one can get.

Tue, 01/29/2013 - 13:13 | Link to Comment trav777
trav777's picture

Bid up property in a place NOBODY wants to actually live??!! ROTFL.

The place is a god-forsaken desert, FFS.  They are paying people to live there, otherwise it's a camel lot.

Tue, 01/29/2013 - 14:00 | Link to Comment DeadFred
DeadFred's picture

Add to that the complete lack of respect for tradition by using suitcases instead of the time-honored wheelbarrow. Distasteful.

Tue, 01/29/2013 - 12:39 | Link to Comment EscapeKey
EscapeKey's picture

yes, when the bubbles eventually pop, the true problem is not that they were blown in the first place, it's that they were popped.

anyway, who the hell wants to buy property in the desert in the first place?

Tue, 01/29/2013 - 12:46 | Link to Comment Stoploss
Stoploss's picture

Is that the " sidelined cash " everyone'been talking about for the past 1000 years??

Tue, 01/29/2013 - 12:53 | Link to Comment Pladizow
Pladizow's picture

EscapeKey - "who the hell wants to buy property in the desert in the first place"

Um hello - Arizona, Nevada, New Mexico......

Tue, 01/29/2013 - 13:14 | Link to Comment trav777
trav777's picture

do they truck sewage out of those places and block Skype?

When are the majority residents of Dubai going to demand political representation that libtards claim is their ENTITLEMENT.  That and fast-track "amnesty" or citizenship?

Tue, 01/29/2013 - 12:40 | Link to Comment Snoopy the Economist
Snoopy the Economist's picture

"as the world's central banks do what they do best - blow bubbles in unintended places"

I argue that the bubbles are exactly where they are intended to be since these are not stupid men - they are however compulsuve liars.

Tue, 01/29/2013 - 12:40 | Link to Comment Catullus
Catullus's picture

The honorarium is as old as usury laws themselves.

Does the UAE have a different banking regulation for interest rates and usury?

Tue, 01/29/2013 - 13:31 | Link to Comment Mercury
Mercury's picture

"Islamic banking" is a fiction. Money now comes only by such means as de-facto zero-coupon bonds and well-capitalized third parties who buy desired assets and re-sell them to end buyers at a mark-up and on the installment plan.

No, you can't borrow money for free in the land of Mohamed...only big Western banks can do that!

Tue, 01/29/2013 - 13:22 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

We all think of inflation as accelerating from one speed forward to a higher speed forward. But inflation also appears when you switch from reverse to forward. Don't always assume that an initial forward motion is required for inflation to take effect or to be felt. Those suitcases of cash have moved the shift lever from reverse to forward.

<Just wait until the after burners are lit.>

Tue, 01/29/2013 - 13:12 | Link to Comment Shizzmoney
Shizzmoney's picture

Richard Wilkinson "If Americans want to live the American dream......they should go to Denmark.”

http://www.ted.com/talks/richard_wilkinson.html

 

Tue, 01/29/2013 - 13:29 | Link to Comment Mercury
Mercury's picture

Not only could you not pay me to live in the UAE but at the end of the day the king owns every grain of sand no matter what your paper says.

That said, a vacuum is forming in the world of discretionary banking. Someone will eventually fill that void.  A banking business where you charge depositors instead of paying them sounds like a good fit for that part of the world to me.

Tue, 01/29/2013 - 13:17 | Link to Comment Never One Roach
Never One Roach's picture

So how many suitcases of hot cashola flows thru LAX every day from the PRC and HK to the nearest "House For Sale" sign?

Tue, 01/29/2013 - 13:19 | Link to Comment glenlloyd
glenlloyd's picture

suitcases of cash you say...have to wonder if the NAR has thought of that...

Tue, 01/29/2013 - 13:25 | Link to Comment Downtoolong
Downtoolong's picture

The stupidest things I've seen people do with money are done by people with more money than they know what to do with. Nowhere is this more prevalent than in real estate markets.

 

Tue, 01/29/2013 - 13:32 | Link to Comment Mercury
Mercury's picture

And yet everyone knows at least someone who got rich through real estate.  Hard to say that about anything else.

Tue, 01/29/2013 - 16:18 | Link to Comment Remington IV
Remington IV's picture

you'd think one of these suitcases would show up with a buyer so i can finally sell my apartment on UES... geez

Tue, 01/29/2013 - 16:24 | Link to Comment Bunga Bunga
Bunga Bunga's picture

Could get funny when you find living Iranian monkeys in your UAE property backyard.

http://www.latimes.com/news/world/worldnow/la-fg-wn-iran-space-monkey-la...

Sun, 02/03/2013 - 09:22 | Link to Comment e-recep
e-recep's picture

as marc faber said, bubbles will form at unexpected assets if qe continues.

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