Economic Volatility in UAE Increases Expat Risks
Over the coming year the United Arab Emirates is going to likely face a number of economic and political challenges.
The country’s ruler, Sheikh Khalifa bin Zayed, is believed to be in poor health, and a transfer of power to the Crown Prince , Sheikh Mohammad bin Zayed, may take place this year. While Sheikh Mohammad is already functionally ruling the country, this may still cause some jitters among investors, just as the UAE improved its ranking by credit rating agency Moody’s.
Following the drastic drop in oil prices, the UAE instituted a series of reforms to diversify the economy and to attract foreign investment, and this has bolstered investor confidence in the Emirates.
Nevertheless, the UAE has a history of diversifying by means of various financial bubbles; most notably in the real estate sector.
The announcement that yet another “tallest building in the world” is being planned does little to indicate that the UAE is genuinely trying to avoid another economic bubble, and its inevitable bursting.
At the moment, Emirates-based investors are buying up property in Hong Kong, not in Dubai or Abu Dhabi, which suggests that those in-the-know realize that another financial crisis may be on the horizon.
What this means for expats in the UAE, and for potential investors, is that their capital is not likely to be secure. Long after the Global Economic Crisis, jobs were being cut left and right in the UAE, and debtors have been pursued with a vengeance by Emirati banks.
Detained in Dubai has dealt with case after case over the past 6 months of foreign investors being coerced, threatened, and directly swindled out of their assets, with these assets ending up in the accounts of unscrupulous Emirati partners, or even in the hands of members of the Royal Family.
“We have seen expat residents cheated out of their property investments, scapegoated for financial mismanagement by local business partners, and framed as patsies when colleagues embezzle funds from a company”, says Radha Stirling, founder of Detained in Dubai. “It is becoming more dangerous to succeed in the UAE than to fail, as foreigners have few protections, and can easily be wrongfully accused. Local business partners can wait for expat professionals to grow a company, achieve massive profitability, and then simply file fabricated criminal charges against them to appropriate the company’s assets for themselves.”
Any financial instability in the UAE can be expected to intensify these types of abuses, and expats and foreign investors need to remain vigilant to these potentially devastating risks.