The Dubai bubble has burst. Gordon partners with mideast city of Dubai 20 days ago. Typical of Gordon building sand castles. Here today, gone when the tide rushes in.... This is Dubai today....... With property prices falling, jobs being lost and tightening credit conditions, Dubai is facing negative equity and repossessions for the first time. There are estimates that as many as 40% of the mortgages in Dubai are already in default. In the past, while house prices were on the way up, buyers who struggled to meet monthly repayments could sell their home at a profit and repay their debts. But times have changed and Dubai’s property prices are correcting along with the rest of the world’s. People are also losing their jobs, lending is considerably tighter than six months ago and mortgage interest rates are resetting on the cheap loans, which means defaults and foreclosures. Keith Parker said, “Today, negative equity and repossessions are becoming increasingly part of the business language. An alarming number of home owners are falling behind on their payments.” Gordon and Dubai Sand Castles

Gordon Partners with Dubai 20 Days Ago, Gone Today

PHOENIX (Wire Services) April 29, 2009 — Phoenix Mayor Phil Gordon created a strategic partnership with the wealthy Persian Gulf city of Dubai, culminating a two-year effort to forge ties Gordon hoped would lure investment and create thousands of jobs.

Mayor Phil Gordon and His Excellency Hussain Nasser Lootah, director general of Dubai City, signed a partnership agreement designed to foster business between the two desert cities and an exchange of scientific research.

An empty agreement

The agreement is more of a vision for the future than a concrete business plan. It lacks specifics, containing no financial commitments or timetables. And Gordon was unable to provide an estimate of how much money Dubai might invest in Phoenix in the coming years.

The deal caps the Valley's two-year push to forge a formal business partnership with Dubai. In February 2008, the Greater Phoenix Economic Council hosted a Dubai business delegation during Super Bowl XLII. A month later, Gordon visited the port city to discuss establishing a direct Phoenix-Dubai flight.

An Arizona delegation, represented by GPEC, Phoenix and the state, followed suit last fall under the banner of the Phoenix Global Trade Initiatives, a privately funded group Gordon had formed to seek out international business opportunities for Phoenix.

The fall of Dubai

The agreement between Phoenix and Dubai comes in the midst of a global recession in which both cities have been hit hard by collapses in the real-estate market, which had driven their economies during the recent boom. In the first quarter of 2009, home prices in Dubai fell by more than 40 percent; the emirate's economy grew by only 1 percent during that period.

Professor John Mathis, director of the Global Financial Services Center at Thunderbird School of Global Management in Glendale, called the agreement a "good move" that will help Phoenix bolster its presence on the international stage. But he warned that because Dubai's economy has primarily relied on banking and real estate, it is more susceptible to recessions.

"It doesn't have a strong supporting domestic economy, either driven by oil or something else, to support itself. That has made it vulnerable," said Mathis, who has witnessed Dubai's economic triumphs and setbacks during 20 years of traveling to the Persian Gulf city. "Dubai will be more vulnerable to business cycles (than other cities). It may be a good investor in good times and, in slow times, it may be less than a good investor."

The former article was updated May 18, 2009 by Hispanic News.