As was noted in previous articles, the Dubai (United Arab Emirates) based ownership of John Laing Homes - the international developer known as Emaar - now finds itself saddled with a bit of financial dead wood right here in our little city. As erstwhile interest holder in the troubled One Carter Estates property, Emaar now finds itself facing the possibility of having to swallow this highly leveraged piece of muddy real estate. A holding that they couldn't even give away at auction last week. More reflections of the banking and real estate crisis here in the United States.
But if you think things are bad here, check out what is going on in Dubai. This from the Qatar based Gulf Times:
Banks that financed Dubai's six-year real estate boom now face the unprecedented challenge of foreclosing on bad mortgages as over-stretched borrowers, who had hoped to cash-in on soaring property prices, default ... Market financing has evaporated, sales have slumped, developers and brokers are cutting jobs, while prices in some areas are reported to have fallen sharply.
You need to think of Dubai as the Switzerland of the Arab world. It is where all the most influential banks are located.
What this means for us is that we could be looking at an orphan property at One Carter. With little financial incentive to further invest in needed infrastructure construction, and with the economy in Dubai making raising the capital needed to go forward with this project difficult, what is to prevent them from just packing up and walking away?
The consequences of one of the worst blunders in Sierra Madre history continue to show no signs of abating. What we are possibly faced with here is an abandoned property, one that poses a significant threat for mud and landslide damage should severe storms hit this rainy season. Could it be that the cost of building the retaining walls and the other things needed to fend off disaster could end up falling upon the City of Sierra Madre? And is that really what the rumored bonds were for?
The Sierra Madre City Council - Class of 2004. The gift that just keeps on giving.