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A major UAE survey revealed that over 85% of UAE residents are heavily indebted individuals have an average loan of AED 500,000 (over US $135,000).

 

The study, the first of its kind held in the UAE and published by the semi-governmental daily Khaleej Times, suggests that 75 per cent of the debt-laden residents are men and the rest women.

 

In Dubai, in terms of total debt by nationality, residents from India (17 per cent) and Philippines (25 per cent) rank the highest, followed by Pakistan and South Africa, while Emiratis accounted for three per cent.

 

The study covered a cross-section of mostly salaried category, earning between AED 4,000 and AED 70,000 a month.

 

August 12, 2010

 

 

Analysis and Forecast: Increasing Risk

 

The study reveals a staggering mountain of debt among the UAE population, particularly the expatriates, regardless of the exact figures.

 

The Dubai economic crisis in 2009 has resulted in tens of thousands of expatriates leaving the emirate with unpaid debt, including home mortgages. This is the first study that has revealed the true extent of the crisis. With expatriates able to stay for only one month should they lose their employment, they are unable to leave the country without settling their debt, or face jail until the debt is settled. As much of this debt includes property mortgages, the stagnant property market in Dubai means that those properties are unsalable.

 

The extent of the debt mountain reveals that the country needs to address this issue, either by making it easier for individuals to declare personal bankruptcy or somehow helping in jump-starting the property sector, which is a near-impossible task with even greater supply coming into the market. Besides the socio-economic implications and jail populations soaring, banks are particularly at risk of massive debt being effectively written off.