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Actors and chefs among investors set to lose millions in Dubai crisis
Jonathan Prynn, Consumer Business Editor27 Nov 2009
A glittering line up of Britain's best known restaurateurs stand to lose out in the £50billion Dubai debt crash.
The emirate's extraordinary economic boom - which now lies in tatters - had attracted some of the biggest names in the industry in recent years.
Among those who have opened expensive restaurants in Dubai are Gordon Ramsay, Gary Rhodes, Marco Pierre White and Giorgio Locatelli.
Other said to be looking at locations include Alan Yau and the Wolseley's Chris Corbin and Jeremy King.
Most have launched in partnership with hotels, so their personal financial exposure will be limited, but it is another setback for an industry that has stampeded into the Arab state.
Many high-profile Britons, including footballers David Beckham and Michael Owen, as well as Hollywood stars such as Brad Pitt have invested in Dubai properties that are almost certain to have lost much of their value.
The fallout from the announcement that major state-owned company Dubai World can no longer meet its debt repayment commitments continued to send shock waves through the financial markets today.
In London a jittery FTSE-100 plummeted more than 50 points in early trading on fears that British banks could be exposed to bad debts in Dubai, before recovering most of the lost ground.
By lunchtime the blue-chip index stood down only 9 points at 5185 ahead of the opening of the Dow Jones index in New York.
Gordon Brown sought to reassure investors and voters about the scale of the impact on the British economy during his trip to a summit meeting of Commonwealth leaders.
He said: "While it is a setback I think we will find it is not on the scale of previous problems we have dealt with. I think global recovery has depended on monetary action and fiscal stimulus."
City commentators said the impact of the debt announcement by Dubai World was a reminder that the credit crunch is far from over but it was unlikely to derail the world economic recovery. Howard Wheeldon, analysts at brokers BGC Partners, said: "A crisis yes and certainly not one that can be ignored but neither is it one that global financial markets should overreact to.
"In my view, and despite the scale of the Dubai debt, this is not a repeat of the Asian financial crisis in 1997, the Russian debt default crisis in 1998 or the crisis in Argentina that emerged in 1999."
However, the huge British ex-pat community, which is estimated to have peaked at 100,000, and the thousands of British businesses that have invested in Dubai since 2000, face an uncertain future.
A roll-call of familiar retail names have opened in Dubai in recent years including Asprey, Burberry, De Beers, Jo Malone, La Senza, Crabtree & Evelyn and Diesel.
The vast hotel industry is also expected to be heavily hit, including Sol Kerzner's spectacular five star Atlantis at the Palm development.
The hotel opened last year with a £12million launch party - said to be the most costly in history - with guests including Kylie Minogue, Lily Allen and Lindsay Lohan.
Industry analysts said hotel chains would be forced to slash room rates to fill the tens of thousands of bedrooms that have been built in the past five years.
One industry analyst said: "I expect to see prices come down and to see even more aggressive marketing from Dubai.
"They had already been working on getting slightly more mainstream hotels into the market in any case and flight prices were falling. That pool of the rich and famous that they were targeting has got smaller.
"We could see them fall more into line with China, which is more of a mid-market destination."
Reader views (21)
in our hindu relegion it has been said that greedy humans (knowing how poor indians were treated by arabs)will have to face their KARMA .In gujarati language "dubai" means "to drown".
- M.Shaw, birmingham uk, 08/12/2009 12:29
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Oh dear,how sad,never mind
- Joe, bromley england, 30/11/2009 19:12
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This whole report is the worst kind of alarmist rubbish I have ever read.
It is nonsense from top to bottom. There is not one person named here who is in the least concerned with last weeks events.
This is Dubai and The Emirates flexing muscles and telling the worlds banks and hedgers that they can do what the hell they like but it is they that will call the shots.
The don't give a hoot if their debt restructuring costs millions on the markets.
The fact is it won't cost Dubai a penny!
- George Liddell, London Uk., 29/11/2009 21:38
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Boo-hoo? Think not.
- N. Waters, Mississauga, Canada, 29/11/2009 21:24
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So plenty of cheap tacky bling for sale then.........having been there on holiday several times it astounded me that people can be taken in by the glitz that is funded by debt and built by poor underpaid foreign labourers whose sole aim is to send a few pennies home
the amount of empty 'luxury' appartments and villas is staggering........the place will end up a ghost town frequented only by hypocritcal arabs looking for some 'fun' and the bling brigade more suited to southend on sea
ghastly place to live but great for ONE week stay
- Anon, london, 27/11/2009 16:41
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So there is some justice - rich, money-grabbing celebrity chefs and talentless Z-listers losing money in Dubai. This is an economy built on debt and slave labour. Let's hope they lose every penny and have to some proper work all the people they have exploited.
- Chris, London, 27/11/2009 16:33
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Whodathoughtit eh? A property bubble where the property is located in the desert, built on sand, built by workers paid a survival-level pittance - what could go wrong?
- Paxton Pat, London, 27/11/2009 16:31
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We were told Brad Pitt was buying a flat at a proposed development in Hove that came to nothing. Are these celebs given a property free to entice lemmings to buy there?
- Sabrina, Peckham, 27/11/2009 16:25
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I saw this coming a long time ago, it was built on greed and exploitation and was doomed to fail because of it.
- Tallualah, Chelsea, 27/11/2009 16:21
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Ha ha ha ha ha ha ha ha
- Will, London, 27/11/2009 16:20
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Anyone that builds castles in the sand, can only blame themselves when they fall into the sea, this is just normal and sensible logic.
What is not normal and sensibly logical, are the bankers and investors that finance castles built on sand?
They say what goes around comes around, and you get what you really deserve in the end?
I predict for the worlds future; more bicycles in the developed countries, and more camels in the oil producing countries, that is ''if’’ both can learn to ride them again, after getting far to fat on illusions and greed; especially once the oil has finally gone forever, and that must be better for us all, and even better for the world.
It would have been better to let all the banks go broke last year; that way we could have started again without the taxpayers being in debt for the next 50 years; and it will be 50 years, not 20 years as the Government says today.
Building Castles, on Sand? Yes that was always a stupid way to build anything, even sand castles, any child that never went to university; will tell you that, once the tide comes in, all the castles fade away to where they came from.
- Mickinlondon, london, 27/11/2009 16:18
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Shame.innit
- Tonyw, london, 27/11/2009 16:12
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It is amazing how human beings are so bad in judgement that when on a roll it is not going to go on forever there will always be a downturn. But marvellous for those who can then pick up bargains.
- Edwin Underhill, beaconsfield, bucks, 27/11/2009 16:09
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Happy Thanks Giving.
What a bunch of Turkeys building sand castles on debt. It was only a matter of time before the tide came in.
Back to basics then, fishing, diving for pearls and going round town on a camel.
- Frank, Copenhagen, Demark, 27/11/2009 16:03
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If the celebs in question are so utterly gormless they believed someone who suggested investing in Dubai was a good idea then they deserve to lose their cash. When I read that Kevin Peterson and Freddie Flintoff had invested in Dubai I wondered at the time why they weren't received proper investment advice.
- Tom, Hammersmith, UK, 27/11/2009 16:00
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"Whilst obviously sad, I think your front page, putting this story up in the same space as the poor people of Peckahm, some of whom have lost everything in the fire, says a lot about the world we live in."
Indeed - the situation in Dubai is potentially far more serious in terms of its possible impact on a still struggling global economy than a localised fire (however large the latter might seem on the ground), so it should obviously have been given far more prominence. But since Peckham is much more of a local story to the Standard's circulation area, I can see why they were equalised.
- Michael, London, 27/11/2009 15:55
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I'm afraid I can't feel too sorry for them. Dig below the surface glitter and you will find slave labour and a total disregard for womens' rights.
- Jonathan Lloyd, Nesle Hodeng France, 27/11/2009 15:37
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"We could see them fall more into line with China, which is more of a mid-market destination." - meow.
- Andy Davids, London, 27/11/2009 15:12
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fantastic the rich particularly gordon ramsey loses another boil in the bag restaurant income highly dependent on the tacky rich and highly gullible dubai set, how wonderful, maybe he could show them what to do when you have no natural environment only steel and glass and then they could make a programme for the sheikh or whoever he is
- Val Keller, London UK, 27/11/2009 15:07
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We moved back to London in 2007 after having lived in Dubai for 5 years. What is never reported is that wealthy local residents never, never, never keep their own money in Dubai banks. The reasons are obvious - there are no assets to support the vast borrowings that have accumulated. i would not keep anything more than a tenner in a Dubai bank for this reason. If the situation is bad now it will only get far worse in 2010 when more loans fall due for repayment.
- Simon, London, 27/11/2009 14:54
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Whilst obviously sad, I think your front page, putting this story up in the same space as the poor people of Peckahm, some of whom have lost everything in the fire, says a lot about the world we live in. To the people of Peckham their homes are/were everything - to the rich in Dubai ... well ...I guess they already own homes in 'posher' parts of London anyway ...
- Ken Joralemon, London, UK, 27/11/2009 14:49
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