From The Daily Telegraph:

“Paul Reynolds, head of Rothschild’s advisory operations in the Middle East, was this week asked to work for the Dubai government’s chief restructuring officer alongside Aidan Birkett of Deloitte, who was appointed on Wednesday.

The team is tasked with assessing the group’s assets, which is likely to result in a large scale sell-off of assets as varied as the QE2 cruise liner; Turnberry, the golf course that hosted this year’s Open Championship; and a raft of properties.”

My Comment:

This was the first I´d read about Rothschild´s involvement in Dubai, but it turns out Rothschild has been advising Dubai about the potential bankruptcy of Dubai World and its subsidiary Nakheel for a while.  The advice is in connection with the bond issue to funnel money to Nakheel through something called the FSF (Financial Support Fund), which will apply certain tests (equivalent to the US “stress” tests) to pick and choose which of Dubai World´s operations will qualify.

“Those seeking FSF cash will have to demonstrate they have a long-term plan for financial and commercial viability, not least because the cash will have to be repaid, probably within a three- to five-year time frame. …..

It is worth noting, too, that the Dubai financial sector appears to fall outside the Rothschild guideline of FSF eligibility. Although they are obviously a key part of ongoing economic development, the emirate’s banks are generally regarded as being in a comparatively healthy condition, well-capitalised and with acceptable levels of non-performing loans. But whether the Rothschild strategy would allow a big financial institution with a high real-estate exposure to qualify for FSF funding is open to debate.”

More at Global Reearch.

What´s interesting is that Dubai World´s real estate assets wouldn´t qualify, which means that a lot of expensive real estate, some of it in New York and London, is likely to be on sale for cheap, although Dubai itself is stating that it will not allow itself to be forced to sell its prize assets at what it considers unfair prices.

Now with Dubai´s own property prices already down 50-60% from their 2008 peaks (with another 20% to go), what´s a firesale in London or New York property going to do to prices already showing signs of entering the famous second dip?