Impact of Financial crises in the real estate investment sector of UAE Research Paper

Impact of Financial crises in the real estate investment sector of UAE ( UAE is a country which is United Arab Emirates) - Research Paper Example Also, construction highly contributes to the economy of a country. These sectors intensify and make the financial structures extra adequate by assisting in lessening informal sources of finance, enhancing access, and assisting in mobilizing savings. In addition, real estate lending, including development and commercial investments have the capacity to make the financial system to be unstable, predominantly if connected to speculative and recurring market dangers, as highlighted by the continued worldwide financial calamities (Fried, 2012). This paper will look at the effects of financial predicaments in the real estate investment sector of United Arab Emirates. Growth of Companies   At the start, the companies which were affected were those which were engaged in mortgage lending and home construction in a direct way. This is because the companies could not get financial support through the credit sector. Almost one hundred corporations became bankrupt in the recent recessions. The growth of companies has been slowing down after the recent recessions. House building companies, despite the tremendous discounts they have been giving on their works, have found it difficult to make sales. This is because a large number of companies cannot contend with the mark down in value in the largely suffering resale sector (Fried, 2012). A large part of house sales made by real estate companies now incorporate foreclosure. This is an indication of persistent market failure. Moreover, foreclosures are becoming a prominent component of the limited market situation that they are increasingly being used as the standard. Also, manufacturing companies have sharply decreased their activities thus lessening their growth (Fried, 2012). Individuals are no longer able to buy new residences, which mean that house constructing companies are compelled to desert construction assignments. Think of all the materials that are employed in furnishing and constructing a household; all the compan ies that develop these materials, in general, have suffered decreased sales to create market value. Manufacturing companies, already suffering deterioration, are falling in a dramatic manner. These companies are also filing for bankruptcy after shutting down a number of their dealerships and factories, despite unparalleled economic assistance from the United Arab Emirates governments. Also, a number of chief companies have crashed, taken over by the different governments, or attained under constraint. Growth of Investment The financial crises have also had an impact on the growth of investment in the United Arab Emirates. The financial predicaments have caused a spectacular alteration in the purchasing decisions of home owners and have had a tremendous effect on the revival of the property markets in the United Arab Emirates. The financial crises have caused a decline in the growth of investment. Several studies conducted in the United Arab Emirates indicate that the financial issue s have had a significant impact on the purchasing decisions which are made by home owners. The outcomes indicate that over 50% of home owners have a feeling that the financial problems have had an impact on their property purchasing resolutions. In addition, almost 33% of homeowners are waiting for the property values to stabilize before they can take part in the real estate market (Schweizer,  2009). It has also been highlighted that prior to the financial crises