Subprime Market Fallout Shakes Middle East

Earlier, the Inquirer pointed to tightened purse strings around the world because of the shoddy home loan market going bust in the US. Deals from Argentina to Japan have been put on hold, because financing has finally begun to discriminate.

In there a sour deal was listed in the United Arab Emirates. London-based Barclays bank had put the brakes on a $937 million loan to DAE Aviation, the Washington, DC subsidiary of Dubai Aerospace Enterprises Ltd. The company had wanted to buy some airplane maintenance companies from investment behemoth, the Carlyle Group.

And now it seems that the ripples of the subprime fallout are rolling deeper into Dubai.

Oil-rich investors in the Middle East have been making the best of depressed markets. For instance, Dubai World has just taken a $5 billion stake in MGM Mirage. At the same time, however, the Journal points to Emaar Properties, the maverick real estate company, which is taking a bit hit.

Emaar is one of the jewels in the crown of the Middle East economy. In a project for the UAE, Emaar is partway finished with the $20 billion Burj Dubai project, which will include the world's tallest building, the Dubai mall (Emaar says it will be the biggest in the world), and a serious of housing developments.

Emaar also has operations in the US, and in a conference call yesterday, Chief Financial Officer Amit Jain said that those operations were taking a hit on Emaar's bottom line.

According to the Journal, shares hit their lowest price in two years yesterday at about 9.75 dirhams, or $2.65. Emaar shares pulled on the Dubai bourse, which dropped 2.4%.

Lehman Brothers, other banks, and plenty of subprime lenders have already began firing staff. Could the subprime mortgage fallout prove to be more a kick in the shins than a full-on topple for the world economy?

(Image a rendering of the Burj Dubai.)