A sober affair

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Exhibition space at Cityscape was down 30 percent to 39,500 sq m.

This year’s Cityscape Dubai had a very different feel to it from 2008’s blistering assault on the senses. Alex Delmar-Morgan looks at what happened, how it happened and what will happen to property in the emirate.

There were no announcements of billion dollar, stratospheric towers and few new projects. This was Cityscape 2009, a year that will be remembered for the fiercest recession of modern times that has been felt in nearly every corner of the globe. Dubai’s famous property show, in the past a hobnobbing extravaganza for all and sundry in the real estate industry, where big deals are done and even bigger projects are announced, came and went this year like an event rather than a big occasion.

Three weeks before the show, Emaar and Nakheel, Dubai’s two real estate heavyweights, dropped a bombshell when they said they wouldn’t be attending. The news made headlines across the Atlantic. Even The Wall Street Journal picked it up. Less than a week later this baffling decision descended into farce when both developers performed a stunning u-turn — suddenly declaring they would be appearing after all. It summed up the mood in Dubai to a tee.

Without the fanfare and hype of last year, Cityscape started last week with a more subdued air. (For a start, exhibition space was down 30 percent this year from 58,000 sq m to 39,500 sq m. Only seven halls were used and additional exhibition space in the Dubai World Trade Centre lay empty this year, unlike 2008. Before the event, the organisers were already penciling a 20 percent drop in visitors.) Gone was the excitement and feeling of greed, replaced by caution and circumspection. But this was to be expected.

Dubai’s property crash is on a par with Hong Kong’s and Singapore’s housing collapse in the 1990s. A perfect storm of artificially inflated prices driven by speculation, a global economic crisis, a regional liquidity crunch and an almost overnight evaporation of investor demand converged, ironically, just about the time that Cityscape last year flung open its doors. The result has seen a 50 percent drop in values , more than 500 projects on hold or cancelled, according to research firm Proleads, and a recent report from Deutsche Bank predicting that Dubai will be oversupplied by 32,000 new homes at the end of 2010.

Donald Trump Jr, son of the famous US real estate tycoon, captured the mood in his opening keynote address on the first morning of Cityscape.

“The days of relying on 100 percent foreign buyers turning up with briefcases of cash are over,” he said.

He avoided blind praise for Dubai’s property market and remained realistic.

It’s a question of risk versus reward,” Trump Jr said. “The potential reward for investing in mature markets has improved significantly over the last couple of years, whereas the risk has if anything reduced. On the other hand, emerging markets, whilst they still represent good reward, their risk element - transparency, regulation — is still a concern.”

Dubai had an over-supply problem he said, but now is a good time to invest.

“But in terms of opportunity, now is the time to be looking at real estate here. When things normalise, Dubai is going to be in a lot better position than a lot of other cities,” he told delegates at Cityscape.

Around about this time, an announcement by a little known New Zealand company, Atconz Real Estate Development, seemed to fly in the face of what Trump had just said. It unveiled an ambitious project in the northern Kurdish region of Iraq, a $100m, 1,565 unit residential scheme that it said would tap demand for housing in the war-torn country.

“We believe in partnership with the government investment authorities in Iraq who have identified the need for 1.5 million new residential units across the country. Our current project represents only around one percent of that potential; we hope it will encourage more investors to engage in this market,” said Atconz CEO Dean Michael.

There was more positive news as well. Saudi-based developer Tanmiyat said it would resume its UAE developments in 2010, after putting them on hold last year. These include its AED4bn ($1.09bn) mixed-use Living Legends project at Dubailand, while it also said it would start construction on a planned AED2bn ($545mn) tower in the DIFC next year.

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