Dubai goes back to the future


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In desperate times, we do desperate things. On countless occasions in the past few years, many of us have “imagined” a recovery based on the flimsiest evidence around. A car crash on Dubai’s Sheikh Zayed Road resulting in a traffic jam — all that traffic must mean Dubai is back. Bad weather in Europe resulting in flights being overbooked — that must surely mean Dubai is back. Renovation work in the mall resulting in massive queues — that must surely mean Dubai is back.

None, of course, turned out to be true. But in the past few weeks, something has changed. There is a whiff of confidence around, a feeling the worst is really over, and dare I say it, a possibility that the glory days of Dubai may yet return.

This year alone, eleven huge projects have been announced. It is worth listing them: Mohammed Bin Rashid City; Meydan’s new development across the Nad Al Sheba landscape; Madinat Jumeirah expansion; Meydan Tower; Taj Arabia; Business Bay Canal Project; Dubai Theme Park; World Discus Hotel;  Habtoor Palace; The Dubai Modern Art Museum and Opera House District, and the relaunch the iconic QE2 cruise liner as a 300-room luxury floating hotel.

Now I know what you are going to say. Are these really going to happen, and if so, who is going to pay for them? It appears Dubai will not have to depend on global financial markets to fund large-scale projects as it has access to sufficient funding from within the UAE, the head of Dubai Economic Council told reporters last week.

Hani Al Hamli explained:  “We do have our own resources and way to finance… We are sure that these projects will be achieved. We have our own resources in the emirates. I don’t want to disclose… This is managed by the finance department. When it comes to resources, we are part of the UAE and we have our own networks… There [are] neighbours who have massive natural resources. At the end of the day, [in] the UAE there is solidarity and a good governance and leadership.”

In other words, there will be no racking up of billions of dollars of debt to fund these projects, notably the fabulous plans for Mohammed Bin Rashid City. It also gives great comfort to see that Emaar — surely the only property developer to have its creditability 100 percent intact after the crisis — will be behind this project.

It’s easy to be cynical and suggest these announcements are part of a calculated PR spin, to persuade the rest of the world that the UAE is on the right track to growth. I don’t buy that. And the reason I don’t buy that is the numbers speak for themselves: Dubai’s economy expanded 4.1 percent from a year earlier in the first half of this year, indicating the Gulf’s main trade and financial hub is holding up well in a weak global environment. Hotel guest numbers in the emirate jumped 9.6 percent to 5 million in January-June, while hotels and restaurants saw a 16.1 percent surge in their business, according to the Dubai Statistics Centre. These kind of figures in Europe or the US would be heralded as nothing short of phenomenal.

What I believe the recent announcements show is willingness amongst the leaders and rulers in Dubai to be daring again. And it is already working — confidence is returning across all sectors of business, with foreign governments starting to look in envy again at Dubai, while foreign investors are again lining up to get a piece of the action.

Too many people have been too quick to call a recovery in the past – many “experts” absurdly did so in 2009 just as property prices were plunging 60 percent. But from the many CEOs I have spoken to privately this week, the message has been clear: the recovery has started.

Anil Bhoyrul is the Editorial Director of Arabian Business.

You can follow him on Twitter at @AnilBhoyrul

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Please post responsibly. Commenter Rules

Posted by: Salman

Posted by: Ronald
Monday, 3 December 2012 11:46 AM[UAE] - UK
They must be putting something in the Kool Aid these days, because this writer is normally quite sensible and knows a con when he sees one.


Normally Quite sensible?! WIth all due respect Ronald, I just read his column for the entertainment it offers nothing else. Just like this article is so funny to read. I love all these "Professionals" who give their opinions.

Posted by: Onell

It is a good news if it is true. Will only believe if all the projects completed earlier, the contractors and workers are fully paid already. That houseowners are actually living on their houses, etc.
Otherwise, better be quiet and just DO it!

Posted by: Kunal

Call me cynical but I do believe that the recent announcements are the latest in a series of reports meant to demonstrate that Dubai indeed is back and more importantly to get the big spenders back here.

Some issues include:

1. The Dubai Modern Art Museum and Opera House District projects were announced in early 2012 but has anyone heard any more about either of these projects? Similar announcements were also made in previous years close to Citiscape.

2. Until recently, there was an estimated oversupply of c.18% in residential and c.40% in commercial real estate, as per JLL. Can someone please explain to me how prices can shoot up by over 20% (including in places such as Discovery Gardens) in light of the above statistics?

I am surprised to see that the GDP numbers for H12012 are already out given that they didn't have the numbers for 2011 until recently.

Posted by: Sami

Delighted to see an article that is factual and spot-on with the current developments taking place in the city of wonders!

Posted by: Salahadeen

Follow the money!!!

Posted by: Thomas

It may be best to say that the Dubai real estate recovery is underway once
a) The stalled projects are completed
b) Tenants / owners are actually living in all the houses
c) Maintenance is taken out of the hands of the constructor and priced accordingly
d) No new roads will be driven through the centre of communities, or towers to be built in owners back gardens
e) Transport infrastructure is in place prior to any new development
f) Etc
g) Etc
Real estate agents coming out with these sorts of statements carry very little credibility at all nowadays, they really should stop printing them.

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