11 May, 2006

Stop the Construction

M&J Adventures’ Halt the Hype (May 11th) and Desert Idleness’ Time to Go (April 15th)entries make interesting reading back-to-back.

Desert Idleness' thoughts on the quality of life and economic viability of Dubai/UAE have attracted considerable comment from expats here, which some will no doubt dismiss as the whingeing of the pampered chattering classes at having their toys taken away. Not so: sample the 7 DAYS Letters page, and see the difference.

Remarks regarding the need for industry in GCC countries made by Hossein Razavi, director of the World Bank's private sector finance and infrastructure department (MENA), appear to substantiate the individual impressions and genuine concern for Dubai's viability which underlie the comments expressed by and to Desert Idleness. Is the current type, and rate, of development wise? Will the end result be sustainable?

M&J Adventures notes India’s short- and medium- range plans, and the position of tourism as 34th (i.e. last) on the priorities list. OK, India and Dubai – not exactly identical twins. But then again, what if the physical, economic and social outcome of Dubai’s ambitious development so degrades the quality of life that both blue and white collar expat workers decide to pass; and Dubai-born Emiratis decide they’d be better off in one of the other emirates? Ah! There’s nothing like a bit of hysterical speculation at the weekend. Except that Dubai has risen extraordinarily fast on vision, talent and hard work It’s a prodigy; and prodigies are notoriously hard to nurture and guide. Mozart. Britney Spears. Know what I mean?

Sheikh Rashid and his sons have achieved great things in this sandy outpost in a physically hostile environment, with nothing much going for it apart from a commercial location and a little bit of the desirable black stuff. How can residents, visitors and the world at large not admire the vision and commitment involved in developing a diverse economic base when many of our neighbours’ petrodollars were being invested overseas or partied away? Dredging the Creek; building Jebel Ali's Port & Free Zone; the establishment of diverse and high profile tourist attractions such as the Shopping Festival and international sporting events; concrete efforts to develop this place as the region's IT and commercial hub by providing infrastructure and relatively liberal conditions. Anyone for Yemen? Tremendous.

But I am one of those who, from the evidence around me, worry that the powers that be are losing the plot, or that private enterprise has become a runaway horse. If the UAE’s 194,000 Indian construction workers (Emirates Today, Wednesday May 10th), most of whom work in Dubai, weigh relative income, cost of living and quality of life, and conclude that they'd be better off at home than here; and the rent-paying, school-fee paying expat breadwinners decide that there's not enough bread to meet spiralling costs, and that community ventures such as a sailing club, a rugby club, a social club, a diving club, will always be sacrificed to commercial interests, and conclude that they too would be better off at home, then this could be come the smartest ghost town there ever was.

It’s not all about the money, not for the people who live, work, raise families and support the economy here. Well, not for most of us; but the handful like DI's landlord, whose idea of good business practice is a 40,000 Dh. rent increase could well screw it for all of us, Emiratis and expats alike.

There have to be some controls, but within the framework of a long-term strategy for viable, sustainable development. I have great faith in the leadership in Dubai. What a team. But it seems to me that this is a pivotal phase in Dubai’s development, and given that it is still, beneath all the banners and concrete, a sandy outpost with not very much of the desirable black stuff, perhaps it is time to step back and consider the long view.

One wonders what Hossein Razavi would suggest in private consultation.

8 comments:

archer14 said...

Its a fact that industrialisation of any country is pivotal in it moving forward and sustaining itself. However, Dubai has chosen to go the way of Hawaii, where there is no other sustainable industry other than tourism. Hawaii is a holiday destination, and since it is small enough, it's able to support itself well. However, if expats were to leave if the spectre of tourism looms at every corner, then this would become the biggest Hawaii of the ME. And this it seems, is the biggest goal of the GCC.

Oil is losing its prospects. The second biggest oil field in the world at Kuwait is slated to not meet expectations and is already faltering in production estimates at quite an alarming rate. The US is now hell bent at utilising alternative energy sources including shale oil, which is substantially cheaper in the long run.

Expats would have to shift base if constructions are to boom as the years pass by.

archer14 said...

Sorry ..not "are to boom", continue to boom with no tomorrow.

samuraisam said...

As someone said to me earlier today, "you’ll never miss Dubai until you leave it"…

I don't appreciate the fact that some stupid camel humping dipshit of a landlord decided to up my parents rent despite the house being well over 25 years old and the fact that the maintenance company are beyond useless, stuff like that really does make me bitter towards Dubai, but I grew up there, and all my friends live there, so I’m attached, it’s a land of opportunity, and I’ll probably end up returning at some stage.

A big problem, as I see it, is that no one is willing to let the bubble burst, so when it does burst, it’s going to hurt.

I never really had a problem with the construction (despite my blog being named ‘one big construction site’) until I visited Dubai a week or two back, Jumeirah was absolutely fucked beyond recognition, and as for all of the development going on elsewhere, I just can't help but think there is going to be an abundance of empty housing in Dubai.

MamaDuck said...

Correction - The story, 'India to woo its own' was ET's cover story on Tuesday, May 9th.

Canuck said...

Samuraisam:

You are absolutely right when you say: "...no one is willing to let the bubble burst, so when it does burst, it’s going to hurt." But this is true only for the real estate market.

The Dubai Stock Market is another story altogether. The DSM is now 55 percent below its end-2005 close and down a massive 64 percent on its all-time high of 1,303 points set last August. Investors in the Dubai stock market have so far lost about $50 billion since the start of the year. The losses are much larger if compared to the peak set late last year.

In Saudi Arabia, the situation is far worse....a recent article in the Financial Times suggested that a total of $380 billion has been lost by investors since the end of February this year.

It is quite likely that losses in the stock market will spill over into the real estate market. With individuals and companies having lost a shitload of money, and with banks being saddled with a crapload of bad debts, it seems unlikely that too many people will have the funds or the inclination to invest in real estate now.

The only way the real estate market will remain buoyant is if overseas investors buy property in Dubai.

If there is only tepid interest from overseas buyers, then the property bubble will also burst, causing a downward spiral in property prices and a resultant slowing down in construction.

Let's hope the real estate market doesn't go the way the stock market has gone.

samuraisam said...

I don't follow the stock market, but from what I hear it's going badly at the moment.

I think the bubble fits in with everything, real estate is a major part of that, but the fallout from any real estate crash could be absolutely horrendous, and I’m sure it’d cross into other spectrums of the fantasy that is Dubai. I think other parts that’ll be a part of the pop will be the traffic, continuous protests from laborers, bias in the legal system (don’t dick around with me, I’m not stupid, I know there is bias in the legal system and nothing anyone says is going to change that), and tourism too; Dubai experienced a slight setback when a hotel and its construction site surroundings were filmed and shown on UK TV, they lost a lot of reservations etc, this was a while back however, like 6 or 7 months ago.

Other stuff that will happen doesn’t really take much to figure out, one day something will happen involving someone important, and they’ll get away with it, people will get pissed, and it will not be one big happy family.

Anonymous said...

jm

Anonymous said...

My Shop rent increased to 40 % last year and this year again 15% , can anybody suggest what should i do as i hv already wasted 6 years settling my career on shop and insted of profit increase rents keep on increasing . The sence of settlement is never going to come as i hv to close my shop and once again i hv to start new work , as i hv already started looking for some new port .

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