09 October, 2008

Cityscape revisited

A wee game of scrabble before we start?

CITYSCAPE
AY, SCEPTIC
SPACEY TIC
ICECAP STY
CYSTIC APE

Unless you live on Mars or in Umm Al Qwain you will have noticed the annual Hajj of the intrepid and gullible to the Dubai Word Trade Exhibition Centre this past week.

There is no other way to describe what is Cityscape. There are those who believe, those who believe what they are told and those who want to believe because everybody else does.

Thousands of starry-eyed “property professionals”, Saudi geezers and Russian biznezmen with suitcases full of cash descend onto the “World’s largest property fair” for their yearly fix of hyperbolic announcements of new outlandish developments, and to ogle scantily clad Lebanese hostesses. Aspirational newcomers can be identified by the cabin trolleys full of glossy pamphlets they drag behind them and the awed expressions on their faces and the drool down their cheeks.

This is not so much a trade exhibition as it is a cattle market: the biggest udder gets the most attention; This is real estate porn, marginally more salubrious than a car show (and the hostesses certainly look the part).
Subcontinental hustlers in mustard yellow shirts and ill fitting coats enquire with Uzbek girls about squarefoot rates, and barefoot rates. Others stop at every stall shrieking with childlike excitement and gorge themselves at glitzy blinking scale models. They are instantly pounced upon by sales agents with standard issue gelled hair and pungent aftershave, sweepingly pointing out this signature tower and that amazing water feature, Karama Rolexes dangling from their wrists, liberally spewing senseless superlatives about “perfect community living” among “brilliant verdant oases” of ubiquitous Greg Norman designed golf courses.

My enquiry at the ‘Dubai Properties’ stall about solutions to the apparent power shortage in Business Bay which forces completed buildings in this ‘elite new CBD’ to run on diesel generators for the next three years, or the absence of a functioning sewage network, is met with a blank stare by Ahmed from Alexandria, who arrived six months ago in Dubai and now offers his expert knowledge of the real estate market to prospective buyers.
I ask about sales rates at ‘Mudon’, a new sand-coloured faux Arabesque Lala land somewhere in the sticks behind Arabian Ranches. My joke about the colours of the buildings looking like they had ‘mud on’ them is lost in translation. Ahmed informs me that without problem he can fix me up with a Dhs 5 million mortgage in no time and that the project would definitely be completed on schedule. According to my bank manager I can’t even afford to borrow two million, but for a brief moment I am tempted to suspend reason altogether and give into the dream of certainty and security: The fata morgana of a project in Dubai being within affordable reach and completed on target.

Even if everything that was launched at past Cityscapes and half of everything on this year’s show got built in the next ten years, I promise you that Dubai is going to become one uninhabitable behemoth of a town, or rather a conglomerate of utterly disjointed “communities” for rich people – each one with its own “water feature”, “amazing” signature building, idiotic joy ride monorail and amazing traffic jams at the access points.

One example: This year’s biggest and bestest announcement, “Jumeirah Gardens” by ‘Meraas Development’: In their own words a mega projects with a twelve year program - read 19 years with neither power nor sewage network in the end.
Three mega towers for good measure and dozens of 20- 50 storey towers. And of course, the “water feature” “defining” the “community”.
This is madness on a megalomaniac scale flying in the face of any single principle of responsible farsighted urban planning. At one side the development is hemmed in by the back road of SZR (access to the parking lots of the entire stretch of buildings from Fairmont hotel to the ShangriLa), on the other sides by Safa park, Al Wasl road and Diyafa street. Imagine the construction access alone for this mammoth building site. Not only will this create absolute traffic mayhem on these roads for the next decade, the construction of several bridges to be built on Wasl road and Beach road to link ‘Jumeirah Gardens’ with a large offshore island development (The ‘Universe’) will choke quality of life in Jumeirah for good.

Has anyone questioned the wisdom of redeveloping an already congested area with twenty-fold density, thus adding a population of circa 300-400,000 people between Satwa and Safa with no physical possibility of creating a multi-lane road network without serious bottlenecks? The slip road behind SZR works for now until it feeds into World Trade Centre roundabout at one end and Interchange 1 at the other.
Bottleneck today, give me the bottle tomorrow! Al Wasl road has already reached breaking point from Emirates Bank all the way to Port Rashid because of Salik dodgers who cause misery for people actually still living in the area.
With appropriate hyperbolic exaggeration I propose a wager: ‘Jumeirah Gardens’ will be the ruin of Dubai. If I’m wrong I’ll go shopping at Union Co-op on Friday evening.

Actually. Someone did question it. The original Masterplan by a well-known international firm indeed proposed low to medium rise housing, not mega structures landed in the middle of town like a UFO. Luckily the developers then came to their senses. What the hell did they think they were doing?! Giving away land to the great unwashed? Building a sustainable society? The heck; a 600m high mega tower was needed! That would look good, with the water feature!!

I searched Cityscape from end to end and I assure you: No sign of lower or middle income housing. Dispersed across town, joined up, public transport connected housing. Not anywhere. Zilch. Not only no private developments - which is understandably with land prices what they are - but no sign of any comprehensive public, Municipality initiated Development Plan to link and inter-weave those private Master developments to retain, allow and create space for “normal” residential areas – like the Satwa that will be no more.

It all started so well. Now it is going horribly wrong.

What we see at Cityscape is not natural and necessary growth.What we see is greed and forced, contrived, and purely speculative wishful thinking at work. You can’t run before you’ve learnt to walk. What Dubai needed now more than anything was a moratorium on construction, completion of the utterly lacking infrastructure and consolidation of growth. There IS such a thing as over-development.

If you built because they would come you’ll have to keep building because they are coming indeed . And then they'll stop coming.

Property in Dubai is an artificially created vicious circle - not dissimilar to the past madness of the financial markets. Like derivatives, securitized by farts of hot air from Abominable Insurance Goons et al., sold over and over again just because somebody somewhere always bought policies or obligations without understanding the risks or even thinking about the day when the chickens would be coming home to roost.

26 comments:

Macthomson said...

Very nice writing and a very sobering perspective.

Abu Dhabi Blogger said...

Sounds like this was your first time to Cityscape. Sadly, they never showcase any middle-income residential units. In the last Abu Dhabi Cityscape, total transactions amounted to US$ 35 billion. You cannot reasonably expect such numbers from this event. The world is going through an unprecedented financial crisis and NO THE GULF IS NOT INVINCIBLE! The stock markets have provided a good realty check. A few years from now, these communities will be desolate concrete jungles because no one will want to pay AED 400,000 in rent. People WILL start leaving to places like Bahrain and Kuwait where housing is dirt cheap.It's a business model to make money and it is working.
Sadly, this is not going to make the life of existing residents comfortable, which is what a progressive state should be doing. While lofty towers will lure investment, they will not draw ex-Lehman employees who cannot afford the rent and do not want to live in affordable developments due for developments.
Dubai needs to find its soul.. among the cement, dust, cranes, ill-treated labour, concrete, rubble, sand and reclaimed land.

BestDesi said...

I agree totally really liked the way you put it..you got another loyal reader added to your subscribers!

If i can put it right, the rich are becoming richer everyone else suffers simple logic. Dubaiiiiiii

alexander... said...

Cystic ape is genius!

Kyle said...

Nick:

Welcome back. It's been a while since you were here.

I read about half of your write-up and want to pose you some quick questions:

1) What's your take on the current worldwide financial fiasco and how's it going to directly affect the local property market?

As I can see, more and more projects keep creeping out of the woodwork. So, are there really takers for these or just ghosts with a hype in mind to keep property prices up?

2) Do you think with the escalation of financial crisis' all over the world, people should dump their property/real estate and consider a long term investment in precious metals (gold etc) or stones (diamonds etc)?

And finally, a bit off-topic. I can see that the UAE has no intention - like the GOP candidates up for POTUS - to issue a new fiat to keep the middle income/middle class residents on their radar in the near or long-term. Do you think, their ignorance of this key factor will speed up their downfall from grace?

slmnhq said...

Thank you for this entertaining write-up of the Cityscape. If I hadn't known any better I would have thought that you really were describing a Las Vegas fetish convention.

Anonymous said...

Lebanese whores! Genius! Are there any other types of lebanese women though?

Sheikha M. said...

Very well written TRN and sadly...very true.

Anonymous said...

love your article. Wanna throw in a religious comment for you:
Islam says this...in a Hadith Bukhari the Prophet Mohammed (saaws) answered to the question, what the signs of the Hour are with this: (...)
"When the shepherds of black camels start boasting and competing with others in the construction of higher buildings." In Sahi Muslim it says to this topic:
...(..)that you will find barefooted, destitute goat-herds vying with one another in the construction of magnificent buildings.
Need I say more.

Marcelle said...

I guess the ones missing out on Dubai's property boom are just bitter they lost out on the chance to get rich. In many cases, your Lebanese sales executive, whom you seem to hate, make more than the normal engineer or doctor.

And i am sick of hearing how the worldwide fallout will come to Dubai, Dubai is different, it has no taxes and will have tourists coming from around the world. Thats why its immune to the global crisis.
Also, Dubai's laws are much developer friendly unlike the West, where liberal crap issues like Human Rights and minimum wage means workers are expensive. In fact I think the West has shown that if you give people too many rights, the economic system will collapse, give me Dubai which knows how to control the average worker and put the in their place and the consequent long-lasting propserity any day.

Seabee said...

Looking at the gridlock for kilometres all around Cityscape I'm amazed anyone could get in to see all the new iconic buildings and epitomes of luxury living.

Rose in Dubai said...

>>Property in Dubai is an artificially created vicious circle - not dissimilar to the past madness of the financial markets. <<

Property in Dubai is nothing more than a gigantic pyramid scheme, where you buy something of no value at a hugely inflated price only because the person who sells it to you convinces you that the next person will pay you twice as much! And they work because greedy people want to believe and don't bother to do their research - or hope that they are not the ones holding the parcel when the music stops.

South Sea Bubble? Tulip mania of 1636-37? Albanian Pyramid Scheme? Canadian Pigeon Scheme? They've always ended in disaster and they always will. Hope the Dubai Property Pyramid doesn't end up in the text books, but I'm not optimistic.

i*maginate said...

seabee, I discovered a quick way to get in and out!

Somehow I ended up on this "new" flyover on the way to Murooj Rotana and saw a right turn, so I took it while kms worth of morons were unecessarily queuing up! I navigated my way through some random place I've never seen before, leading to Zabeel Club. After passing some camels (might have been quicker just to borrow one to take me there lol) I found my way to the car park just in front of Novotel...I made my way out by going in the opposite direction to the Novotel and onto Khail Road.

Sorry I didn't share that with anyone before, and hope everyone enjoyed the traffic! LOOL

And to the moron idiot in the Jeep who was giving me evils just coz I tried to push in the queue, get a life coz you're fugly (if you're reading this haha)...and, ladies first! loool

and kyle...gold and cash is the way to go ;-)

nick, you are very naughty!

the real nick said...

Thanks everyone.

Kyle,

Me is no economist and I'm happy about that. Most 'economists' are a bit shitfaced these days having completely ignored or misunderstood where derivatives trading has heading to.
I never bought into any of this crap because I didn't understood the risks and noon ever could explain them to me. As if there hadn't been any risks.

I can only say that no man is an island. The Gulf is finding it increasingly difficult to finance real estate projects. Lots of developers out here are struggling to complete projects because they were complete numpties and snowballed growth without thinking about how they'd deliver.
Here's how it "worked": you buy land, get fancy designs made and present it with the whole shebang at Cityscape and sell the entire project off plan to some shysters, and then use that money to buy more land and repeat this ad infinitum. Only that these guys sold two years ago at 600 or 800 Dhs per sft and have to now pay 500 to 600 for construction plus the cost of land. All of a sudden you may find it very difficult to leverage your equity (land) against construction finance because the land is actually the investors' deposits of the previous project. Oops.
The escrow acount came far too late.

I have no sympathies whatsoever for these crooks going bust and all the shysters who believed them.

Lastly, since you asked me:
I have put my money into Indian metropolitan land banks / developers like DLF, natural resources (Rio Tinto etc.), gold, and property funds centred on European capital cities (retirement home developers!) as longterm investments.

Not one single fils here.

rosh said...

Neat piece Nick! Worth every penny to those oblivious of DXB real estate ways, which btw, isn't all bad, however, it's time to self-reflect and get some perspective.

Re: financial markets (legalized casinos) - quite wise of you, I think. I just don't understand people who'd invest savings/retirement in the stock market? I have friends in UAE, who took loans from banks/private loan sharks, and bought stock - horrible idea!

nzm said...

Brilliant writing, Nick.

If you weren't an architect, you would have a great career as a writer.

Dubai Nikolai said...

I noted one phrase in your piece Nick, "fata morgana". I recall there was a novel published with that title a few years back. Much of your article was more intelligible than I found that book to be. However using such phrases puts you in the uber elite set, making you the lingusistic (intellectual?) equivalent of the stinking ultra-bourgeoisie whose selfish interests so incense you in Dubai. Otherwise, a rollicking good read. Nikolai

Kyle said...

Nick:

Thanks for the feedback.

When you cite the Indian reference, it brings to mind a recent comment by Robert Zoellick, President of the World Bank where he said that it's about time the term G8* was scrapped and replaced with G11. Zoellick's specific emphasis was on the growing economies of India, China and Brazil. He also issued a thinly veiled warning that any further delay in not granting full-tme membership to these three would not be in the interest of the G8.

So I guess you must be one of those following Zoellick's advice because you're right on spot. In our hemisphere, we've got the growing samba experience!

*According to my wife, 'The G8 is impotent, their decisions mean nothing'. She's slightly modified this line originally quoted by Martin Luther King to RFK in reference to the (US) Supreme Court.

Nature Strikes Back said...

Maybe they could convert the sewage into methane and run the new developments on that ... tho methane gardens doesn't sound quite so attractive.

Rose in Dubai said...

The property market here is nothing more than a giant pyramid scheme. People buying something of no value on the basis that they can sell it to the next person for twice what they paid for it, but it still has no intrinsic value.

Dutch Tulip Scandal? South Sea Bubble? Albanian Pyramid Scheme? Canadian Pigeon Scheme? All of these have one thing in common - when they collapsed they took whole economies down with them. and caused misery for thousands of people.

manavalan said...

"Dubai's laws are much developer friendly unlike the West, where liberal crap issues like Human Rights and minimum wage means workers are expensive. In fact... if you give people too many rights, the economic system will collapse, give me Dubai which knows how to control the average worker and put the(m) in their place and the consequent long-lasting propserity any day."

Bravo, Michelle!

You're right, they're just jealous, these bleaters.

Let's just enjoy the prosperity...them thar workers need to be put in their place all right; put dog collars and chains on em and make em work for free...just imagine the lifestyle we can then have!

the real nick said...

Rose in Dubai,

I do not agree with you.

The Dutch tulip scandal was the end of a craze for a luxury commodity, i.e. fuelled not by essential demand but desire, which is not exactly the same.
The South Sea bubble was basically a hyped up rights issue , again without real underlying demand but merely the promise of profit share.

The entire Middle East on the other hand with its huge and rising young population has real demand for a business 'capital'. That's why I said that it started so well, with several free zones, little bit of freehold property etc.
What I meant by 'going horribly wrong' was that Dubai is overdoing it now, too fast, and is creating a beast that cannot be controlled. That's all. There is a definite need for housing and development in the Middle East. Dubai can be a local yet globally active and connected centre that will always attract the best of the Middle East. Dubai is here to stay, but I'm afraid it will be a mad, bad place to live in like Cairo or Bangkok, or, well, London.

Which is a great chance missed.

Rose in Dubai said...

>>fuelled not by essential demand but desire, which is not exactly the same.
The South Sea bubble was basically a hyped up rights issue , again without real underlying demand but merely the promise of profit share.<<

OK, so the desire to put a deposit down on 10 apartments and then sell them on before the fist payment is made - is that a desire for property or a desire for profit?

The thing about pyramid schemes is that the most successful ones do start off with a genuine product, which might even have some value, but pretty soon the value is eroded when greed takes over.

"Hyped up rights issue" sounds disturbingly close to this place right now.

Anonymous said...

wow marcele is a genius ,way to go liberal laws and human rights are shitty and absolutely not needed .all what is needed are really classy sales and marketing people ..the very thought is marvelous ..NOT!!!

the real nick said...

Rose in Dubai,

I want to clarify that I am not per se against development, off plan selling and profiting from a rising market. The escrow account law came too late and most investors before were indeed greedy speculators driving up prices. That's free market, and the government connived in this.

I stand by my argument that there IS demand for housing and commercial property in Dubai, but the planning is dismal or absent, and the 'Dubai experiment' is a great chance missed.

Editor said...

Long ago I couldn't imagine my self living else where, but lately I am not so sure any more, as I can't handle so much stress and rush...

However, here are two videos of Jumeirah Gardens:

http://www.youtube.com/watch?v=HhgkdzRWxPY

http://www.youtube.com/watch?v=FiwKyaXEZ1E&feature=related

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