Dubai has all the signs of an economic powerhouse: breakneck growth, a sky-is-the-limit attitude and a tower under construction that might pierce the o-zone. But can the real estate market really support the city’s displays of pride?
In 1990, the coastal strip of land where the city of Dubai now sits was nothing but miles of sand dunes. But over the past 15-or-so years, the place has exploded with growth, becoming one of the most popular tourist destinations in the Middle East by displaying a penchant for the biggest and best.
As a country, the United Arab Emirates is only a little more than 30 years old, and Dubai is not even the country’s political or economic center. Abu Dhabi, the capital, takes both of those titles. There, the oil flows like wine, sustaining much of the country’s estimated $129 billion GDP in 2006. Although Dubai's economy was originally built on oil, production has declined, and the liquid gold only makes up about three percent of the city's GDP.
An emphasis on tourism and a service economy has increased in the past few years, the city government has liberalized its real estate policies to allow foreigners to own land on a “freehold” basis. Basically, foreigners can now have sole ownership of property for an indefinite period of time, whereas before they could only lease it for 99-year stints. The new policy makes sense in a country where only 20 percent of the population is native to the area. Surprisingly, about half the population in the UAE is South Asian, and those from East Asia and the West—those two regions who usually have their hands on everything—only make up eight percent of the population, according to the CIA World Factbook.
Of course, Dubai was developing its gaudy real estate portfolio before they enacted these new rules. The city is home to the Burj Al-Arab, a landmark hotel in more ways than one. The building sits on its own manmade island, and you can’t look at its signature sailboat shape without thinking of the Dubai skyline. Fitting to the Dubai mindset, the Burj Al-Arab sets the bar for luxury. Its posh suites, which range in price from $1,000-$15,000 per night, have earned it reputation as the only seven-star hotel in the world, and you have to shell out 80 bucks just to go in and take a look around.
Just across the harbor, back on the mainland, is the Kempinski Hotel. Next to the Burj Al-Arab, it looks quaint enough. But the inside is really cool. In fact, it’s cool enough to support a 400-meter indoor ski slope, complete with snow-blowers that keep you chillin’ at 30 degrees even when its 90 outside.
While both of the above seem hard to believe, Dubai is making some even more gargantuan developments that have me hearing echoes of Babel. Dubailand, a theme park that will boast six different “worlds,” including a sports complex that officials tout as Olympic-ready, will have twice the square footage of Disneyland and Disneyworld combined.
And if that’s not enough, the crown jewel is the Burj Dubai, a 2600-foot building that in its construction phase has already surpassed the Taipei 101 tower in Taiwan as the tallest building in the world. The tower will be its own little city, mixing retail space with skyline residences and the first Giorgio Armani hotel, along with untold other amenities.
All this opulence begs the question: Is Dubai going too far too fast? Can the city’s economy, which one of the realtors I met described as “fast and loose,” live up to the pledges its extravagant buildings are making?
Only time will tell, but I hope Dubai’s developments will fare better than the ancient tower built toward the heavens in that part of the world.
The research for this article came from interviews I did for my job at GlobalAtlanta, an Internet-based international business publication. Check out the original story here.