Friday, July 11, 2008
After a brief recent visit to Singapore, I realized that it's what Dubai should have been, especially considering how much Dubai copied from there. You can understand certain shortcomings, especially that innovators are always ahead of imitators. But the one thing that still does not add up about Dubai, is real estate.
There you had Asia's international hub of business, finance, and trade, wrapped up in a city-state governed by fully enforced republican law, enjoying excellent transportation facilities and civil infrastructure, great tropical weather, and a municipal management unmatched all over the continent. Literally billions of Asians are competing to get a spot or an office in this limited island, and yet they have a healthy real estate market where 60% of the units costs LESS than Dubai's cheapest offerings. The other 40% that cost more (granted some are significantly more) than Dubai's more expensive units, had a lot more to offer for that kind of money that it actually still made sense.
Yes I found many real estate units there that surpassed 4000 dirhams per square foot, but the quality on offer was superb, the facilities included were comprehensive and more than luxurious, and the location slash exclusivity were supreme. Exclusivity there meant a street corner of the top commercial and shopping district, in short, only ONE BUILDING would have that advantage, and therefore would advertise that it's exclusive in that way or location. Dubai's every other tower claims exclusivity, which is an oxymoron now honestly - 100 towers in the middle of nowhere looking at each other's swimming pools and all are branded as exclusive thanks to having central air conditioning or a silly voice activated lift.
Condos there were found thriving being offered for S$700 per sq ft, that is close to 1800 dirhams, and that is with full facilities of parking and entertainment, access to mass transit stations and convenience stores, security and all the usual bells and whistles, but more importantly were ALREADY BUILT!
Still, people here are either still oblivious to the market woos and claiming huge growth and "investment opportunities" still existing, or are now turning sour and unhappy and starting to find places to lay blame like those shopkeepers on the JBR strip http://www.7days.ae/showstory.php?id=75750. Apparently they don't seem to understand or comprehend as to why is it that JBR is a ghost town or why is it that people wouldn't be walking in an OUTDOOR shopping street in JULY, or why wouldn't there be high traffic in a compound they DON'T LIVE AT.
Unless the Dubai developers and current "investors" come to grips with reality, and realize that 3 bedroom apartment rents of over a quarter of a million dirhams per year and prices above 3500 dirhams per square foot that they are dreaming of are probably not going to materialize, JBR will continue to be a ghost town and this market will face a long period of silence, followed by panic sales forced by bank payment pressures and a complete bubble burst.
Kuala Lumpur was even a bigger reality attenuator for me, as beautiful condos were being offered at as little as 250 dirhams per sq ft, and that is including swimming pool, security, car parking and a good view!
With those countries offering foreign owned business licenses and residence visas under even a better system than the dodgy 51% sponsorship system found in the GCC, the whole Dubai offering now makes no sense at all, and this is extremely dangerous for the economy and the total population with both its expat and local sides. Dubai used to be like this great well made Mercedes being offered as a limo at a great price, but over time it started rusting and getting old and all they did was add chrome to it, and in the end began charging enormous money for the ride, claiming that it's a classic. People now are saying "It's not, it's just an old beat up badly maintained and badly renovated taxi", but they're the only people who can't see it yet.
Posted by Dubai Warrior at 11:25 PM