Talk on Dubai – A bubble of facts or just babble of disillusion ?

It started with little murmurs, leading towards a topic of discussion , finding its way to medium of bloggers whose expressions were based more out of frustration and exasperation than any meaningful substance of figures. The media largely controlled by Govt. published brave signs when it was neither necessary nor called for. I watched, listened and participated in all this with great curiosity. I started taking active interest when stories started occupying the columns of New York Times and International Herald Tribune.

It was about Dubai Economy with predictions, analysis, theories and speculations. Articles galored . How Dubai's fantasy skyline tumbled to earth , Dubai Bubble burst and Video on You Tube

I knew all along it was coming. However, I did not know when?. Everything seemed unreal yet it shaped in front of the eyes. The rational part of the brain doubted the variables that existed on the economic equation of the Dubai. Yet, it stayed on. In fact it not just stayed on it grew exponentially and it continued to grow until scales of Y-axis has to be squeezed to fit it on the size of the paper.

An Architect friend of mine has his business flourished amidst this construction boom. I asked him ‘How come you didn’t invest in Dubai when your own customers were getting richer by phenomenal appreciation of their property’. His answer was simple: No matter what he wouldn’t invest. ‘If you have spare money you can invest’. I could sense his underlined uncertainty and lack of confidence in Dubai’s real estate investment. I watched the development around with me with mix of trepidation and awe. I had no spare money nor had I courage to go to the bank and raise loan by mortgaging the property. Instead, I stayed at rental comfort confines of apartment seeing my precious savings eaten by increasing rentals.

In FYO2, One bed-room apartment with central air-conditioning, 24 hour security and Gym at 10 minute drive from my office costed me Dh18K p.a..When I left Dubai in FY07, similar apartment would be Dh46K ( albeit with addition of swimming pool ). Y’day article in Gulf News says that property price is heading towards 50% reduction. Dubai / Sharjah at this level of price is the place to enjoy quality of life.

Christopher Hawthorne in Los Angles times wrote an article 'Deconstructing Dubai' while reviewing book The Vulnerability of Success by Christopher Davidson. He analyses aptly that most people worldwide believe that Dubai has a lot of cash from oil and this they use it to stash it abroad by investing abroad. I also would get similar reaction when I mentioned about Dubai. “On no, you have lot of oil !” The fact was Dubai had such a meager oil . Even at its peak in 91, it produced only 420K barrels a day and account for less 5% of Dubai’s GDP . But Dubai had and still has a visionary, a bold Business leader who exploited the weakness of other countries around the region and encouraged investment . He created finest economic engine that drew profits from international trade, luxury tourism, and high technology and high profile real estate investments from India Subcontinent, Middle East, and Africa who arrived with their moneybags to invest in Dubai. Smart, Suave Dubai ruler H.E. Mohammed Bin Rashid Al Maktoum with poetic mind and business acumen kept frenetic pace with city infrastructure – expanding free ways, airport terminals, ports , hotels, malls , sky scrappers. The crucible was set in. As Dubai 's success story was advertised all over the globe, investments soured. Dubai went ballistic. World's biggest mall, Tallest Building , Indoor ski resorts, Dubai metro, Man-made islands with multimillion-dollar villas booked by wealthy celebrities . Dubai now was well connected with the world.

Dubai growth was parallel only to Shanghai and China. Emirates direct connection with Shanghai, opening of Dragon Mall enables China to open the market of Middle East through gateways of Dubai. Soon China became biggest trading partner with Dubai. Japan till then enjoyed numero one position with automobiles, consumer goods. Indians despite being dominant consumers kept India at number 4 next to Japan and US.

I was neither ecstatic when Dubai was galloping at frenetic pace nor I am disillusioned with the observations of the above articles and views of Davidson . I find Dubai will now settle down for steady growth. A wiser sense will prevail to chart manageable growth.

Dubai has gone at great lengths to affect the image and the transformation. In mid 80’s it was known as for a busy hub for money laundering, fugitive criminals. Now Dubai has the presence of all the leading companies , their airline is among the best and biggest in the world, law and order system is impeccable. Amidst all Islamic fundamentalism surrounding the region, it displays liberal, tolerant secular face. However, I also tend to agree with Davidson’s concerns ‘Dubai’s greatest risk comes from its own population and its patronage towards her own country’. Dubai is projected to outnumber Abu Dhabi for the first time in 2009. With 80% expatriate population, bulk of locals are teens whose major time is invested drinking coffee, playing video and soccer games. Dubai has to shape its population.

However, I foresee the exit of speculative investors that had swarmed Dubai like El Dorado would bring orderly correction. Manageable rents, great infrastructure, modern lifestyle will make Dubai once again a happy place to live and enjoy a quality of life.

I hope I am correct in my assessment.