David Nicholson is a freelance journalist based in London.
Despite the political and social problems in the Middle East, Dubai appears to have carved itself an untroubled niche, where foreign investors and residents are able to live and do business with the rest of the world in peace and security. David Nicholson reports
Property developers and businesspeople in general have been amazed at the rapid growth of Shanghai over the past few years, as giant office and residential buildings have risen from the ground.
Yet there is one other part of the world where even this amazing speed of growth has been outpaced. Dubai, one of the United Arab Emirates, claims that it is expanding even more quickly than Shanghai, bringing with it enormous opportunities for investment.
The most recent major project to be launched is Sports City (pictured), a vast interconnected series of sports stadia, residential and commercial property developments. All sited inside what will be known as Dubailand, the project is the latest in a series of eye-catching development initiatives from the rulers of Dubai. Other initiatives include a massive island in the shape of a palm tree, with hundreds of luxury villas on each section, another set of artificial islands in the shape of the world, and the tallest building in the world, an apartment block with more than 100 storeys.
Residential property is the most accessible means of investing in this brave new world, with apartments already on sale in a range of developments, including a series of blocks called Champions Towers. Units are available in Champions Towers III for between £50,000 and £136,000, with 90% mortgages offered by local United Arab Emirates banks. A three-year rental guarantee of 10% of the purchase price is offered, with completion scheduled for the end of 2008.
Also due to complete in the summer of 2008 is Ocean Heights, next to a new marina, with its top-end condominiums selling for up to £624,000. And then there is Dubai Properties' Jumeirah Beach Residence, the largest single-phase residential development in the world. This sprawling waterfront community with apartment prices topping out at US$1.1 million is just one of the company's seven large-scale, world-class residential and business developments presently under construction in Dubai.
Rents in Dubai have risen sharply in the past couple of years, making the prospects for letting income brighter. The advent of local sources of mortgage finance has made purchasing simpler, while the huge influx of foreign workers, with the disposable income to pay for high-level accommodation, has added to the pressure on prices and rents. Fears of an oversupply leading to falling prices and rents have not yet been realised, although it is an issue to bear in mind.
Apartments in some unlikely places will be coming onto the market in the next few years. For example, Ilyas and Mustafa Galadari, members of a well-known Dubai family, have announced the creation of City of Arabia, a massive development based around a multi-million-dollar dinosaur-themed amusement park, with more than 1,000 shops, a 15-screen cinema, a five-star hotel and 35 high-rise towers providing both offices and apartments. The brothers believe that 45,000 people will eventually live and work in the complex, which should be complete by 2008.
There are several different "cities" in Dubai catering for all kinds of business sectors and public needs. There is a Media City for the internet generation, fostering high-tech companies and media businesses; then there are the Humanitarian Aid City, the Healthcare City and the International City. Creating a Sports City was a logical next step, since Dubai has built a reputation for itself as a sporting location over many years.
The Dubai Classic golf tournament has been attended by many of the world's elite golfers over the past few years, hosting Tiger Woods and Ernie Els, for example. The Emirates in Dubai was recently named among the world's top courses in a survey by US-based magazine Golf Digest. The ballot, which included 1,005 of the best courses around the planet, was decided by a panel numbering over 800 course-rating specialists and 22 editors of Golf Digest.
Other world-famous golfers have joined in the process of designing golf facilities for Dubai. Courses have been built or are under construction by designers and golf stars such as Jack Nicklaus with Ian Baker Finch, Gary Player, and Desmond Muirhead with Colin Montgomerie. Ernie Els is designing a new course for Sport City, in collaboration with Jack Nicklaus, to be surrounded by 700 luxury villas. A Golf School is to be run by Butch Harmon.
Besides golf, the city plans to have four major sports stadia: one for cricket, another for rugby, football, and track and field with a 60,000 capacity, an indoor multi-purpose stadium and another specially for hockey. Training facilities and sports schools will be plentiful, including a Manchester United football academy and a David Lloyd tennis school. The International Cricket Council, the authority governing the sport, is now based in Dubai, adding to the region's importance as a sporting hub.
The Jebel Ali airport city, a complex covering 140 sq kilometres, will be the new home of Exhibition City, measuring three million sq metres, with 19 halls, several hotels, restaurants and residential apartments. "This project will enhance the UAE's commercial position on the world map," says Sheikh Hamdan. It is expected to be complete by 2020.
Nearby, the Dubai International Financial Centre (DIFC) is to be flanked by a new 8,700m² twin-tower development, combining commercial, residential and retail space. Dubai is already considered the Middle East's main financial centre and expanded its role in 2005 when the Dubai International Financial Exchange (DIFX) opened its doors to business, aiming to be the number-one stock exchange in the region.
"There was a need for an exchange for local companies who would normally go overseas," says Steffen Schubert, former DIFX chief executive officer. "Many go to London, Ireland or New York, up to nine time zones out of their way. But ideally, if your stock is traded, you want to be awake when it happens."
The exchange is playing a key role in the new financial "free zone", one of several such zones in Dubai, which since their establishment in the 1970s have made the emirate the most important business hub in the Middle East.
As with the other free zones, the financial zone will allow 100% foreign ownership of companies, full repatriation of profits and zero tax rates for the first 50 years of operation. All laws except criminal issues have been framed to correspond with international standards and are written in English. "This has created a transparent environment that can easily be understood, where international standards are adhered to," says Schubert. As with many high-profile developments, there is a parallel ambition of creating valuable property assets around it. Dubai Sports City is being sold to residential and commercial property developers and investors as an opportunity to buy apartments, shops and offices that will become much more valuable as the years go by.
Fellow emirate Abu Dhabi has experienced its own more localised boom, as property investors have jumped on chances to buy, in expectation of sharply increasing prices. In one example, 600 people queued for two days to buy a release of 363 new villas at Al Raha Gardens, snapping them up in less than an hour. "The first phase of the development was sold out within 45 minutes," said Ahmad Ali Al Sayegh, chairman of Aldar Properties. "This has been a tremendous success for Aldar and it marks our first step in meeting the pent-up demand for nationals to purchase their own accommodation."
Rapid growth continues unabated, and considerable inward investment means Dubai has been transformed into an attractive regional hub for international business.