Friday, June 5, 2009

Tangible signs of UAE recovery by 'end of the year'

The first tangible signs of economic recovery in the UAE will be witnessed towards the end of the year and the current positive indicators of recovering markets, high oil prices and reports of a possible bottoming out should be met with caution, say economists and industry leaders.
With local markets on the upswing, oil floating in the high $60s and the real estate market witnessing few sales, public perception that the economy may have seen the worst of this global recession is premature, they said.

The full effects of several measures governments and central banks have taken to mitigate the crisis are yet to be seen and felt, meaning uncertain times remain.

"I see the UAE economy bottoming by the end of 2009 with weak recovery thereafter in L-shaped scenario not 'U' or 'V'-shaped," Dr Eckart Woertz, Programme Manager, Economics, at the Gulf Research Centre, told Sole Business.

"In my view, the gross domestic product (GDP) will be between zero and one per cent for 2009.
"The global situation is slightly improving but it's still too early to tell. We might see some hiccups going forward," said Woertz.

"The global economy, which plays a major role in how our economy performs, could face massive inflation due to the ongoing monetary expansion or prolonged recession without it. So either way we are facing tough times. One must understand that this is a serious structural crisis. The economists who feel this is just a cyclical crisis are not on the right track, and all this talk of green shoots is premature," said Woertz.

The bottoming out of the real estate market after widespread distressed selling would be the key catalyst to the economy's upswing, he added.

In a report released this week, HSBC said: "The distressed stock is gradually clearing due to renewed interest as well as some sellers re-pricing, pulling their properties off the market, or putting them up for lease."

HSBC indicated the real estate market in the UAE was beginning to bottom out as prices stabilised, but warned that values could still fall further as more property comes onto the market.

Andrew Chambers, Managing Director of Asteco, however, put aside the notion of the current market reaching its bottom. "We will see the bottom and then recover in the last quarter of this year because the summer is traditionally slow even in a booming market," he said.

"The last quarter is the real deal because by then we should see a lot more mortgages and loans happening. Very few have qualified for mortgages today. It will never get back to last year's level, but the market needs more loans given, and the loan to value ratio still needs to improve," said Chambers, pictured right.

Property firm Asteco has begun recording single digit sales over the past few weeks, which, though pale in comparison to the two dozen weekly sales the firm recorded last year, is a sign of slight movement.

"In the last six weeks we started to see people putting offers on property because they believe the market is at its bottom," said Chambers.

"We have seen more interest now. People are accepting current prices as fair value. But there have only been a few sales. This is obviously better than March this year, when nothing sold. So the handful of sales we are recording now is still a better situation.

Current Asteco data for Dubai shows increasing offers for villas on The Palm Jumeirah, studios and one-bedroom apartments in Discovery Gardens and completed units at Dubai Marina.
The H?SBC report states agreed prices in the UAE rose four per cent month-on-month in April and five per cent in May, but were still 23 per cent down from its peak in September 2008.
Advertised prices in Dubai rose three per cent month-on-month in April and fell one per cent in May, while prices in Abu Dhabi were up two per cent and seven per cent for both months respectively.

Residential real estate prices in Dubai fell an average 41 per cent in the first three months of the year, according to data from property consultants Colliers.

Average prices for apartments in Abu Dhabi have fallen by 10 per cent since the end of the first quarter, while villa prices remained stable, property consultancy Landmark Advisory said earlier this week.

"In the UAE, the real estate situation still has its problems, especially now as summer time is approaching. Since it plays a crucial role in the country's economy, no recovery is possible without real estate healing first," said Dr Woertz.

Oil prices, another crucial factor to economic growth in the region, played favourably this week, peaking above $69 (Dh253) this week, before returning to $66.92 yesterday.
Citing reasons for rising oil prices, Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc said: "This is all about recovery expectations. It looks like manufacturing is recovering in a number of countries, which is feeding into the belief that the worst is behind us. It doesn't hurt that the dollar is at the lowest level of the year."

"We're certainly on our way to $70, if not $75," said Stephen Schork, President of Schork Group. "That seems to be the number everyone is talking about. Given the technical momentum in this market, you cannot bet against it and step in front of this train."

Woertz said: "The current oil prices are helpful for the UAE economy. In my opinion, the prices are right and pretty well calculated because of tight supply scenarios going forward. So even in these recessionary times, it can perform well."

Meanwhile, annual inflation in the UAE slowed to 1.9 per cent in April and prices dropped between January and April led by the housing price slump. Inflation rates have decelerated quickly in the second-largest Arab economy since hitting a 20-year peak of 12.3 per cent in 2008, Ministry of Economy data showed.

"This gives us a good sense that for the year as a whole you could have deflation, and it is being driven by a sharp fall in rents," said Giyas Gokkent, chief economist at National Bank of Abu Dhabi.

"Rental increases have been the key driver of inflation in the UAE," said Monica Malik, regional economist at EFG-Hermes, which expects rental prices to fall between 20 and 50 per cent this year compared with a rise of 21 per cent in 2008.

The Ministry's data stayed true to the International Monetary Fund's (IMF) April forecast that the UAE would record one of the lowest inflation rates in the GCC at around two per cent.
IMF figures in its World Economic Outlook showed the combined inflation rate of the Middle East oil exporters would recede to around 8.8 per cent in 2009 from 10.3 per cent in 2008. "For the region as a whole, inflation pressures are projected to subside quickly, owing to lower commodity prices, rents, and economic activity," the IMF said. (With input from agencies)

Global property prices: why sellers are still asking too much


The worldwide impact of the property crash is far from uniform, according to a global survey of house prices over the past year.
The latest Global House Price Index from agents Knight Frank (KF) dents the idea that all nations are suffering equally at the mercy of global recession.

Covering 46 countries, it found home prices rising or falling within a margin of five per cent in 25 of them.

The KF table reveals strong house-price rises over the past year in Israel (up 10.9 per cent), Czech Republic (9.9 per cent), the British Channel island of Jersey (6.9 per cent) and Switzerland (5.6 per cent).

Prices in India climbed by 5.1 per cent, with Austria (4.1 per cent), Russia (3.6 per cent) and Belgium (2.7 per cent) all performing creditably last year.

By contrast, the biggest drops were in Latvia (36 per cent), Singapore (23.8 per cent) and the USA (16.5 per cent). The UK was the fifth-heaviest house price faller, down 16.5 per cent over the year, and by 4.5 per cent in the first quarter of 2009.

Faring marginally better than Britain during the past year were Denmark (-11.6 per cent), Ireland (-10 per cent) and Norway (-9.4 per cent).

France, despite a 5.7 per cent annual drop, actually rallied to gain 0.1 per cent in the last quarter. Spain, down 6.8 per cent in a year, fell three per cent in the first quarter of 2009.
Although the speed of the price fall varies from country to country, KF fears the situation will get worse in most places before they get better.

It is particularly alarmed by the prospect of unemployment rates hitting double figures in many countries by late 2010, for the first time since the early 1990s.

Nick Barnes, head of KF's international research, said: "The worst and most widespread economic recession since the 1930s continues to batter housing markets across the globe.

"The world's housing markets remain under intense pressure with little evidence of any of the hoped-for 'green shoots', and even the improvement in performance shown in some countries in the last quarter may yet turn out to be a false dawn."

That belief was supported by Stuart Law of Assetz, a property investment and development company delivering carefully selected UK and overseas property projects as well as property funds.

"Dubai, in particular, is under pressure," Law said, "partly because it has many investors who tend to panic early, while the US is also unable to find a proper floor to property values.

"By contrast, the UK has seen falls of 15 to 20 per cent, and is now very close to the bottom. The problem in the UK is that investors are back in anger at the distressed end of the market, and not at price levels indicated by estate agents.

"Unless the distressed sector dries up, the real market is bound to remain weak – which means turnover cannot recover."

Many homeowners, unaware of the full impact of the property crash, are in danger of over-estimating the value of their bricks and mortar by £35,000 (Dh211,000) and more, said a new survey. It means they could come unstuck if they try to remortgage – unless they have paid more off their loan, they might need a higher LTV ratio on a new loan than lenders will allow.
Research from British lender Abbey Mortgages found that, on average, owners estimate the value of their homes to be worth £190,175. But official Land Registry figures put today's average house price at only £152,895 – representing a gap of more than £37,200.

Nici Audhlam-Gardiner, Abbey's Director of Mortgages, said the big danger is for homeowners who need a new mortgage deal at some stage in the future. As prices keep falling, owners who linger for too long on a Standard Variable Rate (SVR) loan, may be hit by tight loan-to-value (LTV) limits on their next loan.

Housing expert Henry Pryor said: "There has been a wide discrepancy for some time between the average Halifax house price achieved of £157,326 against latest figures from Rightmove showing the average asking price to be standing at £227,441, down only 6.2 per cent on May 2008.

"It is clear that vendors decided to bump prices up, as the daffodils came out, and the green shoots of recovery came back into people's consideration, possibly a little prematurely."
Pryor points out that the 6.2 per cent fall in asking prices measured by Rightmove must be set against the actual fall in sale prices achieved in the past year of about 17 per cent. "It shows a big divergence between sellers's aspirations and reality," he said.

"Sellers are damned if they do and damned if they don't. Do they pitch a price realistically in the first place, or wait for one of those rare buyers to come along in a position to proceed, who is almost certain to pitch an offer well below the asking price.

"Most vendors obviously prefer to start with a high price, and come down to convince the buyer that they have landed a bargain. Agents may be so desperate for business that they deliberately over-value to get homes onto their books."

Pryor said 67,800 homes went on sale for the first time during April, against 150,500 in April last year.

The volume of house sales, which averaged 3,839 per day over the past eight years, fell to 2,967 in April 2008 and to 1,933 in April 2009.

Wednesday, June 3, 2009

Increasing activity suggests Dubai realty market recovery by late 2010



Dubai's real estate sector is expected to recover by late 2010 with emerging signs of increased activity, industry sources said yesterday.
"In Dubai, we expect a recovery to happen in 2010, although it will not be a sharp one. The real estate market will be a far more matured with competitive mortgage rates and good amount of affordable housing in place by 2010," said David Macadam, Director Sales and Leasing, Better Homes.

According to Elaine Jones, CEO of Asteco, a real estate and property management company, cash and confidence are the two elements needed to bring confidence back into the real estate market in the emirate.

"The recent announcement of the issuance of a six-month visa to property purchasers is a very short notice for buyers to stay in the market. It should be for a longer time. One cannot do much without a visa in this city. One cannot apply for Dubai Electricity and Water Authority facilities and there is no point in selling a property if you cannot have people live in it," she said.

Steven Henderson, Partner at law firm Clifford Chance, said: "The next few months will be very quiet with little real estate activity in Dubai. However, by the end of this year we could see a number of consolidations of developer companies through mergers and acquisitions. Recovery can be expected towards the third quarter of 2010."

Speaking on the sidelines of the Cityscape Connect Business Breakfast Dubai, Henderson said the law in Dubai would need to catch up with the progress of the real estate market. "In the past six to seven months, the Real Estate Regulatory Agency has been proactive and introduced a number of regulations into the market. The Strata Law will help to bring back confidence into the market," he added.

Sunil P Gomes, Chief Guru, Guru Real Estate, said the real estate sector has witnessed a dramatic growth in the past two years.

"Today master developers and developers are looking seriously at their feasibility studies. Dubai has been and still is an emerging market with developers making a return of about 16 to 17 per cent on their investments. While earlier they were making about 40 per cent return, now they have to be more realistic," he said.

According to Better Homes, Dubai is set to witness 29,000 new residential units to be added onto the property market.

Macadam said the company has recorded an increased number of new lease transactions for Dubai.

"In May we recorded about 400 lease transactions, in February the number was about 208, in March we recorded 308 transactions and in April these totalled 323 transactions.

"A third of those people are coming as new entrants from the United Kingdom, Western Europe and North America. They are mostly in the mid-managerial level and they are coming now because the salaries in the market today are at a certain level that is not too high or too low," said Macadam.

Monday, June 1, 2009

Dubai property market starts its comeback


Property prices in Dubai are bottoming out with initial signs of confidence returning to the market, new research said yesterday.

"Distressed stock is gradually clearing, with further signs of consolidation as volumes continue to pick up. Also, more recently, mortgage providers have moved to ease their requirements, raising loan-to-value (LTV) and relaxing credit norms, which we view as a further sign of some normalcy returning to the market," HSBC said in its "Property Ladder" report.

According to the bank, the May transaction survey suggests that the market is starting to bottom out, with agreed prices up four per cent and five per cent month-on-month (m-o-m) in April and May, respectively.

"On the ground market testing confirms that the distressed stock is gradually clearing due to renewed interest as well as some sellers repricing, pulling their properties off the market, or putting them up for lease. Sentiment seems to be improving and sellers are now less willing to negotiate. Anecdotal evidence also suggests that foreign investors seem to be back in the market and there are bulk buyers of property for investment purposes."

Besides, most of this year's transactions have been conducted in cash, but mortgage purchases are starting to pick up following the recent change in policy by lenders. Apparently, Standard Chartered and RAKBank are leading the way, the report said.

While agreed prices are now down 23 per cent from the September 2008 peak, "we believe that it is important to compare agreed prices to advertised prices in order to fully understand the extent of the downturn". According to the report, prices are down 65 per cent from the peak asking prices to the agreed prices.

David Lepper, Head of UAE Equity Research, HSBC Global Research, said: "Market data from April and May show a range of positive indicators: agreed property sale prices are rising, volumes are holding up well, and banks have loosened their lending criteria. However, we will not be able to discern a sustainable trend until later in 2009, and while we note these positive developments, the market as a whole is coming off a very low base, given the sharp declines since the market peak. Credit growth remains subdued, and the UAE economy still has challenges to deal with."

While apartment prices (which account for 85 per cent of transactions) have started to turn around, up nine per cent in May 2009, villa prices continue to come under pressure, down 11 per cent m-o-m. Villa agreed prices have now fallen 49 per cent since the September 2008 peak, compared to only 16 per cent for apartments.

The steeper decline in villa pricing is partly due to a sharper upturn last year, but is also a result of affordability, in light of lower mortgage LTV. "Transaction prices could be understated as buyers could potentially understate the value of their property in order to reduce registration fees. That said, however, the discrepancy is unlikely to be large, since properties with suspiciously low values are typically investigated by the regulator. This means that actual prices should be somewhere in between asking and agreed, which are now starting to converge," HSBC said.

However, there are still potential risks. With the summer approaching, volumes are likely to soften leading to short-term price volatility. The school year coming to an end in June, and more supply coming on the market could lead to renewed weakness.

According to the report, construction costs are likely to come down further although the building materials price index points to a 20 to 30 per cent price drop from the July 2008. "We believe that construction costs are likely to continue to trend downwards," HSBC said.

YIELD COMPRESSION

Yield compression is now apparent as rentals continue to slide (down 41 per cent year-to-date), while prices start to stabilise. Rental yields are down from seven per cent in March to 5.9 per cent in May. However, yields on asking prices are higher, upwards of 10 per cent in May.
Rental yields initially expanded, as prices were first to get hit by tightening credit conditions. Rentals, on the other hand, were only impacted after the first lay-offs. "Considering that rentals are a pure reflection of demand/supply dynamics, we believe they are likely to see further weakness as more stock comes on to the market."

According to HSBC, the May survey of advertised listings shows initial signs of stabilisation as transaction prices lead advertised aspirations. While down 18 per cent m-o-m in March, advertised prices in Dubai were up three per cent in April and down one per cent in May. The advertised data highlights no m-o-m change in apartment prices in May, but a three per cent m-o-m decline in villa prices.

Dubai advertised listings saw a gradual decline over the past two months despite more stock being delivered, falling 11 per cent from 5,782 in March to 5,173 in May.

"We believe this adds further credence to our analysis and shows that stock is clearing and/or listings are being pulled off the market. In any case, this is supportive of pricing. Also the shift in mix towards lease listings persisted in May 2009, increasing to 15 per cent, the highest level since we started our survey in September 2008."

ABU DHABI

Advertised prices in the capital are also showing signs of stabilisation, up two per cent and seven per cent, in April and May, respectively. Villa prices underperformed apartments, declining by four per cent m-o-m in May, while apartment prices rose eight per cent m-o-m. The bank believes this has to do more with lower affordability due to tightening liquidity than preference, said HSBC.

QUALITY UNITS IN FOCUS

In Abu Dhabi and Dubai, buyers and tenants are showing renewed willingness to pay for better units and better locations, a report by Sole Dubai said yesterday. "Even if decline patterns differ between Dubai and Abu Dhabi, falling prices are creating opportunities that boost demand in both markets. In April, we observed strong leasing and higher sales volumes," said Trevor Bondoro, Director of Sole Real Estate in the Q2-2009 real estate report on Abu Dhabi and Dubai.
"Since mortgage activity is low, cash buys constitute a significant portion of transactions. Therefore, to accurately assess price trends, it's critical to have access to data sets containing both transaction types. In Dubai, Emaar is faring best in terms of demand and pricing," he added. Bondoro said with a flight to quality clearly under way, end-user preferences are differentiating prices in favour of developers such as Emaar and preferred locations such as Dubai Marina. In the Q1 of 2009, Emaar master developments accounted for approximately two-thirds of sales and 57 per cent of new leases. "More specifically, units developed directly by Emaar represented over half of sales and 39 per cent of new rentals." Dubai Marina was the most popular area among renters, capturing 30 per cent of all new annual leasing contracts. Emirates Living came in second, at 16 per cent.

As for Abu Dhabi, "the issue of first-phase master development integration will leave certain Abu Dhabi developers more vulnerable in the short to medium term," said Bondoro. Sole Dubai's analysis shows a positive correlation between price performance and proximity to central Abu Dhabi

Saturday, May 9, 2009

Dubai Labourers get backing from Municipality

"We have also dismantled all our camps, which were built due to the earlier needs. We have now made it compulsory that all workers must live in buildings to implement better living standards," said Hussain Nasser Lootah. "This will apply to both freehold and leasehold project sites in the city."
He told Emirates Business that the green building legislation study will be completed this month and the consultants will give DM its findings. "We have already starting implementing measures in phases in terms of insulation and green roof. A big part of that project will be dedicated to education and how to implement the requirements of green building design," said Lootah. "We have already enforced the essentials but it will take time. Green design does not mean just the building but also the surroundings."
Lootah was speaking on the sidelines of the media conference held by DM and ThyssenKrupp Elevator yesterday, which announced the winners of the ThyssenKrupp Elevator International Architecture Award 2009. The competition was held under the auspices of International Union of Architects.
The competition received tremendous response from more than 70 countries. Lootah thanked ThyssenKrupp for selecting Dubai from among the cities all over the world for the 11th ThyssenKrupp Award and said it reflects the development of Dubai as a major city in the world.
The first prize of $100,000 (Dh367,300) was won by Fernando Donis of the Netherlands for his proposal, Dubai Frame. Rather than compete with the city, Dubai Frame intends to do the opposite: simply to frame it, explains the winning team. "The developmental process of the city – current and future – is captured within the ever-changing portrait framed by the building. Rather than building a massive structure, the purpose of this project is to build a 'void'. Measuring 150 metres by 105 metres, the void is a window to the development of the current and future skyline of Dubai," said Donis.
At the base of the project, the podium, cultural and conference facilities accumulate. Open to the public, the podium can also be used for events and functions, such as exhibitions, concerts, outdoor theatre and forums. At the top of the structure, at a height of 150 metres, a café is positioned offering breathtaking 360-degree views of the entire city: the roof top offers an open-air site with viewing terraces.
Javier del Pozo, CEO of ThyssenKrupp Elevator Southern Europe, Africa and Middle East and President of the Jury of the Award, said that the participants were required to propose a new Tall Emblem Structure at Za'abeel Park – an emblem designed to add to the new face of Dubai, while promoting tourism and other recreational, scientific and cultural activities.
He said a total of 926 conceptual design proposals were presented and evaluated for the award by an international jury, which short-listed 10 proposals with merit, and awarded the best five proposals.
Established in 1988, the Architecture Award was envisaged by ThyssenKrupp Elevator as a way to engage professionals to create outstanding proposals for major cities internationally.
"There are many good ideas among the winning entries. So we will form a committee that will evaluate the designs and come up with a decision by end-2009," said Lootah. "There has been no budget allocated to build the design. It is an honour that they have chosen Dubai as the location for the project, funded the prizes and have given it as gift to the city."

Sunday, May 3, 2009

Six-month visa for property owners


The notification on multiple entry visa for property buyers in the UAE will instill confidence among real estate investors. This will also eliminate uncertainty over the residency visa issue for quite some time. Emirates Business spoke to a cross section of real estate functionaries to elicit their views:

Farhan Faraidooni, Executive Chairman, Sama Dubai: It is a smart move from the government. The residency visa resolution will boost confidence of investors in the real estate market, which will also boost the UAE's economy. We believe this announcement will calm the nerves of the investors as it brings in more clarity on the issue for those who have invested and those who are looking to invest. In fact, it will help everybody.

Chris O'Donnell, CEO of Nakheel: We welcome the notification as it clarifies all the uncertainties that prevailed in the market in terms of residency visas.
It is a stimulus to the property sector and one of the many measures that the government is planning to take for the revival of the property market.

Arif Alharmi, CEO, Amlak Finance: We view the new resolution that was taken by the Minister of Interior as another step in the right direction, in an effort to ensure the growth and prosperity of the national economy. By introducing the amended clauses pertaining to property owners and their families' eligibility for a six-month visa, the federal government has addressed a major concern that was raised in recent months.

I am confident that this and other measures taken and those that will be taken in the future will all lead to boosting the local economic environment and encourage investors in the real estate sector to benefit from the stability of the UAE market.

Wassim Saifi, CEO, Tamweel: The government is working on multiple issues to give boost to the realty sector, as the visa clarification was required to bring in more investor classes to the property market.

There are a lot of buyers from the Indian subcontinent, CIS countries and Iran who were waiting for specifics on the residency visa issue as it was one of the factors driving their investment decision. Overall, the visa resolution will help enhance market sentiments.

Omar Al Barguthi, DirectorGeneral of Ajman Real Estate Regulatory Agency: The decision is very healthy and it will definitely help, serve, and improve the market the situation for investors and developers. Considering the market conditions, I believe the span of up to six months residency is good.

Overall, it is good news for the industry.

Abid Junaid, Executive Director at ETA Star Properties: Any kind of residency visa resolution will boost the confidence of the real estate market. There was an air of uncertainty over the residency visa issue, which is now eliminated. The announcement has come as a big relief as it will reinforce stability of the property market.

The fees should not be more than what a company pays to hire an employee. It should be no more than what one is currently paying.

The visa issue will help a bit, but overall more measures such as availability of home mortgages will play an important part in revival of the industry.

Christina Cabading, President, BSEL Infrastructure Realty: Although it is a good step, the government has to take into consideration the fact that properties in the Northern Emirates are generally less than Dh1 million in value.

People buying in Ajman are end users and ones who were not able to afford properties in other emirates in the past two years. Moreover, it was the availability of residency visa in Ajman that drove investors here. I believe the government should take into consideration all these issues as it makes Northern Emirate less attractive for investment. On behalf of all the investors and stakeholders in Ajman, we urge the government to include all property owners. Creating a value-based visa permit will complicate the matters further.

K K Sharathchandra Bose, Commercial lawyer and Partner Dar Al Adalah Legal Consultants: Definitely the new visa rule will give confidence for the property buyers. This rule goes very well with the current visa rules.

Even if the visa duration is six months, it will help the property owners. The only issue is that the minimum investment value of Dh1 million as eligibility criteria will restrict the facility to the rich and affluent property owners in the UAE.

K P Viswanath, Partner, Horwath Mac, auditing firm: The move is a welcome step to improve sentinemnt of property owners in the UAE. However, the six-month period is too short to settle down for a new property owner.

Ajay Gupte, property investor: It is a welcome step, but six months would go just like that. The normal visa period is three years here and for property owners too the same rule should apply. The price limit on the property too will keep many property owners outside the purview of the new visa rule. With the steep fall in property price, studio and one-bedroom apartments are sold at Dh250,000. Thousands of property owners would not qualify for the scheme.

Akhilesh Bahl, Indian property investor: "If the UAE Government is consciously trying to introduce visa rules for property owners it will restore confidence. However, if a new property buyer coming to the UAE will ensure Dh10,000 fixed local income. In the case of people earning Dh10,000 they are already on an employment visa or business visa.
If the system is managed properly the property market will revive.

Hesham Bakry, institutional sales manager at Al Futtaim HC: The condition of minimum property value Dh1m and minimum fixed income of Dh10,000 will benefit only high networth individuals. What's the UAE Government is doing is to keep everything in place.
It's not meant to push up and pull down property stocks. I think global situation will impact more on property sector than the local factors. Unless we get back the global demand of 2005levels, there wouldn't be any boom in the market. So, I don't expect a strong session today for property stocks. 1,550 is the next support level for DFM general index, while 1,650-1,680 are the resistance levels."

Richard Coram, Managing Partner of Talent Brokers: I believe it is an interesting law and it does not affect me in the direct short term since I already have residency because of the business I have been running for years here in Dubai.

But should I retire and sell the business, do I have to leave every six months and find a place in a nearby GCC country once my re-entry visa is issued? So, it is about the comfort factor.
However, this is not a law of big difference compared to most countries in the world. If a UAE citizen owns a property in the United Kingdom, this does not mean he or she will automatically get a residency, so it is the same. I believe, people who live in foreign countries have to obey and respect the immigration and residency rules of that country and this is what we are doing.
Yahya Daiffallah, Managing Director of Sharjah-based Orient Oil: I believe it is a good law to manage the real estate sector in the UAE. It will not affect me since I have my residency for many years for my business.

But what about those people who want to own a property, will they be able to give the residency to their children as well and is there an age minimum to do that for the children?
People who find themselves getting into this business or style of life, will understand they have to make an exit every six months that may be inconvenient for some, but ok for others. But to my best knowledge, one of the very good things about this meausure is that it will limit the mess the speculators had been causing in the market and will force them to leave the market to its natural rhythm.

Sunny Varkey, Chairman, Gems Group: The move to introduce re-entry visa rule for property owners is a welcome step that will cheer the property investors here.
As a business group in a different business field, we welcome the decision.
It will definitely help revival of the UAE property market and help all the service sectors including education and healthcare."

Deepak Sharma, CEO, Dynasty Real Estate: This decision will reverse the downfall of property prices after the visa issue for property owners was discontinued. It was a big blow to the property market and escalated the downfall. While six months may not be enough, the rule will restore confidence in the market. Investors from the Indian Subcontinent will resume investing in UAE property market.

Manoj Thomas, Director Marketing, Delta Printing Press: Many investors booked houses here expecting residency visa. The new visa rule is a welcome step, but the frequent travel in and out will add to the expenses and the inconveniences may detract serious investors from the market.
Unhindered residence permit will encourage high-networth non-resident Indians and professionals to invest in the UAE property market.
These investors are not speculators. http://www.soledubai.com/news.aspx?id=365

Thursday, April 16, 2009

The Darker Side of Dubai

The wide, smiling face of Sheikh Mohammed – the absolute ruler of Dubai – beams down on his creation. His image is displayed on every other building, sandwiched between the more familiar corporate rictuses of Ronald McDonald and Colonel Sanders. This man has sold Dubai to the world as the city of One Thousand and One Arabian Lights, a Shangri-La in the Middle East insulated from the dust-storms blasting across the region. He dominates the Manhattan-manquĂ© skyline, beaming out from row after row of glass pyramids and hotels smelted into the shape of piles of golden coins. And there he stands on the tallest building in the world – a skinny spike, jabbing farther into the sky than any other human construction in history.But something has flickered in Sheikh Mohammed's smile. The ubiquitous cranes have paused on the skyline, as if stuck in time. There are countless buildings half-finished, seemingly abandoned. In the swankiest new constructions – like the vast Atlantis hotel, a giant pink castle built in 1,000 days for $1.5bn on its own artificial island – where rainwater is leaking from the ceilings and the tiles are falling off the roof. This Neverland was built on the Never-Never – and now the cracks are beginning to show. Suddenly it looks less like Manhattan in the sun than Iceland in the desert.Once the manic burst of building has stopped and the whirlwind has slowed, the secrets of Dubai are slowly seeping out. This is a city built from nothing in just a few wild decades on credit and ecocide, suppression and slavery. Dubai is a living metal metaphor for the neo-liberal globalised world that may be crashing – at last – into history.

Lady & The Tramp

I. An Adult Disneyland

Karen Andrews can't speak. Every time she starts to tell her story, she puts her head down and crumples. She is slim and angular and has the faded radiance of the once-rich, even though her clothes are as creased as her forehead. I find her in the car park of one of Dubai's finest international hotels, where she is living, in her Range Rover. She has been sleeping here for months, thanks to the kindness of the Bangladeshi car park attendants who don't have the heart to move her on. This is not where she thought her Dubai dream would end.Her story comes out in stutters, over four hours. At times, her old voice – witty and warm – breaks through. Karen came here from Canada when her husband was offered a job in the senior division of a famous multinational. "When he said Dubai, I said – if you want me to wear black and quit booze, baby, you've got the wrong girl. But he asked me to give it a chance. And I loved him."All her worries melted when she touched down in Dubai in 2005. "It was an adult Disneyland, where Sheikh Mohammed is the mouse," she says. "Life was fantastic. You had these amazing big apartments, you had a whole army of your own staff, you pay no taxes at all. It seemed like everyone was a CEO. We were partying the whole time."Her husband, Daniel, bought two properties. "We were drunk on Dubai," she says. But for the first time in his life, he was beginning to mismanage their finances. "We're not talking huge sums, but he was getting confused. It was so unlike Daniel, I was surprised. We got into a little bit of debt." After a year, she found out why: Daniel was diagnosed with a brain tumour.One doctor told him he had a year to live; another said it was benign and he'd be okay. But the debts were growing. "Before I came here, I didn't know anything about Dubai law. I assumed if all these big companies come here, it must be pretty like Canada's or any other liberal democracy's," she says. Nobody told her there is no concept of bankruptcy. If you get into debt and you can't pay, you go to prison."When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let's take the pay-off, clear the debt, and go." So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country."Suddenly our cards stopped working. We had nothing. We were thrown out of our apartment." Karen can't speak about what happened next for a long time; she is shaking.Daniel was arrested and taken away on the day of their eviction. It was six days before she could talk to him. "He told me he was put in a cell with another debtor, a Sri Lankan guy who was only 27, who said he couldn't face the shame to his family. Daniel woke up and the boy had swallowed razor-blades. He banged for help, but nobody came, and the boy died in front of him."Karen managed to beg from her friends for a few weeks, "but it was so humiliating. I've never lived like this. I worked in the fashion industry. I had my own shops. I've never..." She peters out.Daniel was sentenced to six months' imprisonment at a trial he couldn't understand. It was in Arabic, and there was no translation. "Now I'm here illegally, too," Karen says I've got no money, nothing. I have to last nine months until he's out, somehow." Looking away, almost paralysed with embarrassment, she asks if I could buy her a meal.She is not alone. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars."The thing you have to understand about Dubai is – nothing is what it seems," Karen says at last. "Nothing. This isn't a city, it's a con-job. They lure you in telling you it's one thing – a modern kind of place – but beneath the surface it's a medieval dictatorship."


II. Tumbleweed

Thirty years ago, almost all of contemporary Dubai was desert, inhabited only by cactuses and tumbleweed and scorpions. But downtown there are traces of the town that once was, buried amidst the metal and glass. In the dusty fort of the Dubai Museum, a sanitised version of this story is told.In the mid-18th century, a small village was built here, in the lower Persian Gulf, where people would dive for pearls off the coast. It soon began to accumulate a cosmopolitan population washing up from Persia, the Indian subcontinent, and other Arab countries, all hoping to make their fortune. They named it after a local locust, the daba, who consumed everything before it. The town was soon seized by the gunships of the British Empire, who held it by the throat as late as 1971. As they scuttled away, Dubai decided to ally with the six surrounding states and make up the United Arab Emirates (UAE).The British quit, exhausted, just as oil was being discovered, and the sheikhs who suddenly found themselves in charge faced a remarkable dilemma. They were largely illiterate nomads who spent their lives driving camels through the desert – yet now they had a vast pot of gold. What should they do with it?Dubai only had a dribble of oil compared to neighbouring Abu Dhabi – so Sheikh Maktoum decided to use the revenues to build something that would last. Israel used to boast it made the desert bloom; Sheikh Maktoum resolved to make the desert boom. He would build a city to be a centre of tourism and financial services, sucking up cash and talent from across the globe. He invited the world to come tax-free – and they came in their millions, swamping the local population, who now make up just 5 per cent of Dubai. A city seemed to fall from the sky in just three decades, whole and complete and swelling. They fast-forwarded from the 18th century to the 21st in a single generation.If you take the Big Bus Tour of Dubai – the passport to a pre-processed experience of every major city on earth – you are fed the propaganda-vision of how this happened. "Dubai's motto is 'Open doors, open minds'," the tour guide tells you in clipped tones, before depositing you at the souks to buy camel tea-cosies. "Here you are free. To purchase fabrics," he adds. As you pass each new monumental building, he tells you: "The World Trade Centre was built by His Highness..."But this is a lie. The sheikh did not build this city. It was built by slaves. They are building it now.


III. Hidden in plain view

There are three different Dubais, all swirling around each other. There are the expats, like Karen; there are the Emiratis, headed by Sheikh Mohammed; and then there is the foreign underclass who built the city, and are trapped here. They are hidden in plain view. You see them everywhere, in dirt-caked blue uniforms, being shouted at by their superiors, like a chain gang – but you are trained not to look. It is like a mantra: the Sheikh built the city. The Sheikh built the city. Workers? What workers?Every evening, the hundreds of thousands of young men who build Dubai are bussed from their sites to a vast concrete wasteland an hour out of town, where they are quarantined away. Until a few years ago they were shuttled back and forth on cattle trucks, but the expats complained this was unsightly, so now they are shunted on small metal buses that function like greenhouses in the desert heat. They sweat like sponges being slowly wrung out.Sonapur is a rubble-strewn patchwork of miles and miles of identical concrete buildings. Some 300,000 men live piled up here, in a place whose name in Hindi means "City of Gold". In the first camp I stop at – riven with the smell of sewage and sweat – the men huddle around, eager to tell someone, anyone, what is happening to them.Sahinal Monir, a slim 24-year-old from the deltas of Bangladesh. "To get you here, they tell you Dubai is heaven. Then you get here and realise it is hell," he says. Four years ago, an employment agent arrived in Sahinal's village in Southern Bangladesh. He told the men of the village that there was a place where they could earn 40,000 takka a month (£400) just for working nine-to-five on construction projects. It was a place where they would be given great accommodation, great food, and treated well. All they had to do was pay an up-front fee of 220,000 takka (£2,300) for the work visa – a fee they'd pay off in the first six months, easy. So Sahinal sold his family land, and took out a loan from the local lender, to head to this paradise.As soon as he arrived at Dubai airport, his passport was taken from him by his construction company. He has not seen it since. He was told brusquely that from now on he would be working 14-hour days in the desert heat – where western tourists are advised not to stay outside for even five minutes in summer, when it hits 55 degrees – for 500 dirhams a month (£90), less than a quarter of the wage he was promised. If you don't like it, the company told him, go home. "But how can I go home? You have my passport, and I have no money for the ticket," he said. "Well, then you'd better get to work," they replied.Sahinal was in a panic. His family back home – his son, daughter, wife and parents – were waiting for money, excited that their boy had finally made it. But he was going to have to work for more than two years just to pay for the cost of getting here – and all to earn less than he did in Bangladesh.He shows me his room. It is a tiny, poky, concrete cell with triple-decker bunk-beds, where he lives with 11 other men. All his belongings are piled onto his bunk: three shirts, a spare pair of trousers, and a cellphone. The room stinks, because the lavatories in the corner of the camp – holes in the ground – are backed up with excrement and clouds of black flies. There is no air conditioning or fans, so the heat is "unbearable. You cannot sleep. All you do is sweat and scratch all night." At the height of summer, people sleep on the floor, on the roof, anywhere where they can pray for a moment of breeze.The water delivered to the camp in huge white containers isn't properly desalinated: it tastes of salt. "It makes us sick, but we have nothing else to drink," he says.The work is "the worst in the world," he says. "You have to carry 50kg bricks and blocks of cement in the worst heat imaginable ... This heat – it is like nothing else. You sweat so much you can't pee, not for days or weeks. It's like all the liquid comes out through your skin and you stink. You become dizzy and sick but you aren't allowed to stop, except for an hour in the afternoon. You know if you drop anything or slip, you could die. If you take time off sick, your wages are docked, and you are trapped here even longer."He is currently working on the 67th floor of a shiny new tower, where he builds upwards, into the sky, into the heat. He doesn't know its name. In his four years here, he has never seen the Dubai of tourist-fame, except as he constructs it floor-by-floor.Is he angry? He is quiet for a long time. "Here, nobody shows their anger. You can't. You get put in jail for a long time, then deported." Last year, some workers went on strike after they were not given their wages for four months. The Dubai police surrounded their camps with razor-wire and water-cannons and blasted them out and back to work.The "ringleaders" were imprisoned. I try a different question: does Sohinal regret coming? All the men look down, awkwardly. "How can we think about that? We are trapped. If we start to think about regrets..." He lets the sentence trail off. Eventually, another worker breaks the silence by adding: "I miss my country, my family and my land. We can grow food in Bangladesh. Here, nothing grows. Just oil and buildings."Since the recession hit, they say, the electricity has been cut off in dozens of the camps, and the men have not been paid for months. Their companies have disappeared with their passports and their pay. "We have been robbed of everything. Even if somehow we get back to Bangladesh, the loan sharks will demand we repay our loans immediately, and when we can't, we'll be sent to prison."This is all supposed to be illegal. Employers are meant to pay on time, never take your passport, give you breaks in the heat – but I met nobody who said it happens. Not one. These men are conned into coming and trapped into staying, with the complicity of the Dubai authorities.Sahinal could well die out here. A British man who used to work on construction projects told me: "There's a huge number of suicides in the camps and on the construction sites, but they're not reported. They're described as 'accidents'." Even then, their families aren't free: they simply inherit the debts. A Human Rights Watch study found there is a "cover-up of the true extent" of deaths from heat exhaustion, overwork and suicide, but the Indian consulate registered 971 deaths of their nationals in 2005 alone. After this figure was leaked, the consulates were told to stop counting.At night, in the dusk, I sit in the camp with Sohinal and his friends as they scrape together what they have left to buy a cheap bottle of spirits. They down it in one ferocious gulp. "It helps you to feel numb", Sohinal says through a stinging throat. In the distance, the glistening Dubai skyline he built stands, oblivious.


IV. Mauled by the mall

I find myself stumbling in a daze from the camps into the sprawling marble malls that seem to stand on every street in Dubai. It is so hot there is no point building pavements; people gather in these cathedrals of consumerism to bask in the air conditioning. So within a ten minute taxi-ride, I have left Sohinal and I am standing in the middle of Harvey Nichols, being shown a £20,000 taffeta dress by a bored salesgirl. "As you can see, it is cut on the bias..." she says, and I stop writing.Time doesn't seem to pass in the malls. Days blur with the same electric light, the same shined floors, the same brands I know from home. Here, Dubai is reduced to its component sounds: do-buy. In the most expensive malls I am almost alone, the shops empty and echoing. On the record, everybody tells me business is going fine. Off the record, they look panicky. There is a hat exhibition ahead of the Dubai races, selling elaborate headgear for £1,000 a pop. "Last year, we were packed. Now look," a hat designer tells me. She swoops her arm over a vacant space.I approach a blonde 17-year-old Dutch girl wandering around in hotpants, oblivious to the swarms of men gaping at her. "I love it here!" she says. "The heat, the malls, the beach!" Does it ever bother you that it's a slave society? She puts her head down, just as Sohinal did. "I try not to see," she says. Even at 17, she has learned not to look, and not to ask; that, she senses, is a transgression too far.Between the malls, there is nothing but the connecting tissue of asphalt. Every road has at least four lanes; Dubai feels like a motorway punctuated by shopping centres. You only walk anywhere if you are suicidal. The residents of Dubai flit from mall to mall by car or taxis.How does it feel if this is your country, filled with foreigners? Unlike the expats and the slave class, I can't just approach the native Emiratis to ask questions when I see them wandering around – the men in cool white robes, the women in sweltering black. If you try, the women blank you, and the men look affronted, and tell you brusquely that Dubai is "fine". So I browse through the Emirati blog-scene and found some typical-sounding young Emiratis. We meet – where else? – in the mall.Ahmed al-Atar is a handsome 23-year-old with a neat, trimmed beard, tailored white robes, and rectangular wire-glasses. He speaks perfect American-English, and quickly shows that he knows London, Los Angeles and Paris better than most westerners. Sitting back in his chair in an identikit Starbucks, he announces: "This is the best place in the world to be young! The government pays for your education up to PhD level. You get given a free house when you get married. You get free healthcare, and if it's not good enough here, they pay for you to go abroad. You don't even have to pay for your phone calls. Almost everyone has a maid, a nanny, and a driver. And we never pay any taxes. Don't you wish you were Emirati?"I try to raise potential objections to this Panglossian summary, but he leans forward and says: "Look – my grandfather woke up every day and he would have to fight to get to the well first to get water. When the wells ran dry, they had to have water delivered by camel. They were always hungry and thirsty and desperate for jobs. He limped all his life, because he there was no medical treatment available when he broke his leg. Now look at us!"For Emiratis, this is a Santa Claus state, handing out goodies while it makes its money elsewhere: through renting out land to foreigners, soft taxes on them like business and airport charges, and the remaining dribble of oil. Most Emiratis, like Ahmed, work for the government, so they're cushioned from the credit crunch. "I haven't felt any effect at all, and nor have my friends," he says. "Your employment is secure. You will only be fired if you do something incredibly bad." The laws are currently being tightened, to make it even more impossible to sack an Emirati.Sure, the flooding-in of expats can sometimes be "an eyesore", Ahmed says. "But we see the expats as the price we had to pay for this development. How else could we do it? Nobody wants to go back to the days of the desert, the days before everyone came. We went from being like an African country to having an average income per head of $120,000 a year. And we're supposed to complain?"He says the lack of political freedom is fine by him. "You'll find it very hard to find an Emirati who doesn't support Sheikh Mohammed." Because they're scared? "No, because we really all support him. He's a great leader. Just look!" He smiles and says: "I'm sure my life is very much like yours. We hang out, have a coffee, go to the movies. You'll be in a Pizza Hut or Nando's in London, and at the same time I'll be in one in Dubai," he says, ordering another latte.But do all young Emiratis see it this way? Can it really be so sunny in the political sands? In the sleek Emirates Tower Hotel, I meet Sultan al-Qassemi. He's a 31-year-old Emirati columnist for the Dubai press and private art collector, with a reputation for being a contrarian liberal, advocating gradual reform. He is wearing Western clothes – blue jeans and a Ralph Lauren shirt – and speaks incredibly fast, turning himself into a manic whirr of arguments."People here are turning into lazy, overweight babies!" he exclaims. "The nanny state has gone too far. We don't do anything for ourselves! Why don't any of us work for the private sector? Why can't a mother and father look after their own child?" And yet, when I try to bring up the system of slavery that built Dubai, he looks angry. "People should give us credit," he insists. "We are the most tolerant people in the world. Dubai is the only truly international city in the world. Everyone who comes here is treated with respect."I pause, and think of the vast camps in Sonapur, just a few miles away. Does he even know they exist? He looks irritated. "You know, if there are 30 or 40 cases [of worker abuse] a year, that sounds like a lot but when you think about how many people are here..." Thirty or 40? This abuse is endemic to the system, I say. We're talking about hundreds of thousands.Sultan is furious. He splutters: "You don't think Mexicans are treated badly in New York City? And how long did it take Britain to treat people well? I could come to London and write about the homeless people on Oxford Street and make your city sound like a terrible place, too! The workers here can leave any time they want! Any Indian can leave, any Asian can leave!"But they can't, I point out. Their passports are taken away, and their wages are withheld. "Well, I feel bad if that happens, and anybody who does that should be punished. But their embassies should help them." They try. But why do you forbid the workers – with force – from going on strike against lousy employers? "Thank God we don't allow that!" he exclaims. "Strikes are in-convenient! They go on the street – we're not having that. We won't be like France. Imagine a country where they the workers can just stop whenever they want!" So what should the workers do when they are cheated and lied to? "Quit. Leave the country."I sigh. Sultan is seething now. "People in the West are always complaining about us," he says. Suddenly, he adopts a mock-whiny voice and says, in imitation of these disgusting critics: "Why don't you treat animals better? Why don't you have better shampoo advertising? Why don't you treat labourers better?" It's a revealing order: animals, shampoo, then workers. He becomes more heated, shifting in his seat, jabbing his finger at me. "I gave workers who worked for me safety goggles and special boots, and they didn't want to wear them! It slows them down!"And then he smiles, coming up with what he sees as his killer argument. "When I see Western journalists criticise us – don't you realise you're shooting yourself in the foot? The Middle East will be far more dangerous if Dubai fails. Our export isn't oil, it's hope. Poor Egyptians or Libyans or Iranians grow up saying – I want to go to Dubai. We're very important to the region. We are showing how to be a modern Muslim country. We don't have any fundamentalists here. Europeans shouldn't gloat at our demise. You should be very worried.... Do you know what will happen if this model fails? Dubai will go down the Iranian path, the Islamist path."Sultan sits back. My arguments have clearly disturbed him; he says in a softer, conciliatory tone, almost pleading: "Listen. My mother used to go to the well and get a bucket of water every morning. On her wedding day, she was given an orange as a gift because she had never eaten one. Two of my brothers died when they were babies because the healthcare system hadn't developed yet. Don't judge us." He says it again, his eyes filled with intensity: "Don't judge us."


V. The Dunkin' Donuts Dissidents

But there is another face to the Emirati minority – a small huddle of dissidents, trying to shake the Sheikhs out of abusive laws. Next to a Virgin Megastore and a Dunkin' Donuts, with James Blunt's "You're Beautiful" blaring behind me, I meet the Dubai dictatorship's Public Enemy Number One. By way of introduction, Mohammed al-Mansoori says from within his white robes and sinewy face: "Westerners come her and see the malls and the tall buildings and they think that means we are free. But these businesses, these buildings – who are they for? This is a dictatorship. The royal family think they own the country, and the people are their servants. There is no freedom here."We snuffle out the only Arabic restaurant in this mall, and he says everything you are banned – under threat of prison – from saying in Dubai. Mohammed tells me he was born in Dubai to a fisherman father who taught him one enduring lesson: Never follow the herd. Think for yourself. In the sudden surge of development, Mohammed trained as a lawyer. By the Noughties, he had climbed to the head of the Jurists' Association, an organisation set up to press for Dubai's laws to be consistent with international human rights legislation.And then – suddenly – Mohammed thwacked into the limits of Sheikh Mohammed's tolerance. Horrified by the "system of slavery" his country was being built on, he spoke out to Human Rights Watch and the BBC. "So I was hauled in by the secret police and told: shut up, or you will lose you job, and your children will be unemployable," he says. "But how could I be silent?"He was stripped of his lawyer's licence and his passport – becoming yet another person imprisoned in this country. "I have been blacklisted and so have my children. The newspapers are not allowed to write about me."Why is the state so keen to defend this system of slavery? He offers a prosaic explanation. "Most companies are owned by the government, so they oppose human rights laws because it will reduce their profit margins. It's in their interests that the workers are slaves."Last time there was a depression, there was a starbust of democracy in Dubai, seized by force from the sheikhs. In the 1930s, the city's merchants banded together against Sheikh Said bin Maktum al-Maktum – the absolute ruler of his day – and insisted they be given control over the state finances. It lasted only a few years, before the Sheikh – with the enthusiastic support of the British – snuffed them out.And today? Sheikh Mohammed turned Dubai into Creditopolis, a city built entirely on debt. Dubai owes 107 percent of its entire GDP. It would be bust already, if the neighbouring oil-soaked state of Abu Dhabi hadn't pulled out its chequebook. Mohammed says this will constrict freedom even further. "Now Abu Dhabi calls the tunes – and they are much more conservative and restrictive than even Dubai. Freedom here will diminish every day." Already, new media laws have been drafted forbidding the press to report on anything that could "damage" Dubai or "its economy". Is this why the newspapers are giving away glossy supplements talking about "encouraging economic indicators"?Everybody here waves Islamism as the threat somewhere over the horizon, sure to swell if their advice is not followed. Today, every imam is appointed by the government, and every sermon is tightly controlled to keep it moderate. But Mohammed says anxiously: "We don't have Islamism here now, but I think that if you control people and give them no way to express anger, it could rise. People who are told to shut up all the time can just explode."Later that day, against another identikit-corporate backdrop, I meet another dissident – Abdulkhaleq Abdullah, Professor of Political Science at Emirates University. His anger focuses not on political reform, but the erosion of Emirati identity. He is famous among the locals, a rare outspoken conductor for their anger. He says somberly: "There has been a rupture here. This is a totally different city to the one I was born in 50 years ago."He looks around at the shiny floors and Western tourists and says: "What we see now didn't occur in our wildest dreams. We never thought we could be such a success, a trendsetter, a model for other Arab countries. The people of Dubai are mighty proud of their city, and rightly so. And yet..." He shakes his head. "In our hearts, we fear we have built a modern city but we are losing it to all these expats."Adbulkhaleq says every Emirati of his generation lives with a "psychological trauma." Their hearts are divided – "between pride on one side, and fear on the other." Just after he says this, a smiling waitress approaches, and asks us what we would like to drink. He orders a Coke.


VI. Dubai Pride

There is one group in Dubai for whom the rhetoric of sudden freedom and liberation rings true – but it is the very group the government wanted to liberate least: gays.Beneath a famous international hotel, I clamber down into possibly the only gay club on the Saudi Arabian peninsula. I find a United Nations of tank-tops and bulging biceps, dancing to Kylie, dropping ecstasy, and partying like it's Soho. "Dubai is the best place in the Muslim world for gays!" a 25-year old Emirati with spiked hair says, his arms wrapped around his 31-year old "husband". "We are alive. We can meet. That is more than most Arab gays."It is illegal to be gay in Dubai, and punishable by 10 years in prison. But the locations of the latest unofficial gay clubs circulate online, and men flock there, seemingly unafraid of the police. "They might bust the club, but they will just disperse us," one of them says. "The police have other things to do."In every large city, gay people find a way to find each other – but Dubai has become the clearing-house for the region's homosexuals, a place where they can live in relative safety. Saleh, a lean private in the Saudi Arabian army, has come here for the Coldplay concert, and tells me Dubai is "great" for gays: "In Saudi, it's hard to be straight when you're young. The women are shut away so everyone has gay sex. But they only want to have sex with boys – 15- to 21-year-olds. I'm 27, so I'm too old now. I need to find real gays, so this is the best place. All Arab gays want to live in Dubai."With that, Saleh dances off across the dancefloor, towards a Dutch guy with big biceps and a big smile.


VII. The Lifestyle

All the guidebooks call Dubai a "melting pot", but as I trawl across the city, I find that every group here huddles together in its own little ethnic enclave – and becomes a caricature of itself. One night – in the heart of this homesick city, tired of the malls and the camps – I go to Double Decker, a hang-out for British expats. At the entrance there is a red telephone box, and London bus-stop signs. Its wooden interior looks like a cross between a colonial clubhouse in the Raj and an Eighties school disco, with blinking coloured lights and cheese blaring out. As I enter, a girl in a short skirt collapses out of the door onto her back. A guy wearing a pirate hat helps her to her feet, dropping his beer bottle with a paralytic laugh.I start to talk to two sun-dried women in their sixties who have been getting gently sozzled since midday. "You stay here for The Lifestyle," they say, telling me to take a seat and order some more drinks. All the expats talk about The Lifestyle, but when you ask what it is, they become vague. Ann Wark tries to summarise it: "Here, you go out every night. You'd never do that back home. You see people all the time. It's great. You have lots of free time. You have maids and staff so you don't have to do all that stuff. You party!"They have been in Dubai for 20 years, and they are happy to explain how the city works. "You've got a hierarchy, haven't you?" Ann says. "It's the Emiratis at the top, then I'd say the British and other Westerners. Then I suppose it's the Filipinos, because they've got a bit more brains than the Indians. Then at the bottom you've got the Indians and all them lot."They admit, however, they have "never" spoken to an Emirati. Never? "No. They keep themselves to themselves." Yet Dubai has disappointed them. Jules Taylor tells me: "If you have an accident here it's a nightmare. There was a British woman we knew who ran over an Indian guy, and she was locked up for four days! If you have a tiny bit of alcohol on your breath they're all over you. These Indians throw themselves in front of cars, because then their family has to be given blood money – you know, compensation. But the police just blame us. That poor woman."A 24-year-old British woman called Hannah Gamble takes a break from the dancefloor to talk to me. "I love the sun and the beach! It's great out here!" she says. Is there anything bad? "Oh yes!" she says. Ah: one of them has noticed, I think with relief. "The banks! When you want to make a transfer you have to fax them. You can't do it online." Anything else? She thinks hard. "The traffic's not very good."When I ask the British expats how they feel to not be in a democracy, their reaction is always the same. First, they look bemused. Then they look affronted. "It's the Arab way!" an Essex boy shouts at me in response, as he tries to put a pair of comedy antlers on his head while pouring some beer into the mouth of his friend, who is lying on his back on the floor, gurning.Later, in a hotel bar, I start chatting to a dyspeptic expat American who works in the cosmetics industry and is desperate to get away from these people. She says: "All the people who couldn't succeed in their own countries end up here, and suddenly they're rich and promoted way above their abilities and bragging about how great they are. I've never met so many incompetent people in such senior positions anywhere in the world." She adds: "It's absolutely racist. I had Filipino girls working for me doing the same job as a European girl, and she's paid a quarter of the wages. The people who do the real work are paid next to nothing, while these incompetent managers pay themselves £40,000 a month."With the exception of her, one theme unites every expat I speak to: their joy at having staff to do the work that would clog their lives up Back Home. Everyone, it seems, has a maid. The maids used to be predominantly Filipino, but with the recession, Filipinos have been judged to be too expensive, so a nice Ethiopian servant girl is the latest fashionable accessory.It is an open secret that once you hire a maid, you have absolute power over her. You take her passport – everyone does; you decide when to pay her, and when – if ever – she can take a break; and you decide who she talks to. She speaks no Arabic. She cannot escape.In a Burger King, a Filipino girl tells me it is "terrifying" for her to wander the malls in Dubai because Filipino maids or nannies always sneak away from the family they are with and beg her for help. "They say – 'Please, I am being held prisoner, they don't let me call home, they make me work every waking hour seven days a week.' At first I would say – my God, I will tell the consulate, where are you staying? But they never know their address, and the consulate isn't interested. I avoid them now. I keep thinking about a woman who told me she hadn't eaten any fruit in four years. They think I have power because I can walk around on my own, but I'm powerless."The only hostel for women in Dubai – a filthy private villa on the brink of being repossessed – is filled with escaped maids. Mela Matari, a 25-year-old Ethiopian woman with a drooping smile, tells me what happened to her – and thousands like her. She was promised a paradise in the sands by an agency, so she left her four year-old daughter at home and headed here to earn money for a better future. "But they paid me half what they promised. I was put with an Australian family – four children – and Madam made me work from 6am to 1am every day, with no day off. I was exhausted and pleaded for a break, but they just shouted: 'You came here to work, not sleep!' Then one day I just couldn't go on, and Madam beat me. She beat me with her fists and kicked me. My ear still hurts. They wouldn't give me my wages: they said they'd pay me at the end of the two years. What could I do? I didn't know anybody here. I was terrified."One day, after yet another beating, Mela ran out onto the streets, and asked – in broken English – how to find the Ethiopian consulate. After walking for two days, she found it, but they told her she had to get her passport back from Madam. "Well, how could I?" she asks. She has been in this hostel for six months. She has spoken to her daughter twice. "I lost my country, I lost my daughter, I lost everything," she says.As she says this, I remember a stray sentence I heard back at Double Decker. I asked a British woman called Hermione Frayling what the best thing about Dubai was. "Oh, the servant class!" she trilled. "You do nothing. They'll do anything!"

VIII. The End of The World

The World is empty. It has been abandoned, its continents unfinished. Through binoculars, I think I can glimpse Britain; this sceptred isle barren in the salt-breeze.Here, off the coast of Dubai, developers have been rebuilding the world. They have constructed artificial islands in the shape of all planet Earth's land masses, and they plan to sell each continent off to be built on. There were rumours that the Beckhams would bid for Britain. But the people who work at the nearby coast say they haven't seen anybody there for months now. "The World is over," a South African suggests.All over Dubai, crazy projects that were Under Construction are now Under Collapse. They were building an air-conditioned beach here, with cooling pipes running below the sand, so the super-rich didn't singe their toes on their way from towel to sea.The projects completed just before the global economy crashed look empty and tattered. The Atlantis Hotel was launched last winter in a $20m fin-de-siecle party attended by Robert De Niro, Lindsay Lohan and Lily Allen. Sitting on its own fake island – shaped, of course, like a palm tree – it looks like an immense upturned tooth in a faintly decaying mouth. It is pink and turreted – the architecture of the pharaohs, as reimagined by Zsa-Zsa Gabor. Its Grand Lobby is a monumental dome covered in glitterballs, held up by eight monumental concrete palm trees. Standing in the middle, there is a giant shining glass structure that looks like the intestines of every guest who has ever stayed at the Atlantis. It is unexpectedly raining; water is leaking from the roof, and tiles are falling off.A South African PR girl shows me around its most coveted rooms, explaining that this is "the greatest luxury offered in the world". We stroll past shops selling £24m diamond rings around a hotel themed on the lost and sunken continent of, yes, Atlantis. There are huge water tanks filled with sharks, which poke around mock-abandoned castles and dumped submarines. There are more than 1,500 rooms here, each with a sea view. The Neptune suite has three floors, and – I gasp as I see it – it looks out directly on to the vast shark tank. You lie on the bed, and the sharks stare in at you. In Dubai, you can sleep with the fishes, and survive.But even the luxury – reminiscent of a Bond villain's lair – is also being abandoned. I check myself in for a few nights to the classiest hotel in town, the Park Hyatt. It is the fashionistas' favourite hotel, where Elle Macpherson and Tommy Hilfiger stay, a gorgeous, understated palace. It feels empty. Whenever I eat, I am one of the only people in the restaurant. A staff member tells me in a whisper: "It used to be full here. Now there's hardly anyone." Rattling around, I feel like Jack Nicholson in The Shining, the last man in an abandoned, haunted home.The most famous hotel in Dubai – the proud icon of the city – is the Burj al Arab hotel, sitting on the shore, shaped like a giant glass sailing boat. In the lobby, I start chatting to a couple from London who work in the City. They have been coming to Dubai for 10 years now, and they say they love it. "You never know what you'll find here," he says. "On our last trip, at the beginning of the holiday, our window looked out on the sea. By the end, they'd built an entire island there."My patience frayed by all this excess, I find myself snapping: doesn't the omnipresent slave class bother you? I hope they misunderstood me, because the woman replied: "That's what we come for! It's great, you can't do anything for yourself!" Her husband chimes in: "When you go to the toilet, they open the door, they turn on the tap – the only thing they don't do is take it out for you when you have a piss!" And they both fall about laughing.


IX. Taking on the Desert

Dubai is not just a city living beyond its financial means; it is living beyond its ecological means. You stand on a manicured Dubai lawn and watch the sprinklers spray water all around you. You see tourists flocking to swim with dolphins. You wander into a mountain-sized freezer where they have built a ski slope with real snow. And a voice at the back of your head squeaks: this is the desert. This is the most water-stressed place on the planet. How can this be happening? How is it possible?The very earth is trying to repel Dubai, to dry it up and blow it away. The new Tiger Woods Gold Course needs four million gallons of water to be pumped on to its grounds every day, or it would simply shrivel and disappear on the winds. The city is regularly washed over with dust-storms that fog up the skies and turn the skyline into a blur. When the dust parts, heat burns through. It cooks anything that is not kept constantly, artificially wet.Dr Mohammed Raouf, the environmental director of the Gulf Research Centre, sounds sombre as he sits in his Dubai office and warns: "This is a desert area, and we are trying to defy its environment. It is very unwise. If you take on the desert, you will lose."Sheikh Maktoum built his showcase city in a place with no useable water. None. There is no surface water, very little acquifer, and among the lowest rainfall in the world. So Dubai drinks the sea. The Emirates' water is stripped of salt in vast desalination plants around the Gulf – making it the most expensive water on earth. It costs more than petrol to produce, and belches vast amounts of carbon dioxide into the atmosphere as it goes. It's the main reason why a resident of Dubai has the biggest average carbon footprint of any human being – more than double that of an American.If a recession turns into depression, Dr Raouf believes Dubai could run out of water. "At the moment, we have financial reserves that cover bringing so much water to the middle of the desert. But if we had lower revenues – if, say, the world shifts to a source of energy other than oil..." he shakes his head. "We will have a very big problem. Water is the main source of life. It would be a catastrophe. Dubai only has enough water to last us a week. There's almost no storage. We don't know what will happen if our supplies falter. It would be hard to survive."Global warming, he adds, makes the problem even worse. "We are building all these artificial islands, but if the sea level rises, they will be gone, and we will lose a lot. Developers keep saying it's all fine, they've taken it into consideration, but I'm not so sure."Is the Dubai government concerned about any of this? "There isn't much interest in these problems," he says sadly. But just to stand still, the average resident of Dubai needs three times more water than the average human. In the looming century of water stresses and a transition away from fossil fuels, Dubai is uniquely vulnerable.I wanted to understand how the government of Dubai will react, so I decided to look at how it has dealt with an environmental problem that already exists – the pollution of its beaches. One woman – an American, working at one of the big hotels – had written in a lot of online forums arguing that it was bad and getting worse, so I called her to arrange a meeting. "I can't talk to you," she said sternly. Not even if it's off the record? "I can't talk to you." But I don't have to disclose your name... "You're not listening. This phone is bugged. I can't talk to you," she snapped, and hung up.The next day I turned up at her office. "If you reveal my identity, I'll be sent on the first plane out of this city," she said, before beginning to nervously pace the shore with me. "It started like this. We began to get complaints from people using the beach. The water looked and smelled odd, and they were starting to get sick after going into it. So I wrote to the ministers of health and tourism and expected to hear back immediately – but there was nothing. Silence. I hand-delivered the letters. Still nothing."The water quality got worse and worse. The guests started to spot raw sewage, condoms, and used sanitary towels floating in the sea. So the hotel ordered its own water analyses from a professional company. "They told us it was full of fecal matter and bacteria 'too numerous to count'. I had to start telling guests not to go in the water, and since they'd come on a beach holiday, as you can imagine, they were pretty pissed off." She began to make angry posts on the expat discussion forums – and people began to figure out what was happening. Dubai had expanded so fast its sewage treatment facilities couldn't keep up. The sewage disposal trucks had to queue for three or four days at the treatment plants – so instead, they were simply drilling open the manholes and dumping the untreated sewage down them, so it flowed straight to the sea.Suddenly, it was an open secret – and the municipal authorities finally acknowledged the problem. They said they would fine the truckers. But the water quality didn't improve: it became black and stank. "It's got chemicals in it. I don't know what they are. But this stuff is toxic."She continued to complain – and started to receive anonymous phone calls. "Stop embarassing Dubai, or your visa will be cancelled and you're out," they said. She says: "The expats are terrified to talk about anything. One critical comment in the newspapers and they deport you. So what am I supposed to do? Now the water is worse than ever. People are getting really sick. Eye infections, ear infections, stomach infections, rashes. Look at it!" There is faeces floating on the beach, in the shadow of one of Dubai's most famous hotels."What I learnt about Dubai is that the authorities don't give a toss about the environment," she says, standing in the stench. "They're pumping toxins into the sea, their main tourist attraction, for God's sake. If there are environmental problems in the future, I can tell you now how they will deal with them – deny it's happening, cover it up, and carry on until it's a total disaster." As she speaks, a dust-storm blows around us, as the desert tries, slowly, insistently, to take back its land.


X. Fake Plastic Trees

On my final night in the Dubai Disneyland, I stop off on my way to the airport, at a Pizza Hut that sits at the side of one of the city's endless, wide, gaping roads. It is identical to the one near my apartment in London in every respect, even the vomit-coloured decor. My mind is whirring and distracted. Perhaps Dubai disturbed me so much, I am thinking, because here, the entire global supply chain is condensed. Many of my goods are made by semi-enslaved populations desperate for a chance 2,000 miles away; is the only difference that here, they are merely two miles away, and you sometimes get to glimpse their faces? Dubai is Market Fundamentalist Globalisation in One City.I ask the Filipino girl behind the counter if she likes it here. "It's OK," she says cautiously. Really? I say. I can't stand it. She sighs with relief and says: "This is the most terrible place! I hate it! I was here for months before I realised – everything in Dubai is fake. Everything you see. The trees are fake, the workers' contracts are fake, the islands are fake, the smiles are fake – even the water is fake!" But she is trapped, she says. She got into debt to come here, and she is stuck for three years: an old story now. "I think Dubai is like an oasis. It is an illusion, not real. You think you have seen water in the distance, but you get close and you only get a mouthful of sand."As she says this, another customer enters. She forces her face into the broad, empty Dubai smile and says: "And how may I help you tonight, sir?"

http://www.sole-dubai.com/news.aspx

Saturday, April 4, 2009

The Jones Lang Lasalle report states that despite the fact that certain more positive factors have started to be felt 'there is little doubt that we remain in the downturn stage of the cycle,' and that markets are likely to experience a further downward correction in prices over the next six to twelve months.

'Theres a lot of negative media attention, both from a regional and an international basis being paid to Dubai in particular,' Ian Ohan, Jones Lang Lasalle's head of Investment Transactions for the Mena region told Sole Dubai Info.

'Investor confidence globally is obviously very dramatically affected currently. Going forward we obviously have some work to do to repair that confidence. There are a number of government initiatives taking place today that are coming to the forefront that we think will go some way to repairing investor confidence.

'But effectively in 2009 we'll see a continued state of capitulation in the market, it's in 2010 that we'll see results from these initiatives, and perhaps an easing of negative media attention that we're getting at the moment.'

Competitive opportunities Although sentiment is down, there are competitively priced opportunities available in the market, as many investors edge away from acting while awaiting the market to hit bottom.

In February, sales transactions in the emirate doubled compared to the previous month, going up to $520m - although this only represented approximately 400 deals. Until the end of the year, however, further falls in both rental and purchase prices are predicted to continue prior to the sector moving into a recovery stage.

The recovery will be fuelled by the return to the market of liquidity and the availability of capital for real estate investments. One of the initiatives underway, the issuance of bonds by the Dubai authorities, will begin to bear fruit in the coming months as over $5bn is expected to find its way to government-affiliated real estate companies.

'Liquidity is a broad term, we effectively see that 2009 is going to show a continued state of challenge and reducing rates in the market, 2010 we see some traction formed with a bit of stability, and 2011 we see as a period of recovery'. 'Liquidity from the bank side we see starting to come back in mid- to late 2010.
'
This mirrors the view of Abid Junaid, Executive Director of ETA Star properties. 'The banks currently have an exposure to the real estate sector, and they do not want to increase that just yet,' he told Sole Dubai Info. 'But with more liquidity being available to them they will come back and begin lending to the housing sector.'

Fall in supply The Dubai property sector has already seen a 50% fall in projected new supply levels, both commercial and residential, for developments that were due to come online between 2009 and 2012, which should help to cushion the fall in prices over the longer term.
The projects that have remained mostly unaffected have been those targeted at the end user market rather than luxury speculative models. 'In terms of mega projects I think that it'll be some time before we see a return to the ambitions of 2008, things are going to be more prudent for the next few years, perhaps with a slant on sustainable income developments'.

http://www.soledubai.com