Dubai’s developments are reaching dizzying new heights, but how long can the good times last?

The blonde goddess in the flowing white dress plucked serenely at her golden harp, oblivious to the teeming flow of humanity around her. Her presence on the stand of Ferragamo penthouses in the inventively named Pentominium tower was doubtless intended to emphasise their classiness, but, like most things in these parts, the show was really all about the numbers.

Men in shirtsleeves, business suits or crisp white dishdashas with flowing headdresses, and women in everything from burkas to minidresses were all intent, in this 21st-century souk with products and price tags on a mind-boggling scale, on the biggest game in town: the Dubai property market. An estimated 60,000 visitors from 150 countries surged through the world’s biggest property exhibition last week – and, even as the stock exchanges in Dubai and neighbouring Abu Dhabi reflected the global financial unrest, the atmosphere inside showed no signs of flagging.

“The UAE is well placed to weather the storm and will rebound faster than most other economies,” declared Ali Kolaghassi, vice chairman and CEO of Jordan’s Saraya Holdings. “I don’t see real estate going down in value.” His words might be seen as an exercise in damage limitation. On the show’s opening day, The National, a high-profile English-language daily, ran a front-page story, purporting to be based on a report by the property consultants Colliers International, announcing that property prices in Dubai had fallen by 16%. The following day came a sheepish apology: Colliers had actually said that the rate of growth had eased to 16% in the second quarter, after a blistering 43% in the first three months of this year. In other words, the trend was still upward.

From its huge stand at the show, rumoured to have cost almost £6m, Nakheel, Dubai’s largest developer, launched the world’s tallest tower. At more than 1km high, it will dwarf the current title-holder, the Burj Dubai, which has almost been completed and is expected to top out at 819 metres. The glittering scale model at the centre of the stand showed it rising proudly from a nest of more than 40 towers, on a site set in a network of canals.

Another fabulous launch was the modestly named Falconcity of Wonders, which will feature, among its villas and apartment blocks, not just a theme park, but replicas of what its developer has decided are the eight wonders of the world – among them the Eiffel Tower, the Taj Mahal, the Great Wall of China, the Great Pyramid, Venice and what the sales girl confided was the “Leaning Tower of Pizza”. It will have 3,000 units; phases one and two have sold out, with prices set at about £1,650 a square metre, and prices for the third phase will be announced next week.

Meraas Development launched a “master planned community”, Jumeirah Gardens, a £55 billion scheme, the size of a small city, that will include three towers linked by sky bridges. Damac Properties offered an incredible 40% guaranteed rental return on its new Executive Suites project in Business Bay. Dubai Properties, meanwhile, launched its Cairo villas as part of Mudon, a development set back from the coast that will house 50,000 residents in five “cities” named and supposedly styled after leading Arab conurbations: Cairo, Damascus, Marrakesh, Beirut and, er, Baghdad.

Elsewhere at the show, Michael Schumacher, the seven-time Formula One champion, introduced his own branded tower in Abu Dhabi. Another developer, Hydra Properties, touted its range of skyscrapers, including one marketed exclusively to female entrepreneurs.

The expo’s official paper summed up the prevailing optimism with the front-page headline “No sign of a slowdown”. Yet there are indications that the property boom, which began in 2002 when Dubai became the first of the emirates to allow foreigners to buy property, may be brought to an end by oversupply. The Colliers International report predicted that about 140,000 new homes would be completed in Dubai by the end of 2010, adding to the existing stock of 300,000.

For the time being, at least, prices are not dropping and developers are not leaving the market – although it’s becoming more expensive for them to fund their projects. In addition, new regulations on off-plan selling, introduced in an effort to prevent rampant speculation, as well as the merger of two mortgage providers, mean that the market is not slowing, but rather “maturing”, according to the optimists.

Andrew Chambers, managing director of Asteco, a Dubai-based property services company, is among those who see property prices as more likely to level off than fall. “People come to Dubai because of many factors – the working environment, job opportunities, safety and security, and the fact that there is no tax,” he says. “All these keep demand high. In America, 180,000 jobs have been lost. Here, it’s the opposite: there is a shortage of skilled people.”

Source: The Sunday Times

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