I always try to keep my nose pretty clean but when CID walk into your office in the middle of the afternoon there is that moment of panic that washes over you.
CID in Dubai are very polite and immediately explained their visit stating that they were investigating an act of violence and needed to know if they could check our guest list of vacation homes over the past few days.
Naturally we obliged and after 10 minutes they were satisfied that we would not be able to help as they were looking for a particular nationality and none of our guests fitted the bill.
It seems that a Chechen has been murdered in Dubai Marina last week and yet to be confirmed but some ugliness on the Palm which may be related.
Working on the Palm for a living is one of those perks I will never grow tired of but all of a sudden my little piece of Paradise has just been infiltrated by reality.
Two bits of advice for you. 1. Keep your nose clean and avoid the panic attacks 2. If you are planning on assassinating anyone in Dubai don't book a snipers pad with us as the police are our best friends!! ( You can check the gory details out on the bbc website)
31 March, 2009
16 March, 2009
Guest Blog
Guest Blog 12/03/09
Room with a view: a visitor’s outlook
Over my last 8 years of visiting Dubai, I had become comfortable with the belief that ‘all that glitters actually was gold’, and for me, the Emirate, although covered in debris currently, remains precious beneath it all.
I have been fortunate enough to visit Dubai 4, 5 & 6 times a year in recent times and have seen its development from various hotel windows.
Over that same period things have prospered in my home land, as in most parts of the world, enabling me to modestly invest in this shiny Arab Emirate. Here I have seen those investments flourish and happily (even joyously) enjoyed the ride that Dubai was providing.
This prosperous haven has, over the last 6 months, fallen into line with the rest of the world with both prospects and property prices heading sharply south. The Emirate that was still being hailed up until recently as the pinnacle of luxury and glamorous excess is now being pelted and ridiculed by the same media. To me it is often more of an embarrassing insight into the void that is the mind of the correspondent and I wonder sometimes why it often sounds so bitter? The Australians have a phrase for it, they call it the tall poppy syndrome; it’s built-up and then ‘they’ take pleasure in knocking it down, a bit of a cheap dig really.
Over those years I saw plans for the Palm turn to visions of spewing sand emerging from the sea, which turned to land, that turned to buildings, which turned to escalating property prices! I saw the shorelines handed over and shared the disappointment with regard to some of the quality aspects - but who could (or would dare) complain when the price had increased 2 fold and later 3 & 4 fold!?!
As the Palm developed the fronds became little communities and having now lived in one (albeit for a short time) I can see the attraction of the sense of community and security that they bring - not to mention the Kudos. Again, as with the shorelines all may not be perfect... people (mostly those that do not live there) can grumble about the close proximity of neighbours and dogs doing their 'thing' on the beaches but it is unique and remains a spectacle both from the air and when driving through the structure, or any aspect of it, by car.
Then The Atlantis; the explosive OTT Dubai style opening and the world wide publicity - and all this taking place well into phase 1 of the world wide economic crisis!!
Now I see the Marina turning from a building site into a developing International City in its own right (I mean like a developing adolescent New York, London or Hong Kong & not Dubai's own International City budget development) - the night views are spectacular and right now, from today’s hotel room, I can see busy traffic both on the SZ Road and locally around the Marina - and its 2am!?! We are in what are described, understandably, as 'depressing' times but still these people are travelling 24/7 - presumably either working or spending. I wandered down ‘the walk’ this week in front of JBR – how nice it is to have an ‘outdoor’ promenade to meander along – all the cafes and restaurants were packed and it is a real boon for both JBR and all the hotels and apartments around the Marina and beyond.
Still the most luxurious buildings and finishings of the Palm are to come... all the Crescent hotels, the Tiara and Oceana developments, the Fairmont on the trunk, perhaps one day a grand mall at the top of the trunk and greenery & finishings around the Palm such as those seen around Madinat Jumeirah.
Nakheel will need to get bailed out if they are to be the ones that are around to complete the Palm; lets face it, they are giving a very good impression right now of being broke so someone needs to do something with them; their ineptness & lack of funds is an embarrassment for Dubai in my view and gives out all the wrong messages by helping people form beliefs that Dubai will not stand up & play fair in the tough times, but instead will pull up the drawbridge and abandon everyone else; investors of any kind, private, corporate or sovereign do not forget these things but there is still time to make a change and change those developing beliefs. Make a change please!
If Nakheel are allowed to sink... (If Dubai Inc are reading this then please don't let Nakheel go under - Nakheel are seen as being 'part of Dubai' and although it may allow some debt to be written off it will set the Emirate back years in terms of PR and attracting any new foreign institutional or private investment).. I'll repeat that first bit... If Nakheel are allowed to sink (& with dignity please - if that’s possible?!) then it will not be unusual for the originating development company of such a large infrastructure project to go broke - on such vast infrastructure projects the cost is often so enormous that it is seldom possible to recoup costs and survive in any fit state; the Channel Tunnel is a typical example of this scenario (for our European viewers).
So here we now are; prices are said to be 50% down, but not everywhere, let's face it; in some areas you cannot even get 50% of June 08's price! In fact in most areas other than Palm Jumeirah you simply cannot sell a property - at any price!!
This is where we are today – it is not just Dubai that is down, it is the world! Even the most ardent fans of Dubai are beginning to recognise and accept this fall - but the new, and by far the more interesting question, is ‘what next for the glittering Emirate?’
It is interesting to see those folk that never made money in the local property boom condemn all the property owners and claim significance from their 'intelligence' of being able to foresee this downturn; ‘collapse’ they call it. I think, to some level, they have a compelling argument about their wit, although it kind of 'falls flat' when you ask as to why their foresight was not deployed to make themselves millions of dollars during the 'up' period!?! Although these people will have an answer for that – these people always do!
The new wealthy that made money from local property fall into various categories. These include those that are wholly depressed and talk about yesterday and ‘if only’, others are equally annoying by being too upbeat, looking forward to 'prices returning to their previous levels soon’. I have been at least one of these and equally annoying! Mark?
The guys that make most of the money most of the time tend not to talk much. These guys are simply devoting their attention to 'doing' and working on ‘what next’, along with ‘how to make the current situation better’ - not bothering to seek comfort by sharing tales of woe or searching for reassurance about market resurrection; "perhaps these guys can afford not to worry" I hear you say, or was that me!? Perhaps that is true but I am sure there is a connection between their attitude and their prosperity & that may be another lesson that some of us can take from these troubled times.
I believe it is important to see it AS IT IS – to get real!! But also NOT to see it WORSE than it is – and this is where most people appear to struggle right now in my view. If you were to believe the world press you’d be forgiven for thinking the locals were heading back into the desert, setting up their tents and taking up pearl diving – with the name of Dubai to be erased from the map for 100 years.
The way I see it - one day soon the world will figure a way to get back to some form of normality. Finding a solution has every ones attention right now and they will sort it. At what cost, how long it will take, and what the ‘new rules’ of the game will be no one exactly knows. Countries, companies and financial entities will re-organise themselves and between them create a path forward that new & reformed entities will quickly tread. A massive vacuum devoid of trade and finance is being created and, like any vacuum, this will quickly get filled once the door is opened.
Everyone has struggled and most have been hit, both countries and individuals alike, and although the numbers of $’s everyone had has now diminished, most still retain similar places in the pecking order; Dubai included!!
Dubai was a fast growing key location in this emerging region of power – and it still will be. It is in a location that bridges between both East & West and also Africa & the old Soviet States - in the middle of key oil states that hold sizable SWF's and amidst some of the few countries that will maintain some semblance of positive growth over the period of gloom we are now in. Some would argue that it is right in the middle of the new world powers – with only the US missing. The US will remain a super power of course – but because of the oil here, the trade & opportunity, and the security issues the US have travelled to be here and want to be involved too – so everyone is at this party!
The main thing for Dubai is that it has retained its core business model and remains a great place for traders of all types to be. Property corrections and over-leveraged state entities can be dealt with & fixed. Becoming a poor environment for trade would be far more damaging for Dubai and when the world resumes business, city-states such as Dubai will flourish.
Dubai may have suffered but it was exciting, dynamic and fast emerging before the crisis and it will be the same once the crisis is over. It has been hit but so has every one else and Dubai will maintain its status amongst the best places to be in the world that offer opportunity; and some say it is likely to offer some of the quickest opportunities of the new upturn.
Dubai is now positioned as a trading and service hub in this oil rich region and it will not disappear. Oil prices that are so key for the countries of the region will recover as supply is reigned in and world economies recover sometime over the next 1, 2 or 3 years, with the price likely to (quite quickly if you read the recent report by the International Energy Agency) go back to between $80 & $100 per barrel. This will lead to creating sizable budget excesses again for all the local oil producing countries and Dubai will see benefit from this.
Away from business the Emirate remains a remarkable place to visit and it still takes my breath away. The weather, its hotels, beaches, malls, personal safety (if you omit driving or crossing the road!) and the rulers continued focus toward making it a leading holiday destination will continue to cause tourists to flock here. Yes, there are issues; many hotels although gorgeous are too costly for many travelling pockets and the cost of 'tourist living' in the resort locations and premier restaurants is not cheap either, especially now... but the former will always out 'do' the latter and ultimately basic economic pointers will determine price.
A property market will return, Dubai will once again return to being incredibly popular and property prices will start to move forward from the excessive lows that followed the excessive highs; with an initial spurt possible from current ‘distressed sale’ lows once lending returns and the world feels confident that all bad news is on the table.
Property is continuing to sell on the Palm and that is why we can say that many prices are 50% down from June 2008 (if you have to sell today) – it is amazing & testimony to Palm’s standing that property is continuing to change hands there in such uncertain world times but such is the attraction of the Palm. The Palm will be where we see the earliest shoots of a recovery and prices there could well see a jump of 10 or 20% or more when a bottom is accepted and all the distressed sales are gone; perhaps some lending at reasonable LTV’s and % rates wouldn’t go a miss either although I do understand the banks reservations on lending to anyone right now as their own financial situations remain unclear.
Many of the offers coming in for property today are from those that hope sellers have a bill to pay back home and need to sell at any cost. This is the market we have as of early 2009. Fortunately, for most, their position is not that of a distressed seller and they do not want to sell at any cost, although sadly I know for others it is. I have property on the Palm and I have a unit for sale there. It is for sale at a rate that is 50% down from the highs and I would be more than comfortable to rent now if the unit is not sold shortly.
Property is illiquid and therefore this is one of the downturn scenarios to be considered for any property investment; but the key thing and recent tide change for me is that I am confident that this new price level is the bottom line. It is likely, certainly possible, that distressed sales may make some units turnover for a little less than this over the coming period but in general terms I have confidence in the value of this property, in this location, in this town, at these rates – and in time it will build from there.
Forget what has past, if I had to choose a 2nd property for personal use, a business base and investment potential from today’s new prices, I’d still want it to be here.
It is sad for those who have to sell right now and some of the personal stories of loss in Dubai, as elsewhere around the world, are grim and regrettable; but from an economic standpoint these distressed sales need to go out of the market and then all would-be buyers will know what the real prices are. Odd units from distressed sellers coming onto the market perpetuates the ‘wait & see’ attitude of the buyers that are around, with most buyers saying ‘I will wait’ because they think someone else may need to sell for a low price next week. They may well be right for now and if they have little concern over the type of property they end up with then they may well get a bargain – distressed sales are part of the economic cycle after all – but in general I feel the prices for the best locations are at, or close to, the ‘come and get me’ rate – and confidence is now the main obstacle preventing things moving forward.
Sentiment can change quickly however and some commentators are seemingly already getting fed up of the Dubai bashing and are now saying these current prices (on the Palm) could double over the next 3 to 5 years – not great if you have just seen your house value drop 50% in the last 6 months but a nice outlook for those buying now! Personally I do not see a rush for much ‘coming and getting’ until after this summer at least but it will happen & Dubai will prosper; until then there remains bargains to be had.
Room with a view: a visitor’s outlook
Over my last 8 years of visiting Dubai, I had become comfortable with the belief that ‘all that glitters actually was gold’, and for me, the Emirate, although covered in debris currently, remains precious beneath it all.
I have been fortunate enough to visit Dubai 4, 5 & 6 times a year in recent times and have seen its development from various hotel windows.
Over that same period things have prospered in my home land, as in most parts of the world, enabling me to modestly invest in this shiny Arab Emirate. Here I have seen those investments flourish and happily (even joyously) enjoyed the ride that Dubai was providing.
This prosperous haven has, over the last 6 months, fallen into line with the rest of the world with both prospects and property prices heading sharply south. The Emirate that was still being hailed up until recently as the pinnacle of luxury and glamorous excess is now being pelted and ridiculed by the same media. To me it is often more of an embarrassing insight into the void that is the mind of the correspondent and I wonder sometimes why it often sounds so bitter? The Australians have a phrase for it, they call it the tall poppy syndrome; it’s built-up and then ‘they’ take pleasure in knocking it down, a bit of a cheap dig really.
Over those years I saw plans for the Palm turn to visions of spewing sand emerging from the sea, which turned to land, that turned to buildings, which turned to escalating property prices! I saw the shorelines handed over and shared the disappointment with regard to some of the quality aspects - but who could (or would dare) complain when the price had increased 2 fold and later 3 & 4 fold!?!
As the Palm developed the fronds became little communities and having now lived in one (albeit for a short time) I can see the attraction of the sense of community and security that they bring - not to mention the Kudos. Again, as with the shorelines all may not be perfect... people (mostly those that do not live there) can grumble about the close proximity of neighbours and dogs doing their 'thing' on the beaches but it is unique and remains a spectacle both from the air and when driving through the structure, or any aspect of it, by car.
Then The Atlantis; the explosive OTT Dubai style opening and the world wide publicity - and all this taking place well into phase 1 of the world wide economic crisis!!
Now I see the Marina turning from a building site into a developing International City in its own right (I mean like a developing adolescent New York, London or Hong Kong & not Dubai's own International City budget development) - the night views are spectacular and right now, from today’s hotel room, I can see busy traffic both on the SZ Road and locally around the Marina - and its 2am!?! We are in what are described, understandably, as 'depressing' times but still these people are travelling 24/7 - presumably either working or spending. I wandered down ‘the walk’ this week in front of JBR – how nice it is to have an ‘outdoor’ promenade to meander along – all the cafes and restaurants were packed and it is a real boon for both JBR and all the hotels and apartments around the Marina and beyond.
Still the most luxurious buildings and finishings of the Palm are to come... all the Crescent hotels, the Tiara and Oceana developments, the Fairmont on the trunk, perhaps one day a grand mall at the top of the trunk and greenery & finishings around the Palm such as those seen around Madinat Jumeirah.
Nakheel will need to get bailed out if they are to be the ones that are around to complete the Palm; lets face it, they are giving a very good impression right now of being broke so someone needs to do something with them; their ineptness & lack of funds is an embarrassment for Dubai in my view and gives out all the wrong messages by helping people form beliefs that Dubai will not stand up & play fair in the tough times, but instead will pull up the drawbridge and abandon everyone else; investors of any kind, private, corporate or sovereign do not forget these things but there is still time to make a change and change those developing beliefs. Make a change please!
If Nakheel are allowed to sink... (If Dubai Inc are reading this then please don't let Nakheel go under - Nakheel are seen as being 'part of Dubai' and although it may allow some debt to be written off it will set the Emirate back years in terms of PR and attracting any new foreign institutional or private investment).. I'll repeat that first bit... If Nakheel are allowed to sink (& with dignity please - if that’s possible?!) then it will not be unusual for the originating development company of such a large infrastructure project to go broke - on such vast infrastructure projects the cost is often so enormous that it is seldom possible to recoup costs and survive in any fit state; the Channel Tunnel is a typical example of this scenario (for our European viewers).
So here we now are; prices are said to be 50% down, but not everywhere, let's face it; in some areas you cannot even get 50% of June 08's price! In fact in most areas other than Palm Jumeirah you simply cannot sell a property - at any price!!
This is where we are today – it is not just Dubai that is down, it is the world! Even the most ardent fans of Dubai are beginning to recognise and accept this fall - but the new, and by far the more interesting question, is ‘what next for the glittering Emirate?’
It is interesting to see those folk that never made money in the local property boom condemn all the property owners and claim significance from their 'intelligence' of being able to foresee this downturn; ‘collapse’ they call it. I think, to some level, they have a compelling argument about their wit, although it kind of 'falls flat' when you ask as to why their foresight was not deployed to make themselves millions of dollars during the 'up' period!?! Although these people will have an answer for that – these people always do!
The new wealthy that made money from local property fall into various categories. These include those that are wholly depressed and talk about yesterday and ‘if only’, others are equally annoying by being too upbeat, looking forward to 'prices returning to their previous levels soon’. I have been at least one of these and equally annoying! Mark?
The guys that make most of the money most of the time tend not to talk much. These guys are simply devoting their attention to 'doing' and working on ‘what next’, along with ‘how to make the current situation better’ - not bothering to seek comfort by sharing tales of woe or searching for reassurance about market resurrection; "perhaps these guys can afford not to worry" I hear you say, or was that me!? Perhaps that is true but I am sure there is a connection between their attitude and their prosperity & that may be another lesson that some of us can take from these troubled times.
I believe it is important to see it AS IT IS – to get real!! But also NOT to see it WORSE than it is – and this is where most people appear to struggle right now in my view. If you were to believe the world press you’d be forgiven for thinking the locals were heading back into the desert, setting up their tents and taking up pearl diving – with the name of Dubai to be erased from the map for 100 years.
The way I see it - one day soon the world will figure a way to get back to some form of normality. Finding a solution has every ones attention right now and they will sort it. At what cost, how long it will take, and what the ‘new rules’ of the game will be no one exactly knows. Countries, companies and financial entities will re-organise themselves and between them create a path forward that new & reformed entities will quickly tread. A massive vacuum devoid of trade and finance is being created and, like any vacuum, this will quickly get filled once the door is opened.
Everyone has struggled and most have been hit, both countries and individuals alike, and although the numbers of $’s everyone had has now diminished, most still retain similar places in the pecking order; Dubai included!!
Dubai was a fast growing key location in this emerging region of power – and it still will be. It is in a location that bridges between both East & West and also Africa & the old Soviet States - in the middle of key oil states that hold sizable SWF's and amidst some of the few countries that will maintain some semblance of positive growth over the period of gloom we are now in. Some would argue that it is right in the middle of the new world powers – with only the US missing. The US will remain a super power of course – but because of the oil here, the trade & opportunity, and the security issues the US have travelled to be here and want to be involved too – so everyone is at this party!
The main thing for Dubai is that it has retained its core business model and remains a great place for traders of all types to be. Property corrections and over-leveraged state entities can be dealt with & fixed. Becoming a poor environment for trade would be far more damaging for Dubai and when the world resumes business, city-states such as Dubai will flourish.
Dubai may have suffered but it was exciting, dynamic and fast emerging before the crisis and it will be the same once the crisis is over. It has been hit but so has every one else and Dubai will maintain its status amongst the best places to be in the world that offer opportunity; and some say it is likely to offer some of the quickest opportunities of the new upturn.
Dubai is now positioned as a trading and service hub in this oil rich region and it will not disappear. Oil prices that are so key for the countries of the region will recover as supply is reigned in and world economies recover sometime over the next 1, 2 or 3 years, with the price likely to (quite quickly if you read the recent report by the International Energy Agency) go back to between $80 & $100 per barrel. This will lead to creating sizable budget excesses again for all the local oil producing countries and Dubai will see benefit from this.
Away from business the Emirate remains a remarkable place to visit and it still takes my breath away. The weather, its hotels, beaches, malls, personal safety (if you omit driving or crossing the road!) and the rulers continued focus toward making it a leading holiday destination will continue to cause tourists to flock here. Yes, there are issues; many hotels although gorgeous are too costly for many travelling pockets and the cost of 'tourist living' in the resort locations and premier restaurants is not cheap either, especially now... but the former will always out 'do' the latter and ultimately basic economic pointers will determine price.
A property market will return, Dubai will once again return to being incredibly popular and property prices will start to move forward from the excessive lows that followed the excessive highs; with an initial spurt possible from current ‘distressed sale’ lows once lending returns and the world feels confident that all bad news is on the table.
Property is continuing to sell on the Palm and that is why we can say that many prices are 50% down from June 2008 (if you have to sell today) – it is amazing & testimony to Palm’s standing that property is continuing to change hands there in such uncertain world times but such is the attraction of the Palm. The Palm will be where we see the earliest shoots of a recovery and prices there could well see a jump of 10 or 20% or more when a bottom is accepted and all the distressed sales are gone; perhaps some lending at reasonable LTV’s and % rates wouldn’t go a miss either although I do understand the banks reservations on lending to anyone right now as their own financial situations remain unclear.
Many of the offers coming in for property today are from those that hope sellers have a bill to pay back home and need to sell at any cost. This is the market we have as of early 2009. Fortunately, for most, their position is not that of a distressed seller and they do not want to sell at any cost, although sadly I know for others it is. I have property on the Palm and I have a unit for sale there. It is for sale at a rate that is 50% down from the highs and I would be more than comfortable to rent now if the unit is not sold shortly.
Property is illiquid and therefore this is one of the downturn scenarios to be considered for any property investment; but the key thing and recent tide change for me is that I am confident that this new price level is the bottom line. It is likely, certainly possible, that distressed sales may make some units turnover for a little less than this over the coming period but in general terms I have confidence in the value of this property, in this location, in this town, at these rates – and in time it will build from there.
Forget what has past, if I had to choose a 2nd property for personal use, a business base and investment potential from today’s new prices, I’d still want it to be here.
It is sad for those who have to sell right now and some of the personal stories of loss in Dubai, as elsewhere around the world, are grim and regrettable; but from an economic standpoint these distressed sales need to go out of the market and then all would-be buyers will know what the real prices are. Odd units from distressed sellers coming onto the market perpetuates the ‘wait & see’ attitude of the buyers that are around, with most buyers saying ‘I will wait’ because they think someone else may need to sell for a low price next week. They may well be right for now and if they have little concern over the type of property they end up with then they may well get a bargain – distressed sales are part of the economic cycle after all – but in general I feel the prices for the best locations are at, or close to, the ‘come and get me’ rate – and confidence is now the main obstacle preventing things moving forward.
Sentiment can change quickly however and some commentators are seemingly already getting fed up of the Dubai bashing and are now saying these current prices (on the Palm) could double over the next 3 to 5 years – not great if you have just seen your house value drop 50% in the last 6 months but a nice outlook for those buying now! Personally I do not see a rush for much ‘coming and getting’ until after this summer at least but it will happen & Dubai will prosper; until then there remains bargains to be had.
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