Is Dubai Getting Over-Stretched?
Dubai’s bullish economy might be creating ripples across the world, but there is a suspicion among some pundits that it might get over-stretched in the longer run, in its attempt of gaining invisibility. The policy of developing world-class infrastructure to entice investors, entrepreneurs and tourists might be proving successful as of today, but it has also resulted into soaring real estate rates and city congestion in the recent times. This may result into some highly expensive office and living accommodations in a few years from now. Dubai hotels and Dubai apartments, a key area for the local tourism industry and economy, might get hit hard due to sharp price hikes in the future.
Dubai’s office blocks are quoted as the most expensive ones across the Middle East, and the scenario won’t change until many upcoming projects got fully commissioned. There is a growing concern that many existing and prospective buyers might decide to look out for cheaper alternatives elsewhere, within the UAE and outside, both. Many commuters working in Dubai have to spend up to three hours making a round trip from Sharjah. It’s simply out of question for them to reside in a lavishly expensive Dubai. To add to their woes, the public transport system and routes are highly overloaded. Many steps initiated by the city planners to minimize road congestion haven’t produced results until today.
The desire of having the tallest and largest buildings and the fastest growing economy on its soil has led Dubai into a construction mania. Up to 25% of all construction cranes in the world are currently stationed at Dubai. At least fifty of them are employed at Burj Dubai alone to help it rise atop the Arabian sky as the world’s tallest building. Burj Al Arab, the pride of Dubai hotels, is already known to be the world’s largest hotel. There are numerous projects either under way or in the pipeline that could leave even some leading cities of the West dwarfed. This might highly raise Dubai’s real estate rates however, driving away many prospective buyers in a few years from now.
According to a recently issued report by the Middle East Economic Digest, the cost of Dubai’s planned and under way projects is expected to total around $310 billion over the next decade. Up to $230 billion of this capital is expected to go in the property sector alone, indicating at the frenzy about to be unleashed therein. Prices might naturally fall down as a result, once many of the underway construction projects got completed in the longer period. This might tilt the demand-supply ratio in the favor of the latter, making Dubai to be the cheapest destination across the Middle East, say about in a decade from now. You might have to cope with some of the cheapest office blocks, Dubai apartments and hotels, as a result, in the longer run. Dubai apartments are greatly admired across the Middle East for their class, aura and style, and are always in a great demand. Any future fall down in their rates could severely affect the emirate’s economy as well, and that’s a major concern.
Dubai is a city of free-trade, world famous landmarks and soaring dreams. The hospitality extended by Dubai hotels and apartments is universally acclaimed. Investors, travelers and entrepreneurs from across the globe are lining up to be part of its success story. Any misadventure by its own planners could result into serious concerns in the future however, and that’s why some kind of regulation should be placed from within the policy-making elite itself.