United Arab Emirates: Thursday, July 22 - 2004
A Short History of Dubai Property: Part 2
This article considers the development of Dubai under the control of the sons of the late Sheikh Rashid from the 1980s to May 2002.
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For most of the 1980s the Father of Dubai, the late Sheikh Rashid bin Saeed Al Maktoum was unwell and effective control of the emirate passed to his three sons. This was not a particularly easy phase of Dubai's economic development.
In the mid-1980s the accumulated excesses of the late 1970s caught up with the emirate and there was a minor banking crisis that resulted in the merger of several banks. Oil prices were much lower in the 1980s than the 1970s and this naturally dampened economic activity.
On October 7, 1990, Dubai's greatest leader passed away and Sheikh Maktoum bin Rashid Al Maktoum became ruler. This was the time of the First Gulf War and the Iraqi occupation of Kuwait, and a period of high oil prices.
As a regional trading hub Dubai had greatly expanded its status with the creation of the Jebel Ali Free Zone in the early 1980s, and was thus well place to capitalize on the inevitable upswing in Middle East business activity that came with high oil prices. Also, after the liberation of Kuwait, most of the supplies to reconstruct the oil field came through Jebel Ali.
Certainly the business upturn that followed the First Gulf War was enough to more than compensate for a slump in local business in 1990; and hotels, offices and other real estate projects also followed, albeit in modest scale compared to what was to come in the future.
In 1995 General Sheikh Mohammed bin Rashid Al Maktoum was appointed Crown Prince of Dubai, effectively the CEO of Dubai Inc. Speaking recently in Jordan to the World Economic Summit, His Highness reflected on his appointment, and recalled that his brother said he could take an easy or difficult path in this position, and that he consciously chose the difficult path.
For Dubai this meant an accelerated vision of economic transformation under clear and decisive leadership. Sheikh Mohammed knows exactly what he wants to achieve for Dubai and lets nothing stand in his way.
But his expansion plans are always underpinned by business planning and a focus on investment return. His speed of execution is also stunning. For example, the Dubai Internet City was conceived in late 1999 and the first buildings opened a year later.
The original success of the Jebel Ali Free Zone in making Dubai a bigger trading hub has been used as a model in the development of a cluster of free zone cities. The Dubai Internet City has been joined by the Dubai Media City, Dubai Maritime City and many others from a thriving zone for secondhand cars to the latest which is for tea trading.
The late 1990s also saw some notable new buildings in Dubai designed to put the emirate on the global map. The seven-star Burj Al Arab hotel, the tallest free-standing hotel in the world, was the most successful. But the Emirates Towers built at the same time is also the tallest commercial building in Europe and the Middle East.
Sheikh Mohammed focused on world-class buildings and facilities which would make Dubai the location of choice for the world's biggest companies. The return on investment was not just in real estate rentals but in the wider benefits that highly paid staff would add to the GDP of the emirate.
His Highness also promoted the development of real estate through the creation of the publicly quoted Emaar Properties in 1997, today the region's largest real estate company, and Nakheel, a Dubai Government company.
Emaar began by creating the 3.5km long Dubai Marina behind the existing Jumeirah beachfront hotels, set to be the focus of the New Dubai, a high-rise city within a city and home to more than 40,000 residents. Nakheel became synonymous with The Palm, Jumeirah, a 5km long, reclaimed island shaped like a palm tree, which soon achieved international fame.
Thus by May 2002 when freehold property rights were created in Dubai, the stage was set for a real estate boom. The economy was growing apace with a proliferation of free trade cities, and strong oil prices lifting the regional economy. Plus exciting new mega projects such as the Dubai International Financial Centre, Dubai Festival City and Dubai Metals and Commodites Centre were on the drawing board.