Wednesday, May 14, 2008

The death of a sceptic?

Seemingly far-fetched plans for Dubai are steadily becoming a reality.

Ok, I admit it. I've spent the last decade and a bit expressing my doubts about how the Gulf hotel and property markets - especially Dubai's - can keep on growing without registering some kind of side effects or slowdown.

I've even written columns in this very publication talking about the dangers of looming oversupply, and of relying on untested micro markets, for example. Forget all that: I was wrong.

I've been spending some time on my weekends driving about and seeing what's actually going on in Dubai and I must say I was impressed.

Not just because it was the biggest this and the tallest that, or by the endless zeros on the end of the development budgets, but because the end results are there to see and feel, and yes, to smell and cut yourself on, if you get close enough. Sure, some projects have been delayed, but have you seen the scale of them?

As a consultant who often earns a living by advising clients to err on the side of caution, I have to say I'm glad the builders of Dubai didn't, because Dubai wouldn't be Dubai if its leaders sat about and procrastinated. And because it is indeed possible to analyse until you paralyse.

And so it is that the lines on the map of Dubailand are fast becoming more clearly defined. We now know that there will be a new road there called the Dubai Bypass and that the City of Arabia has a mirror image on the other side of the Emirates Road, which is Majan by Mizin.

And no, that's not just a pleasant piece of alliteration, because despite the fact that the project only registered on my radar screen last year, the infrastructure is already in place and there's a bunch of developers selling a bunch of projects and giving a lucrative livelihood to scores of property agencies.

People are building and others are buying and before you know it, there will be towers and people working and living in them. And if you don't buy now, you'll be too late!

The same applies for the Dubai Silicon Oasis, which ain't no lonely patch of desert now, I can tell you. It's a little suburb of Dubai serving a viable niche market that's already half built, in less time than it took me to find out where on earth it was.

And there's thousands of people living at the International City next door, and hundreds of students commuting daily out to the neighbouring Education City too.

You may be like me and have thought this was all talk and that nothing was actually happening, but believe you me, big money has been spent, major workforces have been deployed, houses and offices have been built, finished and swept clean - not just by their creators, but by their occupiers too.

And the same goes with Dubai's hotels. If I ever say again that this growth's not sustainable, stop me. If I express a single doubt about the future success of Bawadi, which by the way is now expected to have 60 hotels, please feel free to shut me up. It's not respectful to the people who are, as you read this, making it happen.

I speak a lot with hoteliers, serious, sensible people who deal with real life all day, and there's not one of them who doubts the potential of the market to continue on its current phenomenal run of excellent performance for many years to come. Build as many new rooms as you like. I think what unnerves me is that Dubai has really navigated off the charts. Here be monsters.

The speed and extent of its growth, take whatever market you want - hotel or real estate - just seems to be much greater than any other city or country has experienced before. The safety net of being able to compare with somewhere else where they've done something similar is simply no longer available.

So, while you hurtle into the unknown, there's really no use looking for your safety belt. You might as well just enjoy the ride, the wind in your hair, the 100% high season occupancies and the average rates as they surge to ever more dizzying record highs.

Actually, if you do want to comfort yourself, just remember that this is not a western country. There are no pesky opposition parties or public pressure groups to stand in the way of progress at the speed of light.

Which by the same token means that conditions can be created to ensure that small external issues - like the sub-prime crisis, the weak dollar, and galloping inflation - can and will be controlled to ensure that we should not use the phrase ‘inexorable climb' lightly in Dubai's case.

Another hotelier friend of mine told me he felt that Dubai's hotel market was only just getting into gear, which chimed with a statement made by a great man we all know and admire, who said he had only achieved 10% of what he planned for Dubai. Woosh! Hang on tight! Here we go!

No comments: