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02 October, 2005

Beware the burgeoning burjes

According to Hong Kong's finest diarist, Hemlock, building massive towers is a sure-fire sign of doom:

"From the Empire State and Chrysler Buildings in 1920s New York to Petronas Tower in 1990s Kuala Lumpur, egotistical architecture has been a ‘sell’ signal, a leading indicator of an economic crash."

Hemlock's gripe is with Hong Kong's planned International Commerce Centre, set to be the world's third tallest building, at half a kilometre high.

What, then, for Dubai and the stunningly beautiful, 700+ metres high Deathspire, its soaring silver spike ever depicted against a glowering, apocalyptic sky?

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23 Comments:

Anonymous Anonymous said...

Really? What about Shanghai with high skyscraypers? The economiy is booming in China, and will last for a long, long time.

02 October, 2005 02:14  
Blogger secretdubai said...

I think it's more of a joke theory (I hope!)

02 October, 2005 02:22  
Blogger waterboy said...

There was a time in Singapore when they built lots of hotels and occupancy rates were only about 20% - people were saying it was the end of the world etc. Evidently it wasn't.

I'm a bit of a bear about Dubai analytically but it has to be said that they may just pull it off..

02 October, 2005 05:13  
Anonymous Anonymous said...

Aw, whatever. Even though it sucked in New York in the 1930s, it's been awesome there ever since (erm, except the 1970s...)

Anyhow. It's a fun theory.

Oh, by the way: that stock market? It'll collapse, like all barely regulated financial institutions do. And then they'll pull it together and forge on. (Dubai's market isn't the New York Stock Exchange, circa 1929: it's way too small.)

02 October, 2005 05:17  
Blogger black feline said...

rubbish...Dubai and the entire UAE will definitely be the next wave economically for a long time coming..im only worry about history repeating itself..balushit, u remember we built the Tower of Babel not too long ago..and what happened? tell them pls..

02 October, 2005 07:48  
Blogger Tim Newman said...

The theory has plenty of merit, it simply being an extension of Pride comes before a fall.

The Twin Towers in NY and Canary Wharf in London were all constructed just in time for a recession to ensure they stood empty for some time.

Dubai is headed for massive overdevelopment resulting in partial occupancy rates, just as Cancun was a decade ago. The enormous building projects underway are not the result of genuine demand and organic growth, they are simply somebody else's idea looking for a buyer once the things have been built. These types of projects do not have a great history of success.

From what I can see, most people are rushing to buy property in Dubai with the sole purpose of flogging it for a profit in the near future. At the moment, apartments are being snapped up at 10% build and sold at 30%, bought at 30% and sold at 80% etc. At some point, about half a million people are going to have to want to live in a completed apartment in Dubai, and have the necessary cash (between $100k-$500k) to do it. I've yet to meet one. Other than a few footballers, rock stars, and dodgy Russian billionaires, I really don't see where these half a million people are going to come from, especially given the precarious state of consumer debt and inflated house prices in the West.

My prediction is the projects will not get the necessary Western interest which will allow them to sell the apartments at a high price, so the prices will drop. Then they will be snapped up cheap by Chinese and Indians who are far more solvent that the West at the moment. Then I'd keep a keen eye on the government's promise that everyone who buys an apartment is guranteed a residency visa.

02 October, 2005 08:09  
Blogger black feline said...

SecretDubai,

Our old friend balushit wanted to know when the embargo on him to this site will be lifted?he's crying bucket of tears at my blog..LOL

02 October, 2005 08:13  
Blogger moryarti said...

A correction is definitely eminent... It will be preceded by a serious cash liquidity issue though. I mean, look at the market today:

- The increase in building material costs are over inflated and doesn't reflect the market prices or conditions.

- Interest rates on business loans have skyrocketed because of the current lower risk premiums.

- Contractors increased their prices/rates.

- Energy, fuel and overall living expense has gone up.

All these factors above forced new building owners to jack-up their prices to cover their inflated expenses.

Now this is where the problem kicks in.

Existing property owners will want a piece of the action. So, they jack up the prices as well to "meet market price". - and this happened with old building landlords increasing their rents in BurDubai, Ghusais and Deira. very very wrong!

Consumers will suffer on the short run, as it will be a sellers market.

But on the long run, and when all those towers are completed, consumers will have 2 choices: 1) live in a brand new apartment for X price and 2) live in an old one for the same X price.

Naturally, everyone will go for the new houses and leave the older ones behind!

Older property owners will go like: "WTF, ah ain't down with this .. i should fix my rents; cause my building is kindda old and i already covered its capital costs. Raju,.. cut the rents and bring on those tenants back!"

So, older buildings become attractive again, cause they are at an attractively lowered competitive rate.

Unfortunately, 'new' property owners won't be able to meet that competitive rate, cause their property costed an arm and a leg and they still have bank loans to repay. Hence, true market value of the property will force itself AND is is much lower than the actual cost of the property.

New property landlords will suffer for about 6 months to 1 year. Then the bank decides to takeover the new building (which was loan collateral) and offer it in the market for peanuts because the bank wants to minimize its losses.

And this, boys and girls, will be the beginning of the end of the property market arrogance in the UAE.

And maybe once again, we will go back to the golden days when landlords reduce rents for the sake of you renewing your tenancy contract..

02 October, 2005 09:08  
Blogger secretdubai said...

black-feline - please could you stop referring to the banned person on this blog. I don't feel it's fair to talk about him while he can't respond. He can always email me, which he hasn't managed to do. Or better still, start his own blog rather than rant all over everyone elses.

02 October, 2005 12:04  
Anonymous The Naked Truth said...

This comment has been removed by a blog administrator.

02 October, 2005 12:20  
Blogger secretdubai said...

The Naked Truth - I've temporarily unpublished your comment as you mention it's a previous blog post - I just wanted to check it's from your blog, otherwise the original writer may want to give permission before it's quoted in full elsewhere.

02 October, 2005 12:45  
Blogger The Devil's Advocate said...

Moryarti:

They are building ghettos.

Give it 10 years. Dubai Marina will be a crim ridden, Camden town like, council estate.

02 October, 2005 13:30  
Anonymous Diabolo said...

No problem SD,

i'd posted it earlier as a comment on http://grainofsandormoundofsnow.blogspot.com/
and then placed a slightly 'nicer' version of it on yours.

Didnt realize that it might be too provocative for your blog - I respect your decision.

Sorry again,
Diabolo

02 October, 2005 13:49  
Blogger secretdubai said...

No problem!

Only there is a problem, because how do I "undelete" it? I only did the removal thing, not the "permanent" deletion thing. I figured I could click back and restore it somehow.

Otherwise if you like, post it again.

02 October, 2005 14:09  
Anonymous Diabolo said...

The fact of the matter is that the folks with power are doing all they can to keep the expats around long enough. Lets see what my old friend NoBullDishdash has to say…

“You see, its real simple... if we dont give 'em anything, they’ll leave. Who will we live off then? Okay, here’s the plan... lets give them some land (but not really, its ridiculously priced and is legally useless as a real asset), we'll send 'em these small timely 'jolts' aka ‘carrots’ in the press about citi*e*ship so that they stick around. Who cares about them subcon lot anyways?!?! All we want them to do is to pay the bills... lotsa lotsa bills! Lets fool them expats by saying we'll charge 9 dirhams a square foot in maintenance but then raise it to double without warning. "

"But the problem is that we've gotta make sure they take the bait! How?!... Ok, plan number 2.. We gotta quietly push up the rents so that it’s marketable for them to buy into this 35/50/99yr nonsense! where else can these dumb expats recover their investments in 10yrs? Instead of them sending it back to the potholes that they came from, we will make them keep the money here! Then in 5years time, we’ll get ‘em once again with property and income tax!!!”

“And they think we're gonna treat them fairly! HA!"


My friend NoBullDishdasha has a point doncha think? If any expat really thinks there's someone who's going to climb down from heaven and give everyone equal rights... they're blumming mad! Besides, they’ve never made a secret about it either! It’s us… the foolish, media believing expats (no I correct myself… many of us european expats don’t apply) who are to blame! When they say “pay up”, we never bothered to ask… “Why?” or “Isn’t that too expensive?” Okay then…Now PAY THE PRICE! But I don’t understand something… what are they going to do once it gets as expensive as NYC / Toronto / Sydney / Auckland etc.? (we’re not all that far away from that!) Do they honestly believe folks will want to stick around as ‘a paying guest’ in 50 degree heat if they’re not saving a dime? Who will they live off then?

When a close friend moved here over three decades ago, she lived in a large, new, two bedroom apartment and paid…. Get this… five thousand a year in rent! The average rent has now increased by a factor of TEN!!! (That 30 yr. old apt. now rents for 45k a year!) But her husband (top management) only makes TWICE his income than in those days! Because of the ridiculous rents(she says its hard to bring the standard down so they continue to live in their luxurious home)they're now living off their savings. So, its not only the ‘small folk’ that are affected!

I personally don’t think anything will change for another 10years…. Once all the buildings are built, once all the land is sold, once all the oil is gone – that’s when they’ll need the lo©als to start paying taxes as well… that’s when the winds will change – and if you the folks in the new developments think you’ll have a choice to leave… I don’t think so – You’ll have spent an additional 500k to 700k bucks in just maintenance by then!

Good Luck Desert Dwellers!

Diabolo

02 October, 2005 14:49  
Blogger secretdubai said...

Anon: deleted, because your comments clearly fall foul of UAE media laws.

And you didn't even try to explain or back up your statement.

02 October, 2005 16:28  
Anonymous AnonK said...

Interesting. I read on BBC the other day something similar in the article "dubai reaches for the Sky"

http://news.bbc.co.uk/2/hi/middle_east/4139094.stm

I also find it interesting because some people believe this is a sign of the Last Hour/Judegement Day. They refer to the verse in the Koran which says (and I majorly paraphrase here) "you see barefoot, poor shepherds building tall buildings." They draw a parellel between Emiratis beeing shepards 30 yrs ago and their economical explosion now.

Not stating this is correct, but I find it quite interesting

02 October, 2005 23:03  
Anonymous Anonymous said...

Here's a fun fact: the world as you know it is going to end. It always has, and it always will. And the apocalypse is coming, as it has many times in the past. The big problem with waiting for the apocalypse is that, although you imagine you won't have to pay your credit cards after, in fact, you will :)

05 October, 2005 06:16  
Blogger Mubeena Mohd said...

When I was in 9th grade studying in Dubai, my Islamic Studies teacher told me that one of the signs of the Day of Judgement would be when huge buildings will be built and will try to reach the height of God. She also criticized artists who tried to match the creativity of God. She also gave us a story where a pious man was given 3 choices and had to choose one: 1. Kill a little boy 2. Rape a woman 3. Drink a glass of alcohol. The pious man opted to have the alcohol and turns out that he ended up killing the little boy and raping the woman as a result of it.

The point is.. what people tell you is based on their own ethnocentric view shaped by their subconscious will of pushing their own identity and agenda onto others. So if someone's experience has been to see economies crashing down due to a warped illusion that high buildings caused such a tragedy, then that's what they will push other minds to believe.

08 October, 2005 00:10  
Blogger secretdubai said...

Mubeena - for the record, what was the pious man supposed to have chosen?

08 October, 2005 01:33  
Blogger black feline said...

i think Dubai is definitely on track..economic reformation b4 social reformation..a price worth paying...

09 October, 2005 14:49  
Blogger Mubeena Mohd said...

secret - Ironically our teacher never gave us an answer to this one. In fact, when I asked her, "so what should the man have chosen mam?" (knowing full well that the alcohol was the best option under the circumstances) she asked me to leave the class on grounds of 'an offensive comment'. My tone came across as sarcastic to her Sudanese cultural sensitivies. I have never forgotten this incident ever, and I was personally offended by her allusion that he should have picked one of the other options, and more so because she was a woman.

I'd like to make it clear that I am a Muslim in my own right.. but one who questions the actions of individuals upon consistent observation.

11 October, 2005 18:17  
Blogger secretdubai said...

Re the teacher: the whole question is actually quite absurd and sick. Where I am from, a teacher would probably have been disciplined just for asking it. But there's no question that the most moral thing to do would be to drink the alcohol rather than harm others, and then lock yourself in a room if you feared that drinking it might cause you to harm them. Your teacher was mad because there wasn't a better answer, there wasn't even an answer, in fact.

11 October, 2005 20:20  

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