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23 April, 2007

The concrete curtain

A few years ago an associate was commissioned to copywrite a brochure for a new real estate development. All the material was sent through, which details such as location, type of building, market segment, main features and so forth. The associate quickly spotted what seemed to be a mistake, and called the agency. "It says forty towers in the information. Did you mean four?"

"No, it's forty towers."

"On that one strip of land? Will they fit?"

"They'll have to fit."


Roll forward to 2007, and the huge lumbering concrete monstrosity that is Jumeirah Beach Residence has indeed been crammed into the strip of land between Dubai Marina and Jebel Ali power station. So little thought was given to proper planning that no room was left to put in adequate roads, let alone parking:

[Head of Roads Planning Section Hashim Mohammed] Al Hashmi revealed that a high quality public transport bus service would be introduced for the residents of Dubai Marina and Jumeirah Beach Residence. "The corridor in this area is too narrow and since the buildings have come up little can be done about it."

Drive around Jumeirah Beach Residence at any time of the day and it is shocking how dark and shadowy the narrow roads are, in a city usually so brilliantly sunlit as Dubai. The towers cut off the sea, the sky and the sunset like a huge concrete curtain. As National Geographic put it:

"Some critics are questioning the speed of change and a lack of planning: The towering apartment complexes stand like a wall, cutting off the rest of Dubai from its coast."

So who's going to live there? There may be millions more workers pouring into the UAE, but how many of them - even white collars - can afford to rent at JBR, let alone buy? Two years ago, analyst Matein Khalid gave these predictions:

"But in 2007-2008, a phenomenal 200,000 new units will hit the market. This means that we need about 800,000 new expats who are not labourers, housemaids, tailors, minimum wage bachelors or the Sharjah/Ajman commuters to fill this unit. In essence, a doubling of the professional high income salaried population of Dubai in the next two years. Realistic? Not at all."

And now a report from investment bank EFG Hermes is in the spotlight, with analysts noting "overbuilding on a heroic scale":

"The report suggested Dubai has a demand for 40,000 to 50,000 residential units per annum. But it failed to make the point observers have added since that only 30 per cent of this demand is in the luxury sector which comprises the majority of construction projects.

"This could leave the real level of annual demand for new high-end properties in Dubai at 15,000 units per annum, which was also suggested by figures forecast in a recent report on the population growth outlook until 2010 from the Dubai Chamber of Commerce and Industry."


Jumeirah Beach Residence: on course to be the world's darkest, emptiest, luxury skyscrapers.

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30 Comments:

Anonymous bob said...

You think the jumeirah beach residence is dense? Wait till you see what else is coming up in the marina. Opposite the bridge from grosvenor house the 10 tallest residential towers in the world will be built, all crammed into a horrendously small space. The tallest (released so far anyway) there is to be 516m, that's more than taipei 101.

23 April, 2007 03:36  
Anonymous Anonymous said...

You are right on, SD. After going to the beach just near JBR for the last four years, I tolerated all of the construction noise and trash blowing off of the work sites onto the sand and sea, and now the towers block the sun until about 2pm. FYI, the beach clubs near JBR are more than tripling their rates now that the towers are almost finished. On Friday or Sat. evenings, it takes almost 45 minutes to get from JBR to the Mina Seyahi traffic lights, a distance of about a kilometre.

23 April, 2007 09:10  
Anonymous wacky said...

6000 apartments and 6000 car park available - thats it, no further cars can be parked anywhere around. The story doing the rounds is, when JBR opened up sale, it was completely sold in record time, as it was cheap. However it was discovered that land value was not included, as someone forgot to put that element into costing. Thus to recover land cost, the number of buildings were doubled. There is going to be 'war' out there to get in and out of JBR, once all apartments are occupied.

23 April, 2007 09:22  
Anonymous Al-Republican said...

SD-

Pretty impressive. I would have to say this is one of your best entries. Good analytical writing backed up by fact and figures. You should attempt the CFA exam, hehe.

Even though I tend to agree with most of what you write, I believe UAE (Dubai in particular) is adequately taking care of job creation. Did you know that the UAE has 800,000+ job openings per annum? Being the procrastinator that I am, I will leave you to check up these figures in the archives of Gulf News. An appreciable volume of these job openings are for people who may be able to afford such apartments (they'd really have to stretch themselves though).

23 April, 2007 09:26  
Anonymous Anonymous said...

Someone explain to me if there is such thing as a middle class here in Dubai and if so, should it complain?

Rent doublings say yes. Are people leaving - in droves? And if so is that fair play considering this is the Arabian Peninsula where white Europeans have a, well, checkered history? Do we include anyone who lives in a neighbourhood with a name meant to suggest verdancy as upper-middle class? Who's getting the worst of all this? Or, rather, who gives a shit?

I wonder because I'm working on a movie set here in Dubai. It's a cross between Bonfire of the Vanities and Shaun of the Dead.

Oh, by the way, I heart Al Ain.

23 April, 2007 09:59  
Blogger S. said...

Are all the high powered executives who are going to move into the towers the same people who're going to take a bus/tram to go to work..?

I think not.

23 April, 2007 12:32  
Anonymous Anonymous said...

Totally agree with all that is said, not just JBR is going to flop what about all those stupid pipe dreams apparently being built out in Dubailand and beyond. Maybe Dubai is now trying to get in the record books for being the biggest real estate f..up in the world?

23 April, 2007 14:17  
Anonymous Anonymous said...

If people read blogs or listened to people before they did things, they will do nothing.

I remember a few years back people were saying the property boom will collapse in the UK, that was way back in 1999. I listened to them and I have been regretting it ever since.

I think people be default are pessimistic. I bet you anything, all those property will be bought by someone. Whether by first time buyers, holiday people, or speculators. Someone will buy, someone always does.

23 April, 2007 16:28  
Anonymous Anonymous said...

Anon @ 23 April, 2007 16:28..

you said it right...even the sleepy oman has woken upto the fact and started offering free hold properties... i think this boom will go on for a while atleast...

and the way the local population is exploding, soon the entire GCC is going to be filled with more locals than expats...guess dubai was smart enough to build enough dwellings and lure wealthy arabs from neighbouring countries too......with so much petrod-dollars, I'm sure there will be enough buyers in the near future..

23 April, 2007 17:01  
Blogger Shahzad said...

You did bring up a hot topic SD and supported by arguments of analysts but NEVER forget that money speaks and best of analysts are bought( hired ? ) by sheikh.
I think an imp parameter missing from these pessimistic analysis is that dubai is NOT a democracy and hence sheikhs have less difficulty in moulding outcome in there own favor. These analysts were saying market will be flooded in 2006 and just see what happened , all major projects got delayed. Int city a huge development supposed to come in market in 2006 is still getting ready , JBR itself was promised to be released by first quarter 2006. My point is that they know demand and can very well engineer the supply.
Atleast appreciate the fact that Sheikhs are spending in billions to achieve the vi$ion and it takes guts and an entrepreneurial thought to spend like that no matter whether you a billionair or a zillionair. They can easily deposit or invest safely the oil money and reap benefits for long time to come with existing infrastructure or they can put the money to work and grow the tiny emirate.

Anyways ... I dont see a property bust in next 2-4 years.

23 April, 2007 18:56  
Blogger trill_42 said...

It is a little frustrating. Then again, money buys publicity - and if the media says JBR is a success, then who are a bunch of engineers, town planners, property managers and other experts to say otherwise...

23 April, 2007 22:33  
Anonymous Anonymous said...

Just a news hit that you might want to follow up: Dubai Police have been rounding up and arresting legal serbians and bosnians living in Dubai (around or over 100 I believe), in relation to the Wafi City armed robbery. A friend of a friend is one of them. No reason, kept in police cells until disqualified from the investigation. Wish I could offer you something official, but maybe of interest?

23 April, 2007 23:03  
Blogger Harsha said...

Like S., I too was wondering if the residents are going to use the buses?

24 April, 2007 01:56  
Anonymous Anonymous said...

"If you build it, they will come!"
Is Dubai the middle eastern field of dreams? Pipe dreams maybe....
Too much of anything, good, bad, or otherwise, is a BAD thing.

24 April, 2007 02:35  
Anonymous Bukowski said...

SD,

my sources tell me the Emirates Evening Post has been shut down due to licensing problems, and that 7 Days was kicked off its presses - any truth to either of these rumours?

24 April, 2007 12:32  
Anonymous Anonymous said...

Is the growth of Dubai's real estate market adding to real economic growth of Dubai. Or it is similar to the Japanese real estate balloon.

Can any economist tell me?

24 April, 2007 14:09  
Anonymous Imran said...

The Bubble Economy of Japan

http://www.sjsu.edu/faculty/watkins/bubble.htm

24 April, 2007 14:14  
Blogger nzm said...

The dark JBR towers can sit in in companionship with the Dubai Marina 1 complex which, after 3 years of tenancy, is still running at about 40% occupancy.

It's such bad feng shui (arabic equaivalent of this?) to build a mass of huge towers on the beachfront which blocks the flow of energy between the sea and the land.

Also recently noticed, the tower under construction which had a fire (on SZR opposite the Marina) looks to have been abandoned - no cranes and no sign of any work going on.

Similarly, Indigo Tower to the left of it has no cranes, a half finished rooftop and missing windows, with little sign of life.

The two towers (about 10 storeys high now) that had started to be built in the Dubai Pearl on Al Sufouh Road, (middle of the Jumeirah Palm interchange), have also been abandoned - no cranes; no workers; the sites are devoid of any construction materials and are all cleaned up.

In other news today, Starbucks at the DIC closed its doors. The DIC restaurants are all suffering due to the lack of patronage caused by the influx of nationalities, now working in the freezones, who bring their home-made lunches and don't buy expensive beverages. After lunch-time, the environs look like a rubbish tip as people walk away from their chosen lunch spots, abandoning their waste on the ground instead of putting it in trash cans.

24 April, 2007 15:32  
Anonymous Anonymous said...

Actually, the issue with Tecom restaurants has more to do with the fact that they were originally promised "exclusivity" - i.e. you'll be the only food outlet serving a building of 6,000 people.

Then it became, you'll be the only coffee shop serving the building. Then, the only franchise coffee shop. Then, what exclusivity?

Even the food courts were originally depicted as being a few outlets serving the many, before TECOM realised the profit potential of cramming outlets in.

I remember at DMC's Majilis meetings, the restaurant guys were always the angriest because of this apparent breach of contract.

25 April, 2007 08:13  
Anonymous Anonymous said...

nzm.......
"The dark JBR towers can sit in in companionship with the Dubai Marina 1 complex which, after 3 years of tenancy, is still running at about 40% occupancy."

Can you please state where you got this information. Are you saying only 40% of the completed apartments have been sold, and the remaining 60% are finding a buyer?

I do not think that is the case, but I stand to be corrected. There are alot of nayssayers, but alot of info is just based on rumours.

25 April, 2007 20:00  
Anonymous Anonymous said...

No, all it means is that of all the completed apartments, only 40% are actually occupied. The rest are just empty. Who knows why

25 April, 2007 20:25  
Anonymous bob said...

Offtopic but has got to do with construction.

Remember that project near burj al arab that was going to destroy the beach and Sheikh Mo put a stop to? Well that's still going ahead, there are ships just off the coast reclaiming land right now so I presume they'll close the beach only at the last second.

26 April, 2007 19:02  
Blogger vk said...

just discovered your blog, enjoy reading it because it gives me an insight into dubai....I lived there for about 7 months, and enjoyed the city very much, but even at that time I was shocked at the ridiculous pace of urban development......keep up the great work.

27 April, 2007 00:05  
Blogger nzm said...

Anon @ 25 April, 2007 08:13: That may be so, but the number of food outlets in the DIC hasn't changed that greatly in the 3+ years that we've had offices here, BUT the number of people visiting those outlets (in particular the more upmarket ones) has dropped.

Anon @ 25 April, 2007 20:00: 40% occupancy means 40% of the apartments are being lived in. It does not mean 40% ownership.

27 April, 2007 12:11  
Anonymous Anonymous said...

Do you really want to move to the Jumeirah Beach Residence?
I lived in Dubai for quite a while...

Check this:
http://uaereport.homeblock.com/

(I would never go back there)

28 April, 2007 22:45  
Anonymous Anonymous said...

I think the point has been made above about low occupancy and it's true. JBR and the rest of the marina may only ever be 50% occupied, the remainder will be empty holiday apartments or those just bought to dispose of Iranian or Iraqi money.

29 April, 2007 14:53  
Anonymous Anonymous said...

Have any of you negative & pessimistic chaps walked inside the JBR area yourselves? Obviously not; give it a try next time you brave the horrendous traffic (interchange 5,5 to open in August). I did yesterday; also visited 3 of the middle towers and 8 apartments.
Dark & brooding? Where do you get this from? By looking at JBR during construction? That's 95% finished now, and it's beautiful, open and airy, great views even from the 5th floors (Marina, Coartyard & Sea), the what looked like tiny windows turned out to be more than adequate, although most of the balconies leave something to be desired.
250 meters walk to the beach.
'The Walk' will finally give Dubai residents a great place to stroll (at least from October to May), dine & shop.
Looking to rent a 3-bedroom here for max AED 140" - beats the Springs where I live now. Tilted walls & stuck doors goodbye....
A walk on the beach every day hello.

;-)

30 April, 2007 02:21  
Anonymous Anonymous said...

The Jumeirah Beach Residence will become a fantastic place to live and for holidays. Open spaces, fantastic appartments and next to the beach. What else can anybody wish?

17 May, 2007 22:32  
Blogger secretdubai said...

The Jumeirah Beach Residence will become a fantastic place to live and for holidays. Open spaces, fantastic appartments and next to the beach. What else can anybody wish?

What in the hell is this? Dubai Properties' desperate attempt at blog marketing?

17 May, 2007 22:36  
Anonymous Spanky said...

I chuckle when I see all these comments from folks who are convinced that the grand masterplan is the work of the best advisors money can buy, and that JBR and all the other luxury towers won't be empty white elephants for years and so the property market cannot crash because the Sheikhs will not let it happen...

...take a look at the Dubai stock market. Ouch! It's 50% down on where it was couple of years back. And darling of real estate investors everywhere, Emaar is about 80% down.

Spectacularly overpriced investments of poor quality can crash in value in Dubai, even when it's awash with oil money and borrowed cash. Of course maybe "this time it is different"? Then why are Emaar shares cheaper than a big mac meal now?

30 September, 2007 11:24  

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