Four years ago a tremor struck world finance markets as Dubai came close to defaulting on its sovereign debt, but the boom times are coming back
Last month Dubai was chosen as the host city for the prestigious World Expo 2020. The news will accelerate Dubai’s recent resurgence.
The emirate, whose name became synonymous with the unsustainability of the Noughties’ building boom, is set on course for a new period of significant growth based on cash, and not on borrowed money.
Richard Thompson, editorial director of MEED, the Middle East Economic Digest, says: ‘If Dubai’s previous boom was debt-fuelled, the new resurgence is benefiting from hard cash flowing out of unstable, distressed regions such as Syria, Egypt and Iran. Dubai is seen as a rock of stability in an area thrown into turmoil by the Arab Spring.
‘Much of the massive new development is high-end residential, built by government-backed developers such as EMAAR and MERAAS.’
Between 1990 and 2003 the UAE enjoyed a 263 per cent jump in GDP. But by 2008-9, despite boasting the world’s tallest building (Burj Khalifa), the largest deep water harbour (Port Rashid) and the largest man-made harbour (Port Jebel Ali), Dubai was in the economic doldrums. One of the region’s largest developers, Nakheel, laid off 500 staff and work on its iconic Palm Islands stalled.
But, under the leadership of Sheik Mohammed, who has been crown prince since 1995 and ruler since 2005, Dubai has weathered the storm and is once again on the up; last week the Dubai stock exchange climbed above 3,000 points, its highest close since 2008.
Dubai saw off rival bids from São Paulo, Izmir in Turkey and Yekaterinburg in Russia to win the right to host the huge global exhibition.
HOK and Populous created the masterplan for the winning bid, with much of the design work carried out in their London offices. Populous project architect John Rhodes says: ‘The site is 438ha and underpins the core themes of technology, connectivity and sustainability.
‘Expo is the third biggest event in the world, after the Olympics and the World Cup, and will see 25 million visitors over six months. So there will be demand for hotels and cultural facilities in Dubai and across the region.’
Rhodes adds that there will also be opportunities for international architects to work on the individual countries’ exhibition spaces at World Expo 2020.
He says: ‘The pavilions themselves will be a wonderful opportunity for British designers to showcase their talents. Dubai is fizzing at the moment. It is on the up and the Expo will see it go from strength to strength.’
The emirate has in fact been ‘on the up’ since oil was discovered in 1966 and the former backwater is unrecognisable from when it was once home to a handful of pearl divers, date growers and fishermen. Now, with a population of about 2 million, homes are in demand and residential rents have already grown by an average of 23 per cent in the past year.
Woods Bagot regional executive chairman for Europe and the Middle East Jonathan French confirms that residential work is soaring. He says: ‘We are seeing a lot of work in design at the moment that will feed into construction over the next 18 months. The Expo will accelerate that – it will be one of the biggest events Dubai has hosted.’
French reckons this latest wave of design work in Dubai is likely to be more attractive to British practices than some previous projects. ‘Contract terms are becoming more acceptable, with limits on liability, and other elements that will lead to more international consultants working in Dubai,’ he says.
Contract terms are becoming more acceptable
‘We are noticing project terms are becoming more pragmatic and fee levels are more reasonable. Clients are looking for world-class design and environmental performance and they are willing to provide the right conditions for international consultants to carry this out.’
The emirate is also keen to attract designers to open offices in D3 – the Dubai Design District – a new business park for architecture, fashion and graphic design announced in July.
Atkins, meanwhile, has recently secured a deal to design three luxury residential towers and a retail podium totalling almost 400,000m² in the heart of Dubai. The scheme, a key part of major mixed use development Al Habtoor City, will see Atkins deliver architectural, structural, MEP and ground engineering design for two 75-storey towers and a 52-storey tower.
Atkins Middle East chief executive Simon Moon says hosting Expo will cement the growing fortunes of Dubai’s real estate market. There is already a pretty good bedrock: 100 towers were erected between 2000 and 2005 in the area between the old city and Port Jebel Ali.
‘The bidding process has already provided a lot of positive sentiment and there is a strong sense within the market that things are going in the right direction, with good planning and decision making underpinning future developments,’ says Moon. ‘We expect to see continuing forward momentum, rather than a sudden rush of activity.’
Property analysts Jones Lang LaSalle says the Expo project will lead to a raft of schemes being let across the Gulf. JLL chief executive Alan Robertson says: ‘While Dubai real estate is poised for growth regardless of World Expo 2020, the success of this bid will act as the single most important influence on the real estate sector across the UAE next year. The hotel and logistics sectors will be the biggest winners, while the residential and retail sectors will also derive significant benefits.’
Michael Fowler, managing director, Aedas Middle East (based in Dubai)
‘We are thrilled that Dubai was chosen to host World Expo 2020, but were not surprised. As one Emirati put it: ‘Historically, the emirates never had anything … but it was on the way to everywhere.’
‘Am I worried about the UAE after World Expo 2020? Not at all. Dubai will continue to be a ‘world expo’ into 2021 and beyond. The characteristics that have brought Dubai success – visionary leadership, diplomatic skill, a central location for most of the world’s population and outstanding infrastructure – these will only be enhanced.
‘We do see the World Expo as good for our business. Plenty of facilities and infrastructure will need architects to design them.
‘At the same time, we are not starry-eyed about the path from 2013 to 2020. There is a lot of hard work ahead. Moreover, Dubai may see a ‘Gold Rush’ mentality. Businesses the world over will beat a path to Dubai’s door, hoping for a piece of the action.
Dubai may see a ‘Gold Rush’ mentality
The market for consultants, contractors, and others could actually become more competitive, rather than less. I do not foresee a 2007-style boom, where clients paid premium prices for everything. Dubai has learned valuable lessons from that boom and bust. Development will be more cautious, more sensible this time.
‘Likewise, we plan to be very focused and strategic about the work we go after, building on the relationships and reputation we have developed in the region. We want to focus on design quality, not just turnover or market share.’