Testing time for the boom towns

Boom towns can offer an endless number of business opportunities, including a clean slate on which ideas can run wild.

Boom towns are havens in the way they offer an endless number of business opportunities, usually starting with a clean slate on which ideas can run wild.

Emerging sectors of any particular industry operate in much the same way, attracting investment for a relatively short-term gain.

The early stage of their rise tends to be described as a 'boom', with the ensuing phases spent speculating on when 'the bubble will burst'.

Unfortunately, that bubble is prone to antagonisation by another trait of a rapidly growing and open market: greedy investors.

This is not the first time a project in Dubai has provoked fury among those, mainly from the UK, looking for a place in the sun.

In 2006, the owner of the Light House in Dubai Marina allegedly fled overnight, leaving the tower standing 15-storeys and 90 investors around US $3.7 billion out of pocket between them.

The same fate descended on a residential project in Sharjah. Only this time the owner stuck around to face the wrath, and in a letter to investors admitted the company had failed to secure a building permit. This admission came two years after investors had placed their deposits.

As with the Palm Springs saga, the compensation offered was little in comparison to the amount they were expecting to gain from their new homes.

The backgrounds of project owners are often questioned whenever a debacle arises, with some rumoured to have baked cakes for a living before trying their luck at building something of more than three tiers.

Many have sales offices scattered across several parts of the globe, without even having a completed project to show as part of their marketing remit.

Another characteristic of a boom town is its sensitivity to pitfalls, where even the slightest upheaval can shatter confidence, leaving the reputation of an entire economy in tatters.

It wouldn't be so bad if developers admitted to overstretching themselves and failing to envisage that having so many projects on the go might just impact the resources needed to get them finished. Such a situation makes you wonder if the bigger fools are actually the ones living millions of miles away who buy off-plan.

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Sep 01, 2020