Get ready for the ride
There has been much hand-wringing over the past year on whether the construction bubble will burst and leave a mess in the UAE.
There has been much hand-wringing over the past year or so over whether the construction bubble will burst and leave a mess in the UAE that could take years to recover.
Well, I should say there is a lot of angst among economists whether the current boom will go to hell in a hand basket. Not so much for developers and speculators. For them every day is a money-making day with the gravy train barreling down the tracks at full speed.
Maybe they know something I don't. But I wonder just how long Middle East developers and contractors can remain immune to the ravages of the real estate crisis and tanking economy in the West.
Yet, for now, any developer with a fistful of cash can come to Dubai as if it's the 21st century version of the Nebraska land grab. Cadillac Escalades are the new covered wagon as investors roam beachfront property to plant the next 5-star hotel and resort.
Hotel occupancy rates are at a staggering 85%, making the UAE the envy of every Western hotel owner. Emirates airlines next month will launch a direct Dubai-to-Los Angeles flight with enough luxury appointments to intimidate even Donald Trump. The airline already has direct flights from London, ensuring a steady stream of tourists with fat wallets.
So demand is high and the mantra is to keep up supply.
But then there are troubling signs on the horizon like the Damac debacle when investors accused the company of backing out of a development deal to sell land that has trebled in value over five years.
And the looming US/Israel/Iran crisis could severely dampen Western interests in the region no matter what kind of rosy spin the development community puts on it.
What could offset these pesky doom and gloom scenarios is that if Dubai really hits a population of 5 million people by 2015, then developers' zeal to turn the city into a skyline of commercial and residential towers may be justified.
In other words, the construction boom in (as long as there is oil money to spend and the woes of the US economy stay on its own side of the world) the UAE can continue to enjoy unprecedented growth that will exceed anything a municipal planner in the West ever imagined.
That's not to say that Dubai couldn't serve as a cautionary tale of excess if everything goes belly up due to war and a recession, but whatever happens we are in for an interesting ride.
Rob Wagner is the editor of Construction Week.