The great real estate boom in Dubai

In 1995 General Sheikh Mohammed bin Rashid Al Maktoum was appointed Crown
Prince of Dubai, effectively the CEO of Dubai Inc. Speaking recently in Jordan to the World Economic Summit, His Highness reflected on his appointment, and recalled that his brother said he could take an easy or difficult path in this position, and that he consciously chose the difficult path.

Sheikh Mohammed focused on world-class buildings and facilities which would make Dubai the location of choice for the world's biggest companies. The return on investment was not just in real estate rentals but in the wider benefits that highly paid staff would add to the GDP of the emirate.

His Highness also promoted the development of real estate through the creation of the publicly quoted Emaar Properties in 1997, today the region's largest real estate company, and Nakheel, a Dubai Government company.

Emaar began by creating the 3.5km long Dubai Marina behind the existing Jumeirah beachfront hotels, set to be the focus of the New Dubai, a high-rise city within a city and home to more than 40,000 residents.
Nakheel became synonymous with The Palm, Jumeirah, a 5km long, reclaimed island shaped like a palm tree, which soon achieved international fame.

Thus by May 2002 when freehold property rights were created in Dubai, the stage was set for a real estate boom. The economy was growing apace with a proliferation of free trade cities, and strong oil prices lifting the regional economy. Plus exciting new mega projects such as the Dubai International Financial Centre, Dubai Festival City and Dubai Metals and Commodites Centre were on the drawing board.

May 2002 will go down in the history of Dubai real estate as the month that the great freehold property revolution began. Before that month only UAE nationals could own property, and even then often on the restricted gifted-land tenure.

It was in May 2002 that the Dubai Crown Prince General Sheikh Mohammed bin Rashid Al Maktoum issued a decree allowing foreigners to buy property freehold.

In the previous year or so 99-year leases for foreign purchase had been allowed but this was not a big success. It was the adoption of freehold tenure in general and foreign ownership in particular that sparked the great real estate boom in Dubai residential property.

The release of the second phase of Emaar's The Meadows villas saw almost a thousand people queue up to get into the ballroom at The Emirates Towers hotel. There a similar sell-out occurred when The Palm, Jumeirah's 2,000 villas went on sale in the autumn. This iconic 5km-long, palm-shaped island off the Dubai coastline became an international sensation from Day One.

From then on it became a question of how fast developers – at first just Emaar Properties and Nakheel – could roll out their projects.

Emaar added The Springs, a development of several thousand town houses, behind The Meadows; and each successive phase was quickly sold-out. Then there came The Arabian Ranches, a themed community of villas around a desert golf course.

Meanwhile, Nakheel added a second island, The Palm, Jebel Ali not much more than a year after the unveiling of the original Palm, Jumeirah. This second island included thousands of water homes – villas on stilts in the Arabian Sea arranged to spell out a poem. Nakheel also moved on land with its Jumeirah Islands project of villas clustered on a series of small islands surrounded by lakes.

Back on dry land Emaar moved to a second phase of development of its Dubai Marina, a 3.5km artificial harbour created behind the existing beach hotels. The first apartment towers here were sold on 99-year leases, a practice now discontinued in favour of freehold.

At the Dubai Marina Emaar sold and reallocated land to other developers for formidable projects. The largest is the Jumeirah Beach Residence, a complex of 43 high-rise apartment and hotel towers now under construction.

Private developers, both local and international, also bought land at the Dubai Marina for apartment towers. Damac Properties is the most prolific, and the range of high-rise projects now rising from the ground is startling. Indeed, more that 100 towers will be built in the Dubai Marina within five years, creating a city within a city.

However, not all new real estate projects are on such a heroic scale. Emaar's The Greens is a popular development of low-rise apartments opposite the Dubai Internet City, while Nakheel has its Garden Villas near Jebel Ali.

Thus far Dubai residential real estate projects have been concentrated almost exclusively in the area increasingly known as uptown or New Dubai, which stretches from Jebel Ali Free Zone to Dubai Internet City and back into the desert behind.

The Arabian Ranches and Emaar Towers in downtown Diera are exceptions, and Nakheel's International City project is another indication that future developments will also be outside this zone.

Indeed, the next major focus of real estate development will be the Burj Dubai in mid-town, set to be the tallest building in the world, and apartments at two of the six towers, The Residences, are already sold out. There will also be the Old Town of low to medium-rise residential properties to follow.