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The Dubai Dream Is Not Over Yet |
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09.12.2009 |
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At a 10-story luxury apartment complex lining the entrance of the Palm Jumeira, the manmade island in Dubai shaped like a palm tree, only three floors are lit at night. The prevailing darkness is a stark reminder of the recent departure of the European jet set, who generated much of the demand. The price of a three-room apartment, sold only a year ago for 2.8-3 million dirhams (about W999 million) dropped almost by half this year. Even so, estate agents say, hardly anyone is buying.
The Chosun Ilbo visited a labor camp 40 minutes from Dubai in the Alquoz area in eary September where constructions workers from India, Pakistan, the Philippines, and Nepal are lodged. One worker from Philippines said that his income dropped by 10 to 25 percent after night shifts disappeared last year, and with that dropped the amount of money he could send home. After construction demand fell due to the global financial crisis, most of the night shifts were eliminated this year, and the number of workers at his company dropped from 80 to 60.
The setbacks came after foreign investment stopped flowing into Dubai, which has concentrated on real estate development since the early 2000s to transform the emirate into a finance and tourism hub in the Middle East. The local construction industry estimates that about 75 percent of all construction plans are on hold.
* Leadership
Yet Dubai stands out because the leadership of Sheikh Mohammed al-Maktoum is still strong. Public support stems from the relatively light financial burden on the actual citizens of Dubai, who were able to keep their incomes intact through various government and legal benefits. One prominent example is the sponsorship system, which forces all foreign companies to use Dubai citizens as sponsors and pay them sponsorship fees.
Sheikh Mohammed's attempts to compensate for the emirate's relatively weak oil industry also still resonates with his subjects, and his call to develop a strong service industry -- such as finance, Internet and the media -- still enjoys public support.
* Slow Recovery
These efforts have been dealt a blow by the economic crisis, but few experts believe Dubai will abandon its original strategy, as no other Arab nations currently offer serious competition to Dubai's burgeoning service industry.
Even now, there are frail hints of a recovery. The 7-star Atlantis Hotel and the largest malls in Dubai are crowded with tourists from all over the world enjoying the holiday season. Dubai Ski, the only indoor ski slope in the Middle East located in the Emirate Mall, gets 2,000-3,000 visitors a day.
Local experts, however, all agree that it will take at least two or three years for Dubai to reach a stable path of recovery. "Although the drop in real estate prices have slowed, it has not hit bottom yet," said Martin Kohlhase, a lead analyst for the Moody's Investors Service Middle East Branch. "Oversupply in the market is unlikely to be resolved in the next two to three years, which could result in the property sector considerably slowing down the Dubai economy."
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Source:english.chosun.com |
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