The Mega Development Time Bomb
There is no end is sight to new developments in the region, but is there enough demand? asks Mishal Kanoo
Here a mall, there a mall, everywhere a mall. Is it just me or are you too wondering who is going to populate all these grandiose developments and malls that are springing up everywhere around us? I know most people would say that it was said before and it was proven to be an inaccurate statement. But I can’t help feel that we are taking the wrong model as an example of what will happen in future. True, the Gulf area did have a meteoric rise from nothing to where we are today but now we have a set infrastructure and are no longer in the initial stages of developing our countries. In fact, we are most likely in the stabilisation phase of our growth as a region where such ostentatious projects might actually hurt more than it might help the local economies.
If we just looked at a few super projects that are to take place, one can’t help but be aware of the great impact these projects will have on the economy. In Dubai alone you have the Emirates Hills, Emirates Lakes, The Dubai Internet City, The Dubai Media City, The Palm Islands, The new project on the old Chicago village homes, The Dubai Festival City, The Nakheel Mall in Al Barsha and The Emaar Dubai Marina. Perhaps I don’t see it, but could someone please enlighten me as to where these new people are going to come from?
Yes we do have thousand of people coming through our region but actually how many of them are on business and how many are here for pleasure? I do know that there are people who look at Dubai as a destination point only because we are selling them Dubai as a cheap destination to come to only to be shocked by the prices that they have to pay once they get here. Let’s face it; Dubai has lost its value for money status a long time ago. It is still a great place to live in but will people still come here to Dubai because the price is right or because the quality of life is great? This, only time will tell.
OK! Enough is enough! Or is it? Now Bahrain wants to get into the act and compete with Dubai as the premier place to be. On the north of the Island you have the fantasy island of Amwaj which is trying to woe people towards it being an affordable holiday home; Salah Kamal of ART fame is setting up a stand alone resort in the south of the island worth $250 million; Mr. Moawad of Moawad Jewellery is trying to accomplish the same only in the Seef area near the Le Meridien; and finally Hawar Island is getting the royal makeover to appeal to the get away home buyers who want peace and quite yet not be far from home. The $64,000 or should I say $640,000,000,000 question that we should ask is, do we have the infrastructure needed to support all of these mega-projects?
If we took a few minutes to think about the amount of entertainment that we should have to support such grandiose undertakings, or the amount of sewage, cabling, roads, power and so forth needed, I doubt many could turn a profit. The only thing that could make these projects feasible is that if we in the GCC open up our ownership laws to foreigners so that they could own land or homes to entice them to buy locally. The only major hindrance to this is perception. While we like to think of ourselves as a solid area with great potential, we must look at our area from the eye of the potential buyer. There are only a few areas where the buyers would come from. Either they would be rich Indians/Pakistanis; rich north Europeans; rich Americans or rich non-GCC Arabs/Iranians. There might be other buyers but they would be a minority and their impact might not even be felt.
The only ones with the financial clout and cultural homogeny to fit in would be the non-GCC Arabs or Iranians. Again the question here is whether their numbers are viable to make this work out?
Mind you, I am no party pooper nor am I star-stuck. What I hope that I am is a realist trying to see the projects for what they are and not just what they might be. Just because in the past this succeeded doesn’t necessarily mean that history will repeat itself. Then, there were different circumstance and now the rules have changed. But no matter how much I try to pay caution to the wind, there will always be people who think to themselves, If I build it, they will come. God bless them.
Mishal Kanoo is deputy chairman of the Kanoo Group.
