To buy or not Dubai...

Giant palm trees, massive maps of the world and underwater hotels: Nick Lord examines the Dubai property market, one of the most exciting in the world.

A villa in Phuket is so 1990s; that estancia in Spain, very old Europe. The house in London is bought, the apartment in Hong Kong being lived in, the holiday homes in the Med and Caribbean are all there, even the ski lodges in Canada or the Alps might seem a bit passé. So what is there left for the family that has properties everywhere they need?

Well you might start to see Dubai being added to this list of must-have residences. If the promoters of some exciting new property projects are to be believed, Dubai might just be the hottest destination of the new millennium.

To understand why people are talking about Dubai now, you need a bit of history: Dubai was founded in the 1950s as one of the seven emirates that make up the United Arab Emirates. Initially it was little more than a trading post with a seedy reputation. That changed in 1967 when oil was discovered. This oil allowed the country and its ruling Al Makhtoum family to begin a phase of rapid development. From a population of just over 5,000 in 1950 there are now more than 1 million living in the emirate. Of these more than 90% are non-Arab immigrants, forming the backbone of the economy.

There was enough oil to provide a good start for Dubai but not enough that the whole economy became dependant. Indeed some analysts predict the oil will actually run out in the next 10-15 years. With this scenario, the government realized that it had to diversify its economy.

Key to this proposition was attracting foreign talent to build up new industries such as tourism, media and finance. And key to attracting foreigners was a law that was passed allowing non-locals to own the freehold of the property they purchase.

Now a series of attention grabbing property developments are springing up looking to attract the globally wealthy searching for something a bit different.

Most notable are the two Palm resorts being developed. These projects constitute building two giant palm shaped offshore islands on reclaimed land, one at Jumeriah and one at Jebel Ali. On this reclaimed land, exclusive villas will be built, each with its own private beach and boat moorings. The Palm developments hit the headlines early, not only for their grandiose vision but also for the fact that David Beckham was rumoured to have bought rights to one of the villas to be sited on the Palm.

Beckham or not, the developments have caused a Beckham-like frenzy. The 2000 villas that are being built on the first palm apparently sold out within one week and now a blistering secondary market in rights, unfinished properties and land plots has sprung up, reminiscent of the feverish Hong Kong property booms of the 1980s and 1990s.

Another development that will cause perhaps even more headlines is simply called The World. The developer Nakheel Properties is building a map of the world made up of a series of islands 3 meters above sea level. There will be one island for each country of the world (although in some cases that countries have been broken up into states). These 250 islands will not be connected at all to the mainland, nor to each other, so all owners of the islands will have command of their own mini country where they can literally do whatever they like.

The World will be situated 4km offshore and will cover an area of 54 square kilometers. The company will invest $1.8 billion in the project. With 250 islands being built the average price for each island will thus be $7.2 million, if the project is to break even. Sources suggest that the first island has already been sold (Western Australia), but to a commercial rather than residential buyer. The whole concept is beguilingly attractive: own your own island, in the shape of your own country, in the warm tropical seas of the gulf, and there do whatever you feel like, including presumably acquiring neighbouring countries in a show of national strength.

If islands and palms are not your thing, then there is Hydropolis, which is being billed as the world's first underwater residential and hotel complex. This has already raised $500 million in investment and is due to open in 2006. It will be built entirely underwater next to warm tropical reefs and most of the walls will be see-through.

Apart from these esoteric projects, there is a whole rash of new building work going on in the country with more traditional high-rise apartment blocks and villa complexes sprouting up wherever you look.

If you do decide to buy what will you be getting and what can you expect from Dubai? The place sits on the edge of the Arabian desert and is, understandably hot. But it is a dry desert heat rather than the wet tropical heat of Asia, which makes it slightly easier to bear, although in the summer temperatures do rise above 50 degrees celsius. Indeed, if you are lucky enough to own a pool, it is one of the few places in the world where you will need to cool the water rather than heat it up.

Other than the heat, the country can seem a touch soulless. Its historical heart seems absent as so much of the country is made up of modern developments, although you can find evidence of old Arabian culture in the souk district of the old town. It is modern, free and welcoming, a sort of panglossian vision of how the Middle East should look. Interestingly most of the visitors and indeed expats who live in Dubai tend to be other Arabs and people from the Middle East who are attracted to its freedoms - both social and commercial.

In much the same way as property in Macau is riding on the back of continuing restrictions on gambling in mainland China, so property in Dubai will probably prosper as long as there are social restrictions in other parts of the Middle East. After all, no one ever lost money betting on people's desire to have fun. And what could be more fun than owning your own island?

Nick Lord traveled to Dubai courtesy of Cathay Pacific, which flies there seven times a week. While there he stayed at the new Shangri-La Hotel, Dubai, which was recently named at the DEPA Middle East Hotel Awards gala dinner as "New Hotel of the Year".

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