13-Miami Real Estate-Dubai Desert
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(Borrowed from The Miami Herald)
Riches bloom in the Dubai desert
BY SIMON CLARK
From his air-conditioned office on the seventh floor of one of Dubai’s twin Emirates Towers, Pakistani tycoon Arif Naqvi surveys the metropolis that made him rich.
To continue reading this article in Spanish click the following: Desierto de Dubai
To his left, about 50 skyscrapers rise above the desert city, where thousands of cranes work on $200 billion of real estate projects, according to HSBC Holdings, Europe’s largest bank. To his right are the palace, gardens and stables of the emirate’s ruler, Sheik Mohammed bin Rashid al Maktoum, his wives and children.
”I couldn’t have done a 10th of what I’ve done if it hadn’t been for Dubai,” says Naqvi, 47, who moved to Dubai in 1994 with $50,000 of savings and now runs a buyout firm called Abraaj Capital. His $5 billion of assets include stakes in Turkish hospitals, Saudi Arabian pharmacies and a Jordanian aircraft repair company. Successful investments include Dubai’s Arabtec Holdings PJSC, which is building the world’s tallest skyscraper, Burj Dubai, on a $20 billion construction site not far from Naqvi’s office.
Dubai’s Sheik Mohammed, who turns 59 this year, has imported freewheeling capitalists and low-wage laborers to transform his sandy realm into the financial, tourism and transport hub of the Middle East. In a region better known in the West for exporting oil and terrorism, Dubai’s attractions include an income tax rate of zero and free-trade zones where foreigners can own companies outright, without local partners. The immigration frenzy has raised fears of a real estate bubble and drawn accusations of human rights abuses.
Foreigners are welcome in Dubai — as long as they share the sheik’s capitalist vision. ”People come here to make money — that’s the strength of Dubai,” said Essa Kazim, chairman of Borse Dubai Ltd., which controls the emirate’s two stock exchanges. Kazim, 46, wears the traditional white flowing dishdasha gown, white headdress and leather sandals.
The emirate has attracted 1.34 million foreign residents as money from oil costing around $100 a barrel flows across the region and into its banks, real estate and government-owned investment funds. They outnumber locals by about nine to one, according to the Dubai Chamber of Commerce & Industry.
In 2006, 6.1 million tourists visited Dubai compared with 8.6 million who went to Egypt, the land of the pyramids, according to the World Tourism Organization. To accommodate them, Dubai is building a new airport complex that the country projects will be the world’s largest when it’s completed in 2012.
Hundreds of companies, from U.S. private equity firm Carlyle Group to Goldman Sachs Group, the world’s biggest securities firm, to Citigroup, the biggest U.S. bank, and Microsoft, the world’s largest software maker, have set up Dubai units. David Lesar, chief executive officer of U.S. oil services company Halliburton, relocated last year to Dubai from Houston.
”It’s the Singapore of the Middle East,” Mark Mobius, who oversees about $47 billion at Templeton Asset Management in Singapore, said of Dubai. The emirate offers free movement of capital and confidential banking to locals and people from larger nearby countries such as Saudi Arabia and Iran, Mobius says.
Dubai has a steep hill to climb before it can become an established financial center like New York or London. Its new international stock market, the Dubai International Financial Exchange, lists just 12 companies.
”Dubai has yet to prove itself as a serious locus of capital markets,” said Ian Hay Davison, the first chairman of the Dubai Financial Services Authority. Davison, 76, says he was fired in 2004 after he criticized proposed trading licenses for local firms that he says didn’t meet international standards. DFSA spokeswoman Angharad Irving-Jones declined to say why Davison was fired.
The construction boom is helping to ignite inflation, which reached 10.9 percent in the United Arab Emirates as a whole last year, according to National Bank of Abu Dhabi PJSC. The number of new luxury buildings has sparked talk of a real estate bubble. ”I’m skeptical that there is real end demand for all the luxury housing,” says Eckart Woertz, a Dubai-based analyst at Gulf Research Center. “On the other hand, people are moving in, and you never know a bubble until it bursts.”
Dubai also has drawn criticism from human rights activists. ”Dubai is denying basic rights of the laborers who are building the city to organize and collectively bargain,” says Joe Stork of New York-based nonprofit Human Rights Watch. “Many are paying off crazy loans in what is a form of indentured servitude.”
