In the early 1960's oil was discovered 75 miles off the coast of the United Arab Emirates transforming the economy of Dubai and its six neighboring federated states.
When the price of oil soared in the 1970's, the country quickly became one of the wealthiest nations on earth and laid the foundations for Dubai's astonishing modern building program.
Dubai and the UAE, the fourth-largest oil producer in the Organisation of Petroleum Exporting Countries, have been raking in record oil revenue. In the six Arab states that surround the gulf, oil earnings will increase 25 per cent to $250 billion this year, according to London-based Standard Chartered, a bank that generates about two-thirds of its income in Asia.
The Emirates is the world's No 6 oil exporter, behind Saudi Arabia, Russia, Norway, Iran and Venezuela, with an average export of 2.4 million barrels a day, At least in Dubai, it's easy to spot where the money is going (apart from the overbuilding frenzy); for instance, to building up an aerospace industry, relieving its dependence on the US; and to targeting more foreign contracts for its airport management business. And there are plenty more options for "Gulf liquidity" to choose from in case problems arise with the US, as in the recent P&O controversy. The Germans want to build a high-speed train network parallel to the Gulf coast, and German arms dealers want to sell new communication systems, missile defense systems and submarines.
Dubbed "Mushroom City," it is the fastest growing urban center on Earth and currently has, it is estimated, one fifth of all the world's cranes splattered across its skyline.
Spending for present and future buildings is said to be a mind-boggling $100 billion.
Already open to the public is a 400 meter indoor ski slope, the biggest shopping mall in the world and the Burj al-Arab, the world's tallest hotel (remember Tiger Woods teeing off from the helipad?), which claims to be the first "seven-star hotel".
Dubai's economy is booming, thanks to record oil prices and surging real estate values. The Dubai Financial Market has more than tripled in value in 12 months. Each week brings more news of record profits for companies and announcements of yet another gigantic construction project. The $1 billion Burj Dubai, for example, is planned to be the world's tallest building at more than 800 metres (2,625 feet) when it's completed in 2009.
High oil prices are a crucial support to Dubai property values, and a new investment book suggests that buying property in areas rich in commodities like oil is an excellent investment.
Thus the future direction of the Dubai property market is inextricably linked to the price of oil. If the price goes down then within six months Dubai property prices will weaken; if black gold maintains its price or goes higher so will Dubai property prices.
Prices would soar to levels unimaginable today. Could it be that one day an apartment in Dubai will cost more than an apartment in London today? Maybe it is just a matter of time.
Author: by Angela Murray
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