Rose tinted glasses hide the shadows in the city of constant sun

Dinner table conversations in Dubai through the extended festive season seemed more reminiscent of West London in the 1980s than the Middle East of the following century. Property and share prices are still the hot topic of conversation and there is little escape in the international press.

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By  Stephen Corley Published  January 22, 2006

|~||~||~|Dinner table conversations in Dubai through the extended festive season seemed more reminiscent of West London in the 1980s than the Middle East of the following century. Property and share prices are still the hot topic of conversation and there is little escape in the international press. English newspapers during the period delivered a generalised litany on the unambiguous joys of investing in Dubai property. European airwaves and television are awash with reports and advice on relocating to the land of three hundred and sixty five day a year sunshine (as I write this we are in our second day of thick cloud) and my doorstep is covered this morning with leaflets and glossy literature extolling the virtues of investing, should you care to, in any one of a number of apartments that appear to be in the centre of what will probably be a building site for at least five years. This either means we have imported all the horrors of late 20th century London or that finally meaningful existence has become so rare here and the lack of broader cultural interest virtually non existent that this is the way forward. Oh well ye reap what ye sow. What strikes me most about the current investment environment is that everybody is bullish about something. Even here in the GCC where it’s tantamount to high treason not to wear rose tinted glasses at least twenty hours of the day, our old friend, irrational exuberance is stepping into new territory. And yet what additional reasons over those peddled so far makes things any different? Admittedly there are a few more footballers on the horizon and one company is offering free Jags with each apartment purchase but why would the dynamic be any different here than the rest of the globe? We still don’t have a clear property law for example. Indeed some of us maintain as we have since May 2002 that there never will be one, given it’s now four years since the initial Dubai decree. The distant, gated, sterile communities drawn out like some Middle Eastern Houston offer little in the way of dream home material. Inflation is high, as are water and service charges, likely to increase and yet, there seems little evidence of salary increases. Perhaps it’s all driven by tourism. Twenty-eight new hotels are slated to deal with the “unprecedented demand” yet the Ritz Carlton admitted to losing guests and as a result plans to reduce room prices this year. To get an objective view I asked many visitors over the holiday period what they thought. All commented that although they had enjoyed the region in the past; cost, car and noise pollution and the general evident chaos would prevent them doing so again. Once more I find myself confused at the conflicting evidence around. Any temporary bewilderment is banished, however, when assessing the future through the eyes of the relentlessly optimistic tarot readers of the stock market. Second only to the property bull they are the happy Larrys of the economic boom times. Found increasingly in the myriad of newly established investment companies and unsullied by the experience of anything as tedious as a recession or tight credit, they are recognisable by the frequency of comment when times are good and a noticeable absence when the tables turn. These creatures are bouncing up everywhere at present. Were any around during even a temporary market crisis let alone a proper bear market? I have read in the last week the same dreary clichés that have been on the rent-a-quote treadmill for decades. It’s different this time — the GCC is not the same as other places; the oil price will sustain the flood of cash, and, worst all; the money has nowhere else to go. If that is still taught at business school as a driving force for markets then I suggest the family groups sack all their MBA wunderkinds now. Lack of anywhere else to invest (a dodgy premise anyway given the boom in commodities, mining and energy stocks, not to mention undervalued markets such as Taiwan) is hardly reason to pump local company stock prices to levels that make the dotcoms of 1999-2000 look good value. After all, just because there were no other boats going across the Atlantic at the time, putting your family on the Titanic wasn’t in hindsight a very good idea. Stephen Corley is a business consultant with experience in fund and asset management. He can be contacted at corley@emirates.net.ae. ||**||

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