8 July 2014
Moody’s charts Dubai’s dramatic recovery
A report by Moody’s on Emaar Properties, one of Dubai’s flagship property developers, includes a clutch of charts that show just how far the emirate has recovered from its 2009 crash and brush with bankruptcy.
The rating agency reckons that Emaar’s domestic operations are growing briskly,l but points out that its international potential “remains unrealised”. Yet the interesting part of the report are the data and charts on the emirate that Moody’s has collected.
The first, all-important chart below shows the average apartment sale price in Dubai. Following a swift decline after Lehman Brothers’ collapse rattled the global financial system, property prices have stabilised and rebounded to new highs.
Another big, interlinked contributor to the recovery has been the influx of Arab emigres and visitors, who now markedly outnumber the number of tourists coming from Asia and Europe (see second chart). This has been partly fuelled by the Arab Spring, as Dubai’s laisser-faire attitude and stable politics have attracted Arabs escaping the turmoil in their own country.
Interestingly, the biggest growth in tourism numbers is from Saudi Arabia, Moody’s notes, which is up from about 360,000 in 2008 to 1.1m in 2012. That is probably related to the ongoing protests and civil unrest in Bahrain, where Saudis have traditionally sought respite from the strict social mores of their own country.
Many of these visitors are clearly avid shoppers, as can be seen from the third chart, which shows the footfall at Dubai Mall – the emirate’s flagship shopping centre. The number of shoppers visiting rose to 75m last year, and Dubai Mall is now being expanded to be able to cater for 100m annual visitors.
Of course, all these tourists need places to stay (aside from the luxury flats snapped up by the wealthier visitors). The emirate now has over 84,000 hotel rooms and hosted 11m visitors last year, according to Moody’s. More rooms are coming online almost every day, as Dubai prepares to host the 2020 World Expo.
Of course, Dubai has been here before. Some analysts are beginning to fret that the emirate has already forgotten the lessons of 2009 as it has begun to unveil developments that echo the grandiosity of the pre-crisis years.
The stock market has corrected, but remains a third higher this year – the best performance of any stock market in the world in 2014 – and, depending on the gauge, property prices are either close to or above the 2008 peak.