Saturday, January 31, 2009

Dubai: Final Thoughts

It's been a week since I returned to the US from the United Arab Emirates. The best way for me to describe Dubai to Americans is to say that it’s a strange combination of the three well known US cities; New York, Los Angeles and Las Vegas. It is a city, like Los Angeles, where every destination is linked by a freeway. There are virtually no functional avenues or boulevards. A city, like Vegas, where most large buildings are iconic in nature and intended to shock and amaze the average person with engineering feats and architectural marvels. And thirdly a city, a bit like New York, where everywhere you look, you see skyscrapers. Some of them are truly magnificent and capture everything I love about the form; but unlike NYC, Dubai lacks the urban fabric. The places in between. There are so few hole-in-the-wall places worth exploring, because there is no wall.

To be fair, there are two older neighborhoods (Bur Dubai and Deira) where urban fabric is the norm, but they are both eyed with some level of contempt by city planners and are marked for destruction. These neighborhoods are where the action is and they are actually quite remarkable. As other neighborhoods like the Dubai Marina, The Greens, and Jumeriah struggle to maintain value, Bur Dubai and Deira will be affected the least.

This leads to my second key observation: Dubai seems to have the very real and common problem of value retention with age, much like most of the American suburbs. It would seem that most buildings over ten years old are slated for the wrecking ball if they haven't been demolished already. Fortunately this is a problem that will eventually go away as some buildings are spared and the age of the city diversifies. My biggest question is how will they patina. The Empire State building has become increasingly valuable over time, will these? At present, the design of most of these buildings and their neighborhoods makes them difficult to maintain and challenging to repurpose for adaptive re-use. It will be interesting to re-visit the city over time, to see how condo buildings have been converted to offices, or dead malls into living neighborhoods. Fortunately for the Emiratis the Americans will have to tackle this problem first.

My final thought is on velocity and market segment. In our new market reality of limited credit and less flexible lending, there are many building sitting vacant in what should be desirable neighborhoods. This leaves the neighborhood relatively lifeless and exposes it to the possibility of urban blight. Dubai has never seen a neighborhood devalue or become dangerous. What will happen if the target demographic never moves to a half built neighborhood? There are still newer ones on the books, waiting to be built as soon as the economy turns around. How will the built environment absorb an unexpected population of differing means and culture? I believe the best way to handle such a scenario is simply to accept it and open the door for the neighborhood to reinvent itself at the smaller scale. Poor neighborhoods need smaller, cheaper spaces in order to nurture new growth. Cheaper will happen with time, but the zoning code must also allow for storefronts to be modified, apartments to be split in two and offices to be resized. This is what NYC has done so well for so long, what Los Angeles is still learning and what Vegas will soon experience. I hope that Sheikh Mohammed recognizes the opportunity for appropriate infill when the time is right and allows it to happen naturally.

Monday, January 12, 2009

The Life of an Expat?

This evening I went to a piano bar and I felt so connected with the movie Casablanca. There's essentially no swing scene in Dubai, and hardly any respectable live jazz music. It's a huge difference from NYC and a painful one for a guy who used to see live music a minimum of three times per week.

It helped me understand what Humphrey Bogart's character must have been going through living in some random city as a sort of lonely expat. I'm
not there yet, but I can see that sort of lifestyle creeping up on me. There must be amazing days and must be really hard ones too.

Going to a bar like that makes me miss home a bit; not that I've even been away that long, but it's more the idea of being away for a long time that makes me expect to miss it and makes one wonder what kind of new spots you'll find.

Saturday, January 10, 2009

Dubai: First Impressions

On Wednesday 1/8/09 I took the London underground back to the airport and boarded a plane for Dubai at 9pm. I landed in Dubai 1/9/09 at 7:40am and spent the day touring the southern side of the city, went to the gym, napped and went to a handful of hotel bars/nightclubs.

Two of my most interesting observations are that the city is far more dense than I expected, but only about half occupied in places (at least near the Dubai Marina). Secondly, many very nice buildings/hotels have been "out-luxuried" in five years or less. In other words, what was a luxury product five years ago is now just an average to below average hotel due to the constant architectural one-ups-manship here. This begs the question, "what do you do to differentiate your luxury product in an environment like this?" Apparenly the answer here has been to just build taller, more fancy buildings with increasingly nicer finishes, but that only creates an exciting game of real estate hot potato. People keep trading properties back and forth until there's a collapse in perceived value, the last man holding title gets sunk.

When I asked my friends on twitter and facebook I got several responses. One idea to "create the illusion of higher quality by being the most expensive." sounds to me like the above solution. Someone else suggested that the investor "start targeting middle class and sell the product in a way that influences and supports them in feeling productive." in an effort to capture both the mid and high end markets.

In the Dubai market the one exception to this policy of participation in the iconic building arms race is a company called Limitless, which is focused on creating the next destination neighborhood instead of iconic buildings. The problem of course with iconic buildings is that they can be eclipsed, but if you create an iconic district, it retains it's charm despite the lavishness of the buildings. Think of your favorite urban neighborhoods, SoHo, Wicker Park, Rittenhouse Square, the French Quarter, the Pearl District, etc. If someone builds an iconic building in a different part of town does it affect the quality of the life or the property values in your favorite area? Not usually... because a neighborhood is about people. People who live and die, but en mass have the ability to be timeless.