Business Bay scheme set to take city into next stage of rapid development to compete with New York, London and Paris as a global financial centre, and attract permanent businesses and residents
One of the Middle East's biggest clients is planning a $7bn (£4bn) project that aims to make Dubai a global financial centre to rival New York, London and Paris.
In an interview with Building, Hashim Al Dabal, chief executive of developer Dubai Properties, said the mixed-use scheme, known as Business Bay, would attract permanent settlers to Dubai and make it more than a tourist attraction.
The project, which is designed to create a downtown business district in Dubai, will comprise 500 tower blocks across 6 million m2. The area was masterplanned by engineer Halcrow, and work has begun to extend the Dubai Creek, which flows through the site, by 11 km and will stretch to Dubai's coast. The first phase is due for completion in 2007.
Work on site marks the next phase of Dubai's rapid growth, according to Al Dabal. "Business Bay was part of a vision that Dubai could be a business hub such as London or Paris. We are branding it as a business address for the region."
Circumstances in the Middle East, as well as an ambitious government, have led to rapid change and with a wealth of megaprojects recently built or under way - including the Palm Islands, the expansion of the airport, Dubailand, the World Islands and Business Bay - it shows no sign of letting up in the short term. But like any marketplace there have been challenges to overcome.
The rapid pace of development, which has been compared to that in Shanghai, has created problems. The road system cannot take the amount of traffic and congestion is a daily fact of life.
It has been estimated that Dubai will invest $500m (£287m) in road infrastructure in the next five years, which will be welcomed by the expatriates living there. Many live in the neighbouring emirate of Sharjah and commute by car.
One in 20 of Dubai's population uses public transport: the government hopes to increase that figure to 30% in 15 years.
We are branding Business Bay as the business address for the region
Hashim Al Dabal, Dubai Properties
For Al Dabal at Dubai Properties, the main problem caused by the pace of change has been with capacity: "There are supply problems. There are shortages of engineers and contractors - and not because they have been bad planners, but because growth has been so rapid."
A changing market
Although Al Dabal is bullish about growth prospects for property and development - his business plan for the next two to three years is to increase capital investments from £5.8bn to £11.7bn - he said the market was changing.
Until recently Dubai Properties, one of the biggest developers in the region along with EMAAR and Nakheel, concentrated on buying land and then selling it after gaining planning permission and developing the infrastructure - so far it has sold £1bn of land in the Business Bay area to other businesses. But as the market becomes more competitive it is having to diversify its activities.
"We will look at the whole process of development," he said, "including property management and facilities management. That is a concept newly introduced into Dubai and I am doing it because I want to grow."
It is expected that development in Dubai will continue at this frenetic pace for the next five years. Keith Clarke, chief executive at Atkins, said that although Dubai is "not everyone's cup of tea", it will remain a serious market, especially after the law changed last year allowing expats to buy property.
The likes of engineering consultant Halcrow, which is planning to hire another 350 staff in the Middle East, are certainly taking a long-term view.
John Heck, head Halcrow's Middle East business, said: "I would say Dubai will continue at such a frenetic pace for five years, though people who have lived here for much longer than I have have been saying that for the past 30 years."
The only threat is if we do not grow fast enough and that won’t happen
Chris Cole, chief executive at consultant WSP, said he believed that the market in Dubai was sustainable. Last year WSP bought Dubai consultancy PHB with a staff of 200. He expected that number to double in the next 18 months.
He said: "The fact is that the market is likely to cool off in Dubai but that is nothing but cyclical.
We are trying to find new offices but there is no commercial space out there."
A wealth of opportunity has also created more competition for UK companies, including Halcrow, that have been in Dubai for half a century. But a flood of newcomers from the US and Australia has depressed margins and placed pressure on resources as companies seek to poach staff and salaries rise.
One UK director working in Dubai said there were still big discrepancies in salaries between nationalities. He said: "Indians command lower wages than Jordanians, for example, who are paid less than eastern Europeans, who demand less than western Europeans, who in turn are paid less than Americans."
Halcrow's John Heck mentioned another problem: "Material shortages and rising prices are forcing contractors to rethink their way of doing business."
Another issue is safety. When asked if clients are understanding about time pressures in Dubai, Jim Fyvie, Halcrow's development director for the Middle East, was unequivocal: "Understanding? No, not at all. Everything has to be fastest and biggest. There is a huge pressure for clients to get their product launched first, so it's often impossible deadlines. But it is amazing what you can achieve."
The worry is that contractors will be tempted to cut corners, which will inevitably lead to safety problems - although Fyvie said this should not be overstated.
Dubai also faces a more serious rival for investment in neighbouring Abu Dhabi where, according to Christopher Sims, chief executive at Aldar Properties, $270bn (£155bn) of projects are planned.
But Al Dabal insists there are reasons to be optimistic about Dubai's prospects for long-term growth: "The opportunities and size of the market allow others to participate. It makes you think, how can I develop better and finish faster? This is not the end. The only threat is if we decided not to grow, and that won't happen."