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Dubai property boosters defy world's economic woes

DUBAI, United Arab Emirates -The world's financial system may be reeling from a crisis sparked by bad home loans, but developers in the oil-fired Gulf remain confident Dubai's explosive housing market still has plenty of pep left.

Taxis and rental cars continued to snarl traffic even more than usual Wednesday in Dubai's financial district as visitors flocked to the CityScape real estate exposition, which runs through Thursday. Organizers said visitor numbers in the first two days of the four-day show nearly matched the entire attendance of last year's three-day expo.

The annual event is a place for developers to unveil their latest creations _ each seemingly more audacious than the next_ and vie for the attention of real estate brokers and would-be buyers.

Two separate state-run developers laid out plans _ and two-story scale models _ for skyscrapers they say will rank among the largest in the world. And this in a city that is almost done building the current record-holder.

One of the firms, newly created Meraas Development, plans to create even more artificial islands off Dubai's coast and dredge a massive canal as part of the project.

Elsewhere, race car driver Michael Schumacher introduced his own branded tower in neighboring Abu Dhabi, the capital of the United Arab Emirates. Another developer, Hydra Properties, touted its range of skyscrapers, including one marketed exclusively to female entrepreneurs.

The mood is upbeat as always,’ said Robert Troup, managing director of architecture firm Aedas. There's a lot of confidence in the region. Both Abu Dhabi and Dubai have development plans in place and they'll see those plans through.’

The festive feeling stood in stark contrast to the glum economic currents coursing through much of the world's financial system _ even though stocks in Dubai and elsewhere in the Middle East fell again Wednesday along with markets around the world.

Few builders expressed concern that the credit turmoil and global slowdown would choke Dubai's roaring property growth, one of the key economic drivers in the tiny but booming emirate. The expo's official paper summed up the prevailing optimism with a front-page headline: No sign of a slowdown.’

Some industry insiders even predicted the financial pain elsewhere could be a boon to the region.

The bad market situation in the US and Europe will bring even more investors to this part of the world,’ said Mohammad Khazami, general manager of the Dubai branch of Doha, Qatar-based developer Al Madar. You are living in a region full of children and full of money. ... And those people are ready to spend.’

Even so, some observers see trouble ahead.

Colliers International reported this week that its index of Dubai home price growth slowed considerably from the first to the second quarter this year. The real estate consultancy also warned that developers are relying too heavily on high end’ projects at the expense of more affordable housing.

Banking analysts are also urging caution.

Standard Chartered Bank has warned that there are signs of overheating,’ while EFG Hermes said in a recent report that although the real estate market is likely to see continued growth, the market looks set for a softening.’

Observers also remain concerned about the amount of speculative money propping up the market despite recent government efforts to curb rapid buying and selling _ or flipping’ _ of properties.

This is a place where you can really make money,’ said David Hill, executive vice president of New York-based Falcon Real Estate Investment Co., which advises rich clients on buying property in the US and elsewhere.

But it's like the Wild West. It's high risk, high reward,’ he said on the sidelines of the exposition. And I'm not sure people realize there's risk here.’