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Development of Dubai


									       Heriot-Watt University - School of the Built Environment

                         Development of Dubai

A dissertation submitted in partial fulfilment of the requirements for the degree

                   MSc. Urban and Regional Planning

                                               Mahnaz Abulqasim

                                            Dissertation supervisor: Derek Kerr


                                 August 2008

I ……Mahnaz Abulqasim…………,
Confirm that this work submitted for assessment is my own work and is expressed in
my own words. Any uses made within it of the works of other authors in any form
(e.g. ideas, equations, text, programmes) are properly acknowledged at the point of
their use. A full list of references employed has been included.

Signed: ………………………………..
Date: ………………………………….


List of Figures ……………………………………………………………………. iv
List of Tables           ………………………………………….………………………... v
Acknowledgment           ……………………………………………………..…………….. vi
Abstract           ………………………………………………………………………….…. vii
List of Abbreviations …………………………………………………………………… viii

Chapter 1:         Introduction …………………………………………………….                        1
    1.1 Introduction ………………………………………………………...….                              1
    1.2 Aims and objectives …………………………………………………… 2
    1.3 Methodology……………………………………………………………. 3
    1.4 Structure of the research      ……………………………………………. 4
    1.5 Research limitation ……………………………………………………. 5

Chapter 2:         Literature Review   ……………………………………………. 6
    2.1    Globalization, Urbanization and urban planning in the world ……...… 6
    2.2    Urbanization and real estate market in the world ……….…………..... 9
    2.3    Globalization in the Middle-East Region …………………………....            10
    2.4    International context of Dubai   ………………………………...….                13
    2.5    Conclusion ……………………………………………………….…...                             16

Chapter 3:         Dubai Urbanization and Growth   ……………………..……              17
    3.1 Introduction to Dubai City ………………………………………..…..                      17
    3.2 Dubai Urban Development ………………………………………..…..                         19
           3.2.1    Period from 1900–1955   ………………………………..…..                20
           3.2.2    Period from 1956–1970   ………………………………..…..                21
           3.2.3    Period from 1971–1980   …………………………………....                22
           3.2.4    Period from 1980–Present ………………………………..…..               24
    3.3 Urban vision and property development      ……………………..……..            27
    3.4 Emergence of Mega Cities ………………………………………..…..                        28
    3.5 Conclusion …………………………………………………………....                                34

Chapter 4:     The Impact of Dubai's Rapid Development on the city ……..            35
   4.1 Real Estate market …………………………………………………...                                   35
       4.1.1   About Real Estate market in Dubai ………………………….… 35
        Dubai's Strategic Vision    ……………………………                   36
        Dubai – the forerunner in Property Market ……...........   41
       4.1.2   The impact on Dubai Image in Property Market         ……………          42
       4.1.3   The impact on Real Estate Market ……………………………... 45
        The outlook of Dubai property market       ……………          45
        Impact on Freehold Market ……………………………                     47
        Impact on Leasehold Market         ……………………               51
   4.2 The Urban Environment          ………………………………………….… 54
       4.2.1   Air pollution ………………………………………………….… 54
       4.2.2   Water scarcity ………………………………………………….… 57
       4.2.3   Pressure on natural resources ………………………………….… 58
       4.2.4   Degradation of marine and coastal environment …………….….. 60
       4.2.5   Influences on the city's architecture ……………………………. 63
   4.3 Conclusion        ………………………………………………………….… 66

Chapter 5:     Conclusion     ………………………………………………….… 67

References     ……………………………………………………………….…………… 72
Appendix A- Sample of Interview       …………………………………………………                          76
Appendix B- Main delay factors in Dubai supply market       ……………………… 76
Appendix C- Environmental report 2008 conducted by Master C. Worldwide …. 80

List of Figures

Figure 2.1    Urban population growth in western area region ……………….. 12
Figure 3.1    United Arab Emirates Map                 …………………………………….. 17
Figure 3.2    United Arab Emirates Map                 …………………………………….. 18
Figure 3.3    United Arab Emirates Location Map ……………………………... 18
Figure 3.4    Dubai in the 70's and 80's ……………………………………….... 21
Figure 3.5    Dubai Urbanization 1973                  .......................................................... 22
Figure 3.6    Dubai Urbanization 1993                  .......................................................... 23
Figure 3.7    Dubai Urbanization 2006                ……………………………………… 24
Figure 3.8    Dubai Urban Area Structure Plan (1993–2015)                                …………….. 26
Figure 3.9    Map of projects       …………………………………………………. 28
Figure 3.10   Internet City …………………………………………………….. 28
Figure 3.11   Media City        …………………………………………………….. 29
Figure 3.12   Festival City …………………………………………………….. 29
Figure 3.13   International City           …………………………………………….. 29
Figure 3.14   Dubai International Financial Centre .............................................. 30
Figure 3.15   Dubai Marina        ................................................................................ 30
Figure 3.16   Ski Dubai         …………………………………………………….. 30
Figure 3.17   The Palm Islands             …………………………………………….. 31
Figure 3.18   The World         …………………………………………………….. 31
Figure 3.19   The Palm Islands         ……………………………………………..                                                       32
Figure 3.20   Dubai Mall        ……………………………………………………. 32
Figure 3.21   Burj Dubai        …………………………………………….………. 33
Figure 3.22   Madinat Al-Arab              …………………………………………….. 33
Figure 4.1    Palm Jumeirah …………………………………………………….. 36
Figure 4.2    GDP Distribution 2006 ………………………………………….... 37
Figure 4.3    The distribution of Mega Project across the GCC countries……… 40
Figure 4.4    Shares of combined real estate and financial sector in
              Dubai's total GDP            …………………………………………….. 41
Figure 4.5    Burj Al-Arab Hotel, Dubai                …………………………………….. 43
Figure 4.6    Views from Dubai urbanization                       …………………………….. 45

Figure 4.7    Countries with the highest percentage of international
              migrants in total population, 1990             …………………………….. 46
Figure 4.8    Summary of the Freehold Market development                        …………….. 47
Figure 4.9    Expectation of Dubai property prices …………………………….. 48
Figure 4.10   Map for the freehold ownership in Dubai                 …………………….. 49
Figure 4.11   Dubai's Freehold law caveats …………………………………….. 50
Figure 4.12   Rise in rental rates        …………………………………………….. 51
Figure 4.14   Lower rent Increase in middle income areas …………………….. 52
Figure 4.15   Traffic congestion in Dubai, 2008              …………………………….. 54
Figure 4.16   Dubai Metro under construction, 2008                    …………………….. 55
Figure 4.17   Dubai Metro Rout Map, 2008 …………………………………….. 56
Figure 4.18   Dubai Metro Rout Map, 2008 .......................................................... 56
Figure 4.19   Ecological footprint per person, by country, 2003 ……………… 59
Figure 4.20   Artificial Island: Palm Jebel Ali, Palm Jumeirah,
              The World and Palm Deira                       ……………………………. 60
Figure 4.21   Corel Reefs in UAE ……………………………………………. 61
Figure 4.22   Damaged Corel Reefs in UAE                     ……………………………. 62
Figure 4.23   Reclamation for Palm Deira ……………………………………. 62
Figure 4.24   The Palm Jumeirah main divisions               ……………………………. 62
Figure 4.25   Water channels in Palm Jumeirah                         ……………………. 62
Figure 4.26   Different view of modern Dubai                  …………………………... 64
Figure 4.27   Al Bastakiya Village                 ……………………………………. 65
Figure 4.28   Modern designs and traditional designs,
              Mina Al Salam Hotel on the right               ……………………………. 65

List of Tables
Table 4.1     GDP of the construction sector (AED Million)                      ……………. 41

Table 4.2     Population projection for Dubai (2007 – 2010)                     ……………. 46


I would like to thank my dissertation advisor, Derek Kerr, for his support, guidance
and patience. Further thank goes to British Business Group in Dubai who supported
me in the interview process. Special thank goes to my family whose encouragement
has always been there through the whole academic year.

                                                                Mahnaz Abulqasim
                                                                   Edinburgh, 2008


Globalization and rapid urban growth have become a common feature of most
countries, particularly those of the third world. The outcomes and structure of
modernization and urbanization in Dubai following their ruler's vision to establish
Dubai as the hub of commerce, business and tourism in the Middle East Region, and
specially with opening the market for foreigner freehold ownership in 2002, have
attracted significant attention and interest from local and foreign property developers
to invest in Dubai's real estate industry. Since then, significant inflows of capital as
well as human resources have caused a rapid real estate and construction boom. The
real estate development in recent years has become a hot issue as a result of the
massive amount of investment and high selling prices.

The overall aim of this research is to study Dubai's rapid development and its impact
on the city's real estate market and urban environment. A major concern was the
emergence of the mega city or ''city within city''. To understand the phases of urban
growth and real estate development, along with the drivers that led to the property
boom besides the consequences of Dubai’s rapid growth, secondary materials were
examined. In addition, interviews were conducted with professionals in the study
area, in order to obtain their opinion and insight about the research topic.

The research finds that, while urban expansion and property development have been
encouraged, the ongoing rapid development, including massive construction
activities and waterfront projects, has had an extensive impact on the real estate
market, resulting in high selling and renting prices and threats of losing foreign
interest in future investment, besides the extensive degradation of urban
environment. The research suggests introducing improved regulations to control and
manage the property market, enhanced environmental management, as well as urban
and economic policies to ensure a sustainable economic growth.

KEYWORDS: Dubai, real estate, rapid development, impact

List of Abbreviations:

DTCM:       Dubai Tourism and Commerce Marketing
GCC:       Gulf Cooperation Council countries (includes Bahrain, Kuwait, Oman,
            Qatar, Saudi Arabia, United Arab Emirates)
ICT:        Information Communications Technology
NGO:        Non-Governmental Organisation
UAE:        United Arab Emirates
USA:        United State of America
WWF:        World Wildlife Fund

Chapter 1: Introduction

1.1    Introduction

Almost everything is remarkable about UAE, and specially Dubai city, from its tiny
local population, oil prosperity, to its record breaking rapid real estate and
construction activities. Fifty years ago, Dubai was a small trading village. Now it is a
successful cosmopolitan city. Dubai has become a 21st century phenomenon. It has
carried out an impressive transformation, managing to move its economy to finance,
commerce, tourism, shipping and real estate markets. Dubai has become one of the
most successful and fastest growing cities in the world. The changes in the economic,
cultural and social characteristics of the city are remarkable.

Dubai's economy, real estate market and construction activity are booming. Prospects
for business and investors are equally blooming. The city has become the tourism,
business and real estate hub of the Middle East region. The speed and scale of the
development have become a concern, both nationally and globally. Moreover, the
overheated real estate market has become a hot issue for citizens, the government
and the world.

Therefore, this dissertation will focus on studying and analysing Dubai's rapid
development and its impact on the vibrant real estate industry and the urban
environment of the city. It is a very important and interesting issue to find out the
main drivers behind the prosperity of the real estate based economy and its
consequences, which will help in addressing the problems toward mitigating such
impacts to maintain the economic growth of the city.

1.2    Aims and Objectives
The over all aim of this dissertation is to study Dubai's rapid development and its
impact on the property industry and the urban environment.

The key questions are: ''what have made Dubai's urbanization and development
possible?'' and

"What are the consequences of this rapid development in relation to Dubai's property
market and urban environment?"

To achieve the above aim, the following objectives have been adopted:

      To review academic research, articles and books on the subject of rapid
       development, emergence of mega cities, urbanization and globalization.

      To examine and analyze, through the case study of Dubai city, the history and
       background of its urbanization and the changes in its urban planning under
       economic transition.

      To investigate the structure and context that helped in facilitating Dubai’s rapid

      To study and investigate the consequences of its rapid development and
       economic growth, and its impact on both the real estate industry and the urban
       environment of the city.

      To identify how to control development in relation to the city's strategic vision
       and environmental issues without losing the economic opportunities of rapid

      To analyze the findings and draw recommendations and a conclusion on the
       impact of booming rapid development and real state investment on the city of

1.3    Methodology
To obtain the research aim and objectives, a combination of several methodologies
has been adopted for the investigation and analysis of this research; these vary from
the literature review to primary data and secondary data collection. The biggest
portion of this research will be dedicated to studying the city of Dubai.

The research methodology was based on desktop research, using mainly secondary
material. General literature from books, journal articles and research papers on
globalization and urbanization has been the basis for chapter two. Information and
data obtained from industry reports, releases from property companies, research
papers, international reports, property developers/investors web sites, and documents
produced by local government departments and ministries, have been the basis for
chapter three and four. Data collected form secondary sources were very essential to
understand the context and the phases of Dubai urban growth, its strategic vision, the
real estate industry and the impact of the urbanization on the city.

In addition, primary sources have also been used. Primary data were collected
through interviews with key persons in the financial sector, real estate and
construction industry, both local and foreign. The interview questions were grouped
into three categories, including urban growth in Dubai, mega projects, and vision
about Dubai’s future (see appendix - A). The interviews provided professional
insights and opinions about the context of Dubai's rapid development and its
consequences, which were incorporated in chapter three and four to support the

1.4   Structure of the research

Chapter                             Objectives                             Methods

Chapter 1:          Aim, Objectives, Methodology,
Introduction        Limitation.

                    To review the subject of rapid
                    development,         urbanization         and
                    globalization, and to investigate the Based on Desktop
Chapter 2:
                    emergence of mega cities in the study and secondary
Literature Review
                    world,        besides     studying        the material
                    urbanization in the Middle East

                    Examine and analyze Dubai city, the
                                                                     Based on Desktop
Chapter 3: Dubai    history    and     background       of     its
                                                                     study, primary data
Urbanization and    urbanization and the changes in its
                                                                     (interviews) and
Growth              urban     planning      under   economic
                                                                     secondary data

                    To study the consequences of its
Chapter 4:                                                           Based on Desktop
                    rapid development and economic
The impact of                                                        study, primary data
                    growth and its impact on both the
Dubai's Rapid                                                        (interviews) and
                    real estate industry and the urban
Development                                                          secondary data
                    environment of the city.

                    Draw       conclusion        and         offer
                    recommendations about the impact
Chapter 5:
                    of Dubai's rapid development on the
                    urban environment and real estate
                    industry of the city.

1.5     Research limitations
Since the study is about Dubai, a city in the Middle East region, there was a shortage
of academic papers and articles about it, as such materials are not easily available in
this region. In addition, some statistics and financial reports in property markets were
confidential and not obtainable, unless through purchase, and no budget was
available for this.
Also, the time span of the study made it difficult to obtain primary data; the
interview questions were sent by email to key persons in the study area after
extensive investigation and searching having been done to find the right person who
is both in charge and available. Owing to the limited time span, it was difficult to do
these interviews in person. Furthermore, other responses have not been received from
several key agents, even though they showed initial interest to contribute.

Chapter 2: Literature Review
This chapter will give an overview of the literature reviewed to investigate the
urbanization and globalization that has taken place globally, the context of planning
and globalization, and the relation between the real estate market and urbanization.
This will give a better picture about the global forces that have affected many cities,
and Dubai city in particular. It will be followed by a review of the international
context of Dubai in the world and in the Middle East Region, to help in building a
closer view of the statues of Dubai.

2.1       Globalization, Urbanization and urban planning in the world
Planning, according its professional association around the world, has essential
objectives which are intended to provide the balance among the aims of social
welfare,    economic    efficiency     and   environmental   sustainability.   Basically,
maintaining the balance between the planning aims states the pressure of diverse
interests and groups. The global and local pressures need to be balanced with the
creation of new insight into city vision. Through plans, the global forces will be
defined and the spaces of globalization will be set out (Newman and Thornley, 2005,

Although the planning approach for cities has considerable variations, it has a
common concern within international competitiveness. There is a significant
importance of economic globalization during planning for the future development of
cities. The global economy involves important subsets of activities which may
facilitate essential development, such as capital and labour flow; examples of capital
flow are the Chinese investment from Hong Kong and Taiwan, and Los Angeles
funds from the Korean development. Certainly, the global economy flows are not the
entire business of the cities; there are other concerns which have become
significantly important (Newman and Thornley, 2005, p.273).

A major concern of any city is the advanced urban quality, which became part of the
planning agenda in most cities of the world, from New York to Singapore. Higher
urban quality certainly means an enhanced physical environment, yet also greater
varieties and exciting cultural life. In a society of high networks, the place is

important. With concentration on urban quality, there are great needs for the
management of space and strategic planning that play an important role in building a
competitive urban quality, which is the same approach that Dubai followed when it
introduced its strategic plan; it will be highlighted in chapter 3. In addition, Paris, for
example, has always been ahead in emphasizing the quality of urban life, with its
cultural activities, restaurants and attractive built environment. An amount of ₤2.5m
has been spent on the project of converting the docks along the Seine to beach, with
sand, umbrellas, loungers and games for children. The project was considered as the
most dramatic part of the enhancement of the liveability of the Paris neighbourhood
area. In addition, London's South bank and New York Hudson riverside are more
examples of a tendency to create exciting areas of cultural opportunity and good
environment (Newman and Thornley, 2005, p.274).

Globalization and rapid urban growth have become a common feature of most
countries. Globalization can be approached by a number of different processes that
operate over different geographical areas and timescales. One example is the cultural
industry which today is drawing more attention and has become significantly
important for the economic vitality of most of the cities. As the importance of such
industry increases, there will be implications for planning as it tries to hold such
activity. In return, this will lead to dealing with other aspects of preserving good
views, pollution, pedestrian streets and attractive neighbourhoods (Kratke, 2003).
The preservation of cultural identity in Dubai has become a concern which will be
discussed in chapter 4.

Globalization involves different processes that need to be identified and their effect
on cities explored. How the planning strategies treat 'world city spaces' of central
areas and regional infrastructures as focal points, giving the rest of the city less
attention, is obvious. The London plan, for example, has been criticized because of
its central area bias and its global oriented economic activity. By recognizing the
importance of the economic activity that the city plays on the national, local, and
suburb centres, a more balanced plan would be reached. (Newman and Thornley,
2005, p.275). This is useful in studying Dubai urban growth, which will be discussed
in chapter 3.

On the ground, there are five different types of challenges that major cities have to
respond to: urban infrastructure, latest economic base, governability, quality of life
and social integration; only with the ability to respond to these challenges can they
on one hand be competitive, and on the other hand, assure the minimum level of
wellbeing to their population that is essential to have a combination of democratic
peaceful coexistence (Borja and Castells, 1997, p.93). The nature of economic
activity and social life is being reformed in the 'globalizing era'. The national
economies and societies are becoming interdependent extensively, though it is
greatly in uneven way (Olds, 2001, p.17).

The context of globalization and urban change across the world has been
investigated. It has been found that, during the 1980s and early 1990s, explosions of
analysis in the subject of globalization have been done. According to Giddens (1994,
p.4) globalization means:

"The process of the transformation of space and time through 'action at distance' "

Globalization involves a great interaction among different social, economical and
political institutes across a range of geographical scale; it is seen as a
multidimensional phenomenon. On the other hand, the economical analysis of
globalization has narrowed the multi-dimensional tendency; because globalization is
shifting the relationship between consumers and producers, and breaking down the
links between labourers and their families; furthermore, it is obscuring the lines
between local people and the international attachment (Olds, 2001, p.19).

All of the world economy sectors have been influenced by the latest developments in
the international financial system. During the second half of the 1980s, property
development booms spread throughout lands, housing and property markets across
many countries, with the greatest spread in the United Kingdom, USA, Scandinavia,
Australia and Japan.. The characteristics of these booms were widely similar. The
world's economy was the longest, although the slowest, all were having considerable
growth in their service sectors, liberalizing the financial system so that the cash was
easy to come, consumer expenditure was increasing fast, and there was a general

optimism that the government approached this by permitting the free market
(Coakley, 1994, p.671). This will be useful when investigating and analysing the real
estate boom in Dubai in chapter 4.

In early 1990, the international property markets faced the worse crisis of the century
and the boom had ended. All types of property prices dropped throughout the major
capitalist economies, producing negative impact on a large number of homeowners
and a general failure on the commercial real state. The decline in the latter was
mainly because the host companies in building materials, property and construction
were going bankrupt or having some financial problems. The decline in prices
affected all categories of the property market, plus the housing market, but the
office/commercial market especially faced strong declines in prices. The collapse of
the office properties affected all European cities, but very sharply in London and
Stockholm: about 50% for each. Simultaneously, the current crisis expanded to the
USA and Japan, both of which witnessed an extraordinary boom in late 1980
(Coakley, 1994, p.698).

2.2    Urbanization and real estate market in the world

The 1980s construction boom and the subsequent collapse in 1990 presented a
chance to follow the flow of capital into the built environment and to understand the
function that this phenomenon (globalization) plays in the capitalist economy. Some
theorists, mainly urban political economists, were more interested in the real state as
the main target for the capital investment, and the degree to which the capital shifts
away from the productive industrial activities to the real state investment (Coakley,
1994, p.715). Dubai followed the same path in the economic transformation that will
be discussed in chapter 4.

The success of the property market is certainly essential for many reasons. One of
these important reasons is that although the interconnected relation between property
and financial market is being increasingly integrated, there is a threat that the
property crisis can act as a domino or contagion on the financial market (Coakley,
1994, p.698).

It is noted that, over the past 30 years, the main global economies have faced
substantial shifts in their economic structure, with relative decline in the
manufacturing field and growth in the services field. This is accompanied by changes
mainly in the employment distribution. For example, in the USA between 1960 and
1991, non-agricultural employment rose from 62% to 78%, in the UK the work force
grew from 48% to 56%, while in Japan it increased by more than sixfold over 21
years (Coakley, 1994, p.673).

It is clearly seen that the property boom in the 1980s was about financial and
professional services. This means a need for adequate places to work and building
quality far higher than that needed for manufacturing. For instance, the offices have
to be designed to higher standards, to provide better working conditions with new
technology for the employers, and to reflect the advanced architectural design to the
prestige of firms (Coakley, 1994, p.674). Building innovative buildings that reflect
cotemporary best practice, scale, design and technology is considered as new formula
for business success. This will be reflected in chapter 4, while discussing Dubai’s
image and architectural influence.

The 1980s was not a good period for the land use planning. Public policy
encapsulated a number of features which are against the free market ideologies and
the views of free marketeers of how the market should work. The control and
evaluation of the changes in the land use is basically done in quantitative rather than
profitability criteria. The planning authority objective is set out mainly by the
political officials rather than in the marketplace. Later on, planning was viewed
positively as the protector of the environment (Coakley, 1994, p.693). On the other
hand, Dubai followed the free market strategy, as will be discussed next and later in
chapter 4.

2.3    Globalization in the Middle-East Region

In the past 30 years, Western Asia countries and especially the Middle East region
have faced considerable economic, technological and political changes, which have

influenced the functions and the structure of their urban areas. The urban landscape
has been shaped by three main factors: oil boom in 1970, large scale movement
followed by the Gulf wars, and globalization. The rapid economic development that
took place in most of the region countries over the past three decades was
significantly accompanied by greater urbanization and population growth. Massive
immigration of foreign labourers and expatriates to urban areas, particularly to Gulf
countries occurred (UNESCWA, 1999). This will be discussed in detail in chapter 3
when studying Dubai’s urban growth.

By studying the Middle East Region, it is observed that there is a sharp difference in
terms of urban growth between the Arabian Peninsula and Mashriq countries
(including Damascus, Beirut and Baghdad). Urbanization occurred in the Mashriq
countries as a result of the slow movement of population from agriculture toward
well-established industrialized areas. On the other hand, urbanization in the Gulf
Cooperation Council countries (GCC) was sudden and rapid, and was generated from
oil revenues. As a result, modern facilities, infrastructure, education and health
services were created (UNEP, 2004).

Urbanization has generated a flow of foreign workers and Nomadic communities to
the new urban centres; therefore, the percentage of the population growth in Arabian
Peninsula continued to be at different periods much higher than the growth in
Mashriq countries (see figure 2.1). This comparison between the Arabian Peninsula
and the Mashriq countries shows the context and circumstances in which Dubai was
formed originally; this will be explained in more detail in the next chapter in the
discussion about the background of Dubai's urbanization under economic transition.

According to the UNDP (2001), the increase in urbanization in the region has
continued to grow at a greater rate than the total population. In the Arabian
Peninsula, all the countries have around 84% as an average level of urbanization,
excluding Yemen with a level of 25%. Nearly all of the population of Bahrain
(92.2%), Qatar (92.5%) and Kuwait (97.6%) occupy urban areas. The accumulation
of inhabitants, their urban economic activities, travel manners, and their consumption
patterns have a considerable impact on the environment in terms of waste discharges

and resource consumption (Doxiadis Associates, 1985). This will be useful in
studying the impact of urbanization on Dubai in chapter 4.

Figure 2.1 - Urban population growth in western area region
Source: UNEP, 2004, Chapter two, p.1

A study conducted by the Arabian Gulf University in 2005 to identify land use
variations in the urban and sub-urban areas focused on the Middle East region. The
study was carried out by using remotely sensed data and geographic information
systems technologies on two main case studies i.e. State of Qatar and the Kingdom
of Saudi Arabia (KSA). The main purpose is to evaluate the degree of urbanization,
and to examine its impact on land use categories in the Al-Ahsa oasis in Saudi
Arabia, and in Doha, the capital city of Qatar. After interpreting the satellite imagery
using specialized software, and maps having been produced, the study found that the
coastal city of Doha and Al-Ahsa Oasis are suffering from urbanization
encroachment and population growth. This study verified that, in Doha city,
urbanization has mainly impacted on vacant regions, sediments and vegetation areas.
Also, urbanization has had a negative impact on the coastline; this has been caused
by land reclamation and dredging activities. On the other hand, in the Al-Ahsa oasis,
urbanization has impacted mainly on sand areas, agricultural areas and planned areas
(Belaid, 2005). Similar impacts faced Dubai and will be discussed in chapter 4.

Consequently, as urban areas spread, coastal areas, forests, prime agricultural land
and rural areas are changed into land for public infrastructure, housing, industry and

roads. Land transformation activities vary from small scale projects, e.g. filling and
draining of wetlands, to large scale projects, e.g. major land fill and reclamation
projects which expand shorelines into the sea. Such activities have taken place in
Lebanon and the majority of the GCC countries. For instance, Dubai city has
enlarged in size in 15 years by 92 km2 (Doxiadis Associates, 1985). Similarly, the
kingdom of Bahrain enlarged in size in 23 years by 47.3 km2 (CSO, 1999), as a result
of land reclamation alongside the coastal areas of the Persian Gulf to meet the urban
growth needs.

2.4    International Context of Dubai

According to Newman and Thornley (2005), Dubai has been able to develop into a
regional hub of business and economy, with successful planned objectives of
transforming to a city of importance within the international urban-economic
structure. An important factor which energised the development of the city is the
relationship between the local and global forces, mainly rooted within a specific
geographical and historical context. The city development shows clearly the
'convergence-divergence' debates concerning the idea of cotemporary urban growth
by means of demonstrating the logical association between globalisation forces (i.e.
Cultural, economical and political) and localisation forces (i.e. environment, history,
demography and ideology), in the process of urban environment production.

In terms of global perspectives, however, the capitalist global system is mainly
interested in the economic performance; it is more concerned with the urban agenda.
Yet this objective is achieved differentially within a specific institutional and
ideological context that differs from the entrepreneurship of Asia to the neo-
liberalism of USA. As in the case that different cities embrace the economical
importance of capitalism in various ways and various degrees, then some societies
pursue unique development paths which reflect the interaction of local context and
global forces (Smith, 2001).

One of the main global forces that is working to support some sort of 'convergent
urbanization' is the competitive international environment produced by economic

globalisation, which resulted in pushing city managers to work on ensuring that their
city is an attractive location for investment. The competitive significance is obvious
in city marketing, and the promotion strategies held by the majority of large
motivated cities, city branding and imaging will be discussed in chapter 4. The
impact of the physical development requires attracting multinational organizations
and professional services. They contribute to the provision of residential and
entertainment quarters to meet the need of free capital. The provision of mega
projects in Dubai has been successful in representing some of the most spectacular
projects in the modern world (Newman and Thornley, 2005). This will be discussed
further in chapter 3.

Tourism plays a vital role in the global economy as it is the main economic growth
sector. The concept of property-based tourist-led growth has had a major impact on
improving the economy and developing the physical structure of many cities globally.
Dubai has become the primary tourist destination in the Gulf and Middle East region
with its attractive ecosystem and 'sun-sea-sand'. Besides its retail, hotel and
entertainment complexes, Dubai has significantly developed conference facilities,
theme parks and trade centres in order to improve its international image as the main
leisure tourist destination. Furthermore, global pressure places great emphasis on the
provision of infrastructure, including rail transit systems, airport extensions and road
projects, which are obviously in progress currently in Dubai (Newman and Thornley,

Despite the global forces, the local context is able to calculate the impact and
operation of global forces upon the various cities in various parts of the world. One
of the principal factors is state political ideology. Whereas the city planning in the
USA is carried out by many development agencies with little coordination with local
authorities, in Western Europe, the government is centrally involved in the
development and urban planning of the city (Smith, 2001). Dubai uses a hybrid
model that combines both government control and economic liberalism, where the
vision of the ruling family determines the urban development within a market
capitalism environment that works on attracting foreign investment and minimising
the restrictions to open the market. This strategy of state-led entrepreneurial ship to

control the urban growth has created a city plan that is a spatial term for economy
strategy and also, a method for the provision of public infrastructure and services
(Al-Sayazh, 1998, p.90).

To have a better understanding of what is driving the unstoppable model of Dubai’s
development, a clearer instructive comparison may be with Singapore. A leading
figure – Lee Kuan Yew: president of Singapore - set the vision for Singapore to
become one of the world's leading commercial hubs. Both of the presidents of Dubai
and Singapore were aiming to transform their cities to major financial centres with
world-class infrastructure to attract foreign organizations and companies, and in both
cases it was recognized that the provision of services is indispensable to main
international firms. Yet, the most important difference is that Lee Kuan Yew has
controlled the system from the top-down, while Sheikh Mohammed Al Maktoom has
determined a very strong pace in a different way. He always makes sure the money is
available to kick-start very high risk projects, and then lets the market forces take
care of the rest (Al-Sayazh, 1998, p.104).

Therefore Dubai, as a model of development, is neither top-down - similar to
Singapore - nor bottom-up - similar to the USA; the growth is generated from a
combination of innovators and entrepreneurs. The model of Dubai functions well in
the middle area: it acts as a catalyst by providing the support and development of
new assets that are transferred to private management later (Mendoza, 2007).

In terms of the expansion of 'anti-globalisation' and urban politics, the urban social
movements have allowed some groups of citizens to apply their influence on the city
plans, whereas in Dubai, the government centralised the structure and its economic
importance provides the local people with limited potential for democratic
participation in the city planning. The principal theme in carrying the developments
only at the early stages is through a top-down process, instead of the grassroots
process of decision making. However, this model cannot be applied in the USA and
Western Europe because of its different political framework, its consequences in
terms of urban development, and the rapid economics of the city are indubitable (Al-
Sayazh, 1998, p.90).

Thus, Dubai represents a striking model of 'convergent urbanisation' as a result of the
government reaction to global economic forces; yet at the same time it represents the
power of culture, politics, local environment and history to mediate impact of global
forces for the promotion of an urban form within a particular urban framework (Al-
Sayazh, 1998, p.98).

2.5    Conclusion

The chapter gives a background of the urbanization and globalization that have taken
in the world and the Middle East Region. Global forces that have affected cities over
the world have affected Dubai as well. The balance between global and local forces,
with the aim of achieving a better urban quality, is the main objective of
urbanization. Global economy plays a significant role in the urbanization of cities.
The main global forces, including the capital and population (expatriates and
labourers) flows are the main drivers of urban and economical growth.

The world economy is greatly influenced by the international financial system. The
property boom in the 1980s spread throughout many countries for the purpose of
capital investment. Globally, major cities invest in real estate and the construction
sector in order to be competitive. Major cities are facing many challenges to be
competitive; these include capacity of the infrastructure, economic prosperity, quality
of life and governability. Over the last 3 decades, the Middle East Region has faced
similar urbanization under economic transformation. Dubai was very fast and
successful in becoming a competitive city by investing in the property market.

To maintain market prosperity and sustainable economic growth, it is essential to
balance the local forces (e.g. environment) and the global forces (e.g. investors’ and
developers’ capitals). Thus, it is essential to study the impact of the rapid
urbanization and development on the urban environment and property market
prosperity to address the problems and find solutions. The next chapter will discuss
the Dubai urbanization over different periods of urban growth.

Chapter 3: Dubai Urbanization and Growth
This chapter reviews Dubai's urbanization development over different periods of
urban growth, to gain an understanding of how Dubai has transformed under
economic transformation in the last two decades. The Dubai strategic Plan of 1993-
2012 will be highlighted in order to understand the role of the government in
supporting the development strategy. Finally, an overview of the urban vision and
property development will be discussed with the significant emergence of mega
cities which played a vital role in the rapid development of Dubai.

  3.1 Introduction to Dubai City

  The Emirate of Dubai, known also as Dubai city, is one of the seven emirates of
  the United Arab Emirates (UAE) that extends for about 72 kilometres along the
  Arabian Gulf coast. UAE is a federation of seven emirates: Abu Dhabi - the
  federal capital, Dubai, Sharjah, Umm al Quwain, Ajman, Ras Al-Khaimah and
  Fujairah (UAE Government, 2007). Dubai, with an area of 3,885 square
  kilometres, which is equal to 5% of the country's total area, is considered to be the
  second largest emirate in the UAE. Each emirate has been successful in
  contributing to the country's progress (UAE Ministry of Economy, 2007).

           Figure 3.1 – United Arab Emirates Map

Figure 3.2 – United Arab Emirates Map
Source: Wikimedia commons,

Figure 3.3 – United Arab Emirates Location Map
Source: World atlas,

3.2 Dubai Urban Development

Fifty years ago, UAE comprised oasis, sand dunes, simple villages and fishermen,
shepherds and seafarers. With its location in the desert with temperatures that can
reach 130 degrees Fahrenheit and among the highest humidity in the earth, the
challenge to change the living style in such a difficult environment is obvious
(UAE Ministry of Economy, 2007).

Yet, despite all that, Dubai, a tiny city, has carried out an impressive
transformation over the last four decades, managing to move its economy from
that of trading and fishing to finance, tourism, shipping and mass communications
(UAE Ministry of Economy, 2007). Dubai has been able to create for itself an
image associated with luxury: 12 million visitors in 2005, multi-billion dollar real
estate projects, and one of the three most successful cities of the 1990s, as Jones
Lang LaSalle has acknowledged Dubai (beside Dublin and Las Vegas), as
measured by real state development and economic growth (Molari, 2004).

In comparison to Western cities, where the conversion from pre-industrial to
industrial then to post industrial position occurred over a period of two centuries,
Dubai has been able to achieve similar conversion in only fifty years (Molari,
2004). Changes are remarkable in the economic, cultural and social characteristics
of the city, and visible in the pace, scale and size of urban growth. The major
economic transformation of Dubai city over half a century has been connected to
major changes in its urban development pattern and population structure (UAE
Government, 2007).

Formation of Dubai Urbanization: Dubai faced different urban development
through its history. In 1799, the city, which then was over 300 years old, began its
urbanization process. During those days, a building called Al Fahidi Fort was
considered to be the first attempt for the city towards urbanization (Al-Abed and
Hellyer, 2007).

One of the important periods in the urbanization history of Dubai was the British
Colony period in the 19th century. A general peace agreement was signed with the
British for the period of 1820 until 1833; during that time the current ruling family

– Al Maktoum – settled in and ruled Dubai. Accordingly, the urban development
has been planned and directed according to the ruling family’s visions (Al-Abed
and Hellyer, 2007).

In 1892, an agreement was signed with the British, which determined their urban
presence in Dubai until 1971, when the city gained its independence and began a
new period of urban development. The oil discovery in 1966 has steadily
accelerated Dubai's urban growth (Elsheshtawy, 2004, p.176).

Four main phases of urban growth can be identified in Dubai:

3.2.1   Period from 1900–1955
It was a period of limited physical expansion and slow growth as a result of a
minor increase in population and restricted economic growth. During that time,
Dubai, with a population of 10,000, was divided into three districts (Elsheshtawy,
2004, p.178):

           Deira: considered as the main commercial centre, it included 1600
            houses and 350 shops; the majority of its inhabitants are Arabs and

           Al Shindagha: considered as the main residential area and mainly the
            earlier residence of the ruling family, it consisted of 250 houses with no
            shops and with Arab residents only.

           Bur Dubai: considered the smallest of the settlement areas, it included
            200 houses and 50 shops with the domination of Persians and Indian

The majority of the people lived in huts called ‘Barasti’, built of palm fronds, and
they lived all together as families with their relatives (extended families). In 1956
the first house was constructed using concrete blocks (Heard-Bey, 1982).

3.2.2    Period from 1956–1970

It was acknowledged during this period that an official institutional structure was
needed to control future urban growth. The municipality of Dubai was established
in 1957 to manage and coordinate the municipality's services under the guidance
of the city council whose members were among the leading merchants. This period
of compact growth period depended on the master plan of the 1960s that had been
prepared by a British architect for the provision of a roads system, design of a new
town centre and zoning of the town into variety of land uses. The strategy of the
master plan was indicative of how strong the central control over the urban
development was (Elsheshtawy, 2004, p.179).

The land ownership during these times was based on two principles. Any plot of
land that has been occupied in a settlement for a long period belongs to the
residents. Elsewhere, lands were under the control of the ruler; he could sell it,
lease it, allocate it to special uses for a specific a period of time, or give it to the
municipality for community services. The title deeds for the plots developed in
1960 were traded freely, and if these plots had been required by the municipality,
compensation would have been given to the landowner according to the market
value. Moreover, the fact that the land outside the settlement areas could be
disposed freely by the ruler gave magnificent central control over the urban
development (Al-Abed and Hellyer, 2007).

Figure 3.4 - Dubai in the 70's and 80's

Figure 3.5 – Dubai Urbanisation 1973

3.2.3   Period from 1971–1980

This was a planned suburban growth period. In 1971, with the availability of
development capital and wider urban expansion, a new and innovative master plan
was proposed. New provisions for a radial road network to the suburbs and ring
roads around the city were made. Other main transport developments incorporated
a tunnel beneath the creek and construction of two bridges, thus connecting city
district (Bur Dubai and Deira) on both sides of the creek. The eastern area of the
creek (Deira) was developed into the administrative centre and the major business
banking area for the city, a main area for shipping and handling coastal activities,
and the international airport. While on the other side of the creek, the World Trade
Center landmark was located, and the main container harbour was developed
beside the dry docks and the industrial areas (Al-Abed and Hellyer, 2007).

During this period also, Port Rashid was planned, and a large residential area
extending toward Jabel Ali (now called Jumeirah), while the southern parts of the
city were set out for education, health and Leisure/recreation developments.

Moreover, the provision of the corridor along Sheikh Zayed Road toward Jabel Ali
was of significant importance for the future structure of the modern city. This
zone, known as 'New Dubai', is characterised as the new financial and commercial
core of Dubai city (Gabriel, 1987).

It was the end of the twentieth century that Dubai started to work on attracting the
foreign investment, knowing how significant its natural harbour located on the
Arabian Gulf is in linking the ancient trading routes between the Far East and the
Far West, turning into a trading city (Al-Abed and Hellyer, 2007).

Figure 3.6 – Dubai Urbanisation 1993

3.2.4   Period from 1980–Present
It is a rapid urban expansion period, in terms of both the scale and diversity of the
development projects and the urban spread of the city that reached 710km 2 in
2007. The annual urban growth rate is about 3.9% and, according to the strategic
plan, the built-up area will have been extended by a further 501 km2 by 2015
(Gabriel, 1987).

Whereas the master plan of 1960 established the basis of the urban road network
and the municipal services system, it was not designed for the subsequent
explosive growth of the city and the economy. In the early 1990s, Dubai Urban
Area Strategic Plan for 1993–2012 (see figure 3.8) was commissioned by the
government to guide the physical and economical development of Dubai in the
twenty first century (Elsheshtawy, 2004, p.181). Thus, Dubai was preparing for
capital investment while the world was facing the boom crisis in the 1990s, as
discussed earlier in chapter 2.

Figure 3.7 – Dubai Urbanisation 2006

  The main challenges to be addressed in the new strategic plan were (UAE Ministry
  of Economy, 2007):

        To extend the existing infrastructure facilities and transportation network.

        To support the urban expansion by allocating extra planned lands to meet
          the current and future requirements for commercial, residential and
          industrial uses.

        To promote sustainable economic growth.

        To attract and support private and foreign investment by providing enough
          land supply, simpler administrative and planning procedure, adequate
          infrastructure, and by carrying out public funded feasibility studies mainly
          proposed major development to minimise the risk to private capitals.

        To encourage the coordination and cooperation between the government
          agencies and the private sector companies in undertaking 'mega projects'

        To encourage the re-investment of the capital and profit of expatriates’
          local enterprises.

        To develop a department within the planning framework capable of
          monitoring, reviewing and implementing the Structure Plan.

        To advise an environmental authority to operate within a strong market
          economy and integrate the interest and requirements of a great number of
          organizations and agencies.

Recently, given that the economic diversification scheme has impacted upon Dubai's
urban performance, a huge investment is occurring in the physical infrastructure of
the city to meet the population growth and tourism demands. In early 2005, the
population was estimated to be around 1.086 million and is likely to reach 3 million
in 2020; consequently, a massive infrastructure provision has been prioritized in the
city's urban development (UAE Ministry of Economy, 2007).

Figure 3.8 - Dubai Urban Area Structure Plan (1993–2015).
Source: Dubai Municipality,

3.3     Urban vision and property development

Dubai, similar to several other contemporary cities, is running to establish its
position in the competitive global economy, even though Dubai is also in a
distinctive condition. By comparison with former Communist cities and older
western industrial cities which are trying to find how to change their urban
regeneration, Dubai is already involved in the process of urban regeneration. On the
other hand, Dubai is similar to many other cities of the third world; it is facing many
challenges, most significantly the provision of adequate infrastructure within the
rapid urban growth and expansion; this problem is being addressed by Dubai from a
relative economic strength position. Obviously, it has many opportunities, such as
plenty of land resources, political stability, no sprawl settlements, no industrial
dereliction, very strong flow of local and foreign capital investment, and it is moving
with a clear development plan that intends to establish a city of regional and global
importance for the twenty first century (Pacione, 2005).

Property development and investment are the keystones of Dubai's development
strategy. Both government and private sector are using this sector in a number of

       As a method to enlarge and diversify the city economy by establishing new
        urban centres specialized in specific economical activity for instance tourism,
        IT, multi media and retailing.

       To create an image, landmark and space marketing, marked in iconic
        architectures, (e.g. Burj Al Arab - a seven star hotel in the shape of a sail), and
        the massive scale mega projects, (e.g. The Palm islands, Burj Dubai); these
        projects play a significant role as the national identity of the city and in
        attracting the investment capitals, all being means of raising the city's global

       To expand the urban infrastructure network, including the international airport
        expansion, establishment of a new urban light rail system, in order to support
        the population growth and assist urban enlargement.

3.4     Emergence of Mega Cities

Part of Dubai’s strategy to be the region’s hub for leisure, commerce and services
and part of the planned urban growth, is the construction of a wide range of 'cities
within the city' or so-called 'Mega Projects'. To support its strategy, the Dubai
government established three major development companies: Nakheel, Emmar and
Dubai Holdings. These companies were in charge of designing the master planned
projects and ensuring that Dubai’s vision became a reality. Key projects among these
are shown in figure 3.9 and discussed below:

Figure 3.9 - Map of projects                         Source:

      1. Internet City - completed
      One of the former mega projects, it is established to provide an environment
      and infrastructure that allows ICT
      enterprises      to      function   locally,
      regionally and globally from the city
      of     Dubai,         with    considerable
      competitive advantage, and is the
      base to many key international
      companies such as Oracle, Microsoft            Figure 3.10– Internet City
      and Canon (FZ-LLC, 2008).

2. Media City - completed
The city includes studios and the
offices of the main media companies
such as Reuters News Agency and
CNN, and it is situated close to the
Internet City (FZ-LLC, 2008).
                                            Figure 3.11– Media City

3. Festival City - completed
One      of     the    mega   mixed-use
developments that belongs to the
private sector, it includes fifteen
residential neighbourhoods with a
world class atmosphere of leisure
facilities,      entertainment       and
shopping, and with an essential
location beside the shoreline of the
                                            Figure 3.12– Festival City
creek (FZ-LLC, 2008).                       Source:

4. International City- completed
A mixed-use development of about 800 hectares, it includes 21,000 residences
to house 60,000 people in the form
and    design     of   'national   theme'
districts in the architectural design
and style of a mixture of countries
such as England, Italy, Indonesia and
China; it also includes 210 hectares
of central business district, tourist
facilities, hotels and international
exhibition center (FZ-LLC, 2008).           Figure 3.13– International City

5. Dubai International Financial Centre - completed
A financial-free zone of about 450,000 m2, it offers a range of advantages
including zero tax on profit and
income, and no repatriation or
restriction     on    capital/profit.   It
comprises a 50-storey headquarters
blocks,       and    14   other   towers
designated to become the financial
core (FZ-LLC, 2008).

                                             Figure 3.14– Dubai International Financial Centre

6. Dubai Marina- completed
It is a man-made marina of about
4.5 km and is strategically located on
Dubai's Growth corridor. The project
can house about 120,000 people in
six cosmopolitan towers, restaurants,
gardens and water leisure facilities
                                             Figure 3.15 – Dubai Marina
(EMAAR, 2008).                               Source:

7. Dubai-land Ski Dome-
This is part of the Emirate Mall and
is considered to be the third largest
indoor ski-slope in the world. It
measures 400 metres and uses 600
tonnes of real snow (FZ-LLC, 2008).
                                             Figure 3.16– Ski Dubai

8. The Palm Islands – under construction
Three huge man-made residential islands in the shape of palm trees have been
constructed by Al-Nakheel properties on the coast of Dubai (Palm Jumeirah,
Palm Deira and Palm Jabal Ali). These are considered to be the largest artificial
islands in the world. This massive project will increase the ground to water
ratio, will increase the shoreline by 120 km and is attracting first-class hotels,
luxury retail and exclusive leisure facilities (Al-Nakheel, 2008).

         Figure 3.17– The Palm Islands   Source:

9. The World – under construction
The World is an imaginary project which consists of 300 man-made islands in
the shape of the world continents, and is being developed by Al-Nakheel
properties. The project covers an area of 6 km in width and 9 km in length, and
the transportation theme between the islands will be by marine transport only
(Al-Nakheel, 2008).

         Figure 3.18 – The World         Source:

10. Dubai Water Front – under construction
This project will become the world's greatest waterfront project; the man-made
islands are in a crescent shape that covers an area of 81 km2 divided into 10
districts, and will house more than 1.5 million people. The project, dominated
by the artificial creek also called Arabian Canal which is about75 km, consists
of 250 master-planned communities, a harbour, marina, residential and
commercial facilities. The first phase of this massive project is Madinate Al
Arab and Burj Dubai (also called Down Town Dubai) (Al-Nakheel, 2008).

         Figure 3.19 – The Palm Islands   Source:

11. Dubai Mall – under construction
This mall is designed to be the biggest shopping mall in the world and covers
about 9 million ft2 of floor space; it is located near Burj Dubai, and is expected
to attract about 35 million visitors in its first year of operation (EMAAR, 2008).

         Figure 3.20– Dubai Mall      Source:

12. Burj Dubai – under construction
This phenomenal tower of about 800m in height, also called 'Dubai Tower',
will soon be the tallest building in the world. It consists of residential and
leisure buildings, and is designed to be the centrepiece of the huge development
area like 'Downtown Dubai' which is Phase One of the Dubai Water Front
Project (Al-Nakheel, 2008).

         Figure 3.21 – Burj Dubai Source:

13. Madinat Al-Arab – under construction
This project is actually the Phase One of the Dubai Water Front Project which
will house a population of 80,000. It will offer 200 plots and includes public
spaces, commercial spaces, retail facilities, resorts, and an integrated transport
system (light rail and road) (Al-Nakheel, 2008).

         Figure 3.22– Madinat Al-Arab     Source:

3.5    Conclusion
This chapter gives a good background and understanding of how the financial
prosperity, especially of the oil years, played a major role in transforming Dubai
from a quiet village into a modern successful cosmopolitan city. In addition, the
development plans, prepared by the government for the post-oil period, have been
created to sustain this growth. The Strategic Plan for 2015 was an important step to
prepare Dubai for the development growth, where it focused on the provision of
infrastructure, economic diversification, and urban expansion to meet demands for
commercial, residential, and recreational uses. The emergence of ''Mega cities'' was
part of Dubai’s strategy and vision to be the hub of commerce, leisure and business.
Although the physical and economic growth goals have been met, similar to most
capitalist cities, there are consequences that will have impacts on the market
prosperity and the built environment. The latter will be discussed in the next chapter.

Chapter 4: The Impact of Dubai's Rapid Development on the city
The scale and speed of urbanization and development have resulted in a significant
boom in the real estate and construction sectors. Property development has major
influence not only on the economic prosperity of the country, but also consequences
on the real estate market, environment and culture. This chapter will provide an
overview of the real estate market in Dubai, its history, the main reasons and drivers
for the flourishing of this sector and potentials in the property development. It will be
followed by a discussion about the impact of the rapid growth and development on
two main fields, the real estate market and the urban environment, that were mostly
and critically impacted.

4.1      Real Estate market

 4.1.1    About Real-Estate industry in Dubai

 The vision of Dubai has been set out by HH Sheikh Mohammed bin Rashid Al
 Maktoum, the Vice President and Prime Minister of the UAE, and Ruler of Dubai.
 He played a crucial role in directing the growth of the real estate sector. His vision
 of Dubai's city as both a tourism and trade hub has been backed up by government-
 owned real estate enterprises, the marketing of Dubai as a major tourism
 destination and business hub, and          also major investment in services and
 infrastructure, i.e. roads, additional ports and airports (UAE Ministry of Economy,
 In May 2002, foreign property investment has sky-rocketed in Dubai, when a law
 was issued allowing foreign nationals to own properties in Dubai, with full right of
 residency being given to home owners by selected leading property development
 companies. Thereafter, Dubai became the Gulf's most sophisticated and largest
 construction market in the Middle East region; it was considered as the Manhattan
 of the Middle East. With no wonder, Dubai quickly became the main attraction for
 real estate investors and expatriates around the world. It was estimated that more
 than 100,000 British nationals have bought property within the city; this property
 boom has greatly helped to fuel Dubai's rapid economic and financial growth
 (KAB Real Estate, 2008).

                                                                                      35 Dubai's Strategic vision
In drawing the vision of Dubai, there is a need to look at future revenues, taking
into consideration resource limitations and perceptions about the place. It is located
in the heart of the desert and its natural resource - oil - which is an important
contributor to the economies of most Gulf countries is less than 5% of Dubai's
GDP. It is predicted that oil will dry out in approximately 20 years (Middle East
Monitor, 2007). Thus, diversifying Dubai's assets is an overwhelming need (see
figure 4.2– GDP distribution 2006). This fact has been recognized in the
government vision and clearly outlined in Dubai's 2015 Strategic Plan, which has a
main goal to make Dubai a ''Global city'' and “globally leading Arab city” (Al-
Abed and Hellyer, 2007) with the focus on tourism, trade, financial services,
transport, real estate and construction as the key drivers to support its economy in
the 2015 Strategic Plan.

 Figure 4.1 – Palm Jumeirah                 Source: Price WaterHouse Coopers, 2006, p.12

Figure 4.2– GDP Distribution 2006
Source: Ministry of Economy, 2006, p.71. United Arab Emirate yearbook 2008

What have supported the vision of Sheikh Mohammed are the high oil prices which
have generated large funds to flow in the region. The increase in liquidity, together
with continuous repatriation of funds from overseas into the region, has been
conveyed into the real estate markets and stock markets in both private and public
sectors. The government, with the support of a strong economy, investment in
infrastructure, modifying regulation for easier foreign ownership and rapid
population growth, has been able to set the real estate market to maintain a high
growth curve (Price WaterHouse Coopers, 2006, p.13).

   Key Drivers for Dubai's surge in Real Estate Sector (Business Finance, 2005,
      1.    High oil prices and increased liquidity.
      2.    Government strategy to have economic diversification.
      3.    Significant economic growth.
      4.    Increasing the foreign direct investment. It was doubled to USD $18
            billion in the period 2002-2005.
      5.    Repatriation and transfer of funds to Middle East region following the
            September 11th. Many analysts believe that the current boom in Arab
            real estate was the result of fund transfers after the 2001 bombing in
            USA; many Arab governments and individuals feared an American
            backlash, so they withdrew about 200 billion dollars from the US.
            Subsequently, many of these funds have been invested in the UK and
            Europe, with a significant part transferred to Gulf Countries.
      6.    Rapid population growth rates. It has been recorded as one of the fastest
            population growth rates in the world over the last five years.
      7.    Modifying ownership regulations to allow foreign ownerships in Dubai

   In addition, it is important to mention that the vision did not completely depend
   on "build it and they will come". It was also established on ensuring incentives
   for the attraction of major multinational companies and foreign direct
   investments. These incentives took different forms and shapes, the most
   important of these being (UAE Ministry of Economy 2007):

    A well-organized and corruption-free bureaucracy in the public sector,
         which is very rare or almost a non-existent phenomenon generally in the
         Middle East area.
    A hyper-free market economy provides very low boundaries and
         restrictions on flow of funds and transactions.
    Tax-free and reduced tariffs that significantly attracted expatriates and
         western companies.
    Government strategy to support, directly or indirectly, many important
         economic projects to guarantee their success without loss.
    Foreign ownership in the free zone area has been allowed.
    High technology infrastructure has been established to sustain and
         support a prosperous e-government and electronic-based economic
    Visas processes are very easy and quick for visitors and businessmen.
    Security record has been maintained at a good level of zero major
         incidents, where heavy investment been made in the Emirate's security

The real estate market is booming in the Gulf Region. Developers are carrying
out large scale mix-use developments on a regular basis all across the region,
with a large number of them falling into what is called ''mega projects''
(Investments of over USD $500 million) (Price WaterHouse Coopers, 2006,

Currently in the Gulf, almost two-thirds of the real estate ''mega projects'', some
of which were listed earlier in chapter 3, are being undertaken in the UAE (see
figure 4.3). This dynamic real estate activity in the UAE, which over the last
five years has pumped more than USD $300 billion investment projects in the
country in all levels: local, regional and international level. As a result, the
UAE has been able to achieve the highest investment ranking of all the Gulf
countries in real estate investments (Price WaterHouse Coopers, 2006, p.14).

In the last decade, Dubai's economy has recorded an average annual growth of
approximately 10%, and since then has been accelerating recording 17%
growth in 2004, 16% growth in 2005 and 20% growth in 2007 (Dubai
Department of Economic Development, 2007). According to PWC - Price
WaterHouse Coopers- (2006) this growth has been sustained, which is very
impressive keeping in mind the fact that this growth was not driven mainly by
high oil prices, since the oil sector contributes only 10% in the UAE's economy
and less than 5% in Dubai's economy. This, along with a large population
expansion (anticipated at approximately 6-7% per annum), demands the need
for the supply of additional real estate.

 Figure 4.3– The distribution of Mega Project across the Gulf Cooperation Council countries.
 Source: Price WaterHouse Coopers, 2006, p.13

                                                                                          40    Dubai - the Forerunner in the Property Market
To date, Dubai has been in the forefront of the cities, leading the way in the real
estate boom, with construction industry and real estate services contributing to
about 25% of Dubai's GDP and representing about 48% of total constructions in
UAE (see table 4.1) (UAE MOE, 2007), while the capital city –Abu Dhabi and the
other Gulf countries are following at a pace.

Table 4.1 – GDP of the construction sector (AED Million)            Source: UAE MOE, 2007, p.15

In addition, a significant relationship appears to exist between the financial market
and the real estate market, figure 4.4 shows the statistical significance between the
share prices of companies in the real estate and financial sectors.

Figure 4.4– Shares of combined real estate and financial sector in Dubai's total GDP
Source: UAE Ministry of Economy, 2007, p.21

The following section contains a discussion of the impact of the rapid development
and investment on the real estate and construction sector, starting from the impact on
the image of Dubai locally and internationally, moving to the impact on both the
freehold and leasehold property markets.

 4.1.2 The impact on Dubai Image in Property market

 Briefly listing the innovative Dubai projects (mega projects) which some of them
 have been discussed earlier in the previous chapter, these facts about Dubai's real
 estate activity have been found (Price WaterHouse Coopers, 2006, p.14):

           The world’s tallest tower (Burj Dubai) is being built in Dubai.
           The world’s largest shopping mall (Dubai Mall) is under construction.
           The world’s largest hospitality and leisure development has recently
            been started (Bawadi); it is expected to be completed in phases between
            2010 and 2014. It is costing about USD $27 billion and at 10km will be
            longer than the Las Vegas strip. Also, it will contain the world’s largest
            hotel with 6,500 rooms.
           The longest in-door ski slope (in Emirate Mall) opened in Dubai in 2005
           The world’s tallest dedicated hotel building (Burj Al Arab) - a landmark
            and an icon of Dubai’s skyline.
           The world’s first underwater hotel (Hydropolis Hotel).
           The largest man-made island (The Palm, The World), globally profiled
            and holding luxurious condominiums and yacht basins. What is
            surprising is that it has been promoted as the 8th wonder of the world,
            because it can been seen from the outer space, just like the Great Wall of
            China (Business Finance, 2005, p.36).
           About 17% of the world’s cranes are anticipated to be in Dubai now
            (considering a population of only 1.4 million, this percentage is a large

It may be clearly noted from the above that Dubai depends on landmarks and
uniqueness in promoting the city to attract more business and investment and mainly
draw the attention of tourists from around the globe. From observations, there are

always cautions and striking promotions – the ''biggest, tallest, riches, longest,
unique'' which are all considered short-lived differentiators, especially when
constructing destination images. It would be better to base it on the promise of more
concrete and tangible things than on passing titles.

Although the city of Dubai is recognized by a variety of images, not all these images
enclose Dubai's image entirely. Dubai lacks a symbol or single logo to represent the
city. Compared with other cities, such as New York, which is represented by the
Statue of Liberty, the logo of '' I L♥ve NY'' and the campaign of the ''City that never
sleeps'', or Singapore, which is represented by the Merlion, or Egypt, which is
promoted by the pyramids, Dubai has not yet decided what its main image will be.

       Figure 4.5 - Burj Al Arab Hotel, Dubai   Source:

Many efforts have been made for the marketing and branding of Dubai. An
organization, known as DTCM (Dubai Tourism and Commerce Marketing), has been
set out to take responsibility for marketing Dubai. This organization is expert in
expressing the messages about the iconic Dubai constructions overseas. The sail
shape of Burj Al Arab- seven star hotels- (figure 4.5) was designed to be recognized
in 5 seconds (COLLIERS Int., 2006). Although the design has been so successful
that the hotel became a symbol of Dubai in the same way as the Eiffel Tower stands

for Paris, there are yet many symbols emerging by developers competing to have
such attractions.

The image of city in any part of the world needs to be connected to an emotion. What
any tourist will remember is the emotional experience from the destination. Until
now, Dubai has been representing the desire of many expatriate population and
foreigners investors living and working in the city, and since the people are usually
the key drivers, they all want to own the vision and reflect their images; given the
size of the multi-nationalities in the city this is a big challenge.

Undeniably, Dubai was successful in presenting many images in many ways; e.g.
lifestyle, shopping, tourism, business investment, real-estate, financial services,
education and healthcare. Sheikh Mohammad Bin Rashid Al Maktoum, said in his
historic speech:

  ''… It is common knowledge that it is far easier to build a financial capital than it is
  to build intellectual, psychological and moral capital. Building a road, or a bridge,
  may take a year or two, but building a person takes a lifetime. We live, today, in
  the ever changing era of knowledge, requiring continuous learning which does not
  end at a certain level, or by attaining a … certain expertise'' (Al-Abed and
  Hellyer, 2007, p.16)

Dubai vision is clear, yet focus is needed; it presents variety of images which is
confusing. Although Dubai has been able to focus on key elements, it needs to
strengthen a few of these to be able to construct a destination with an image.

Later on this chapter, the impact of socio-cultural changes that are taking place on
architecture in Dubai will be discussed on the section about impact on the Urban

4.1.3     The impact on Real Estate Market

This first part of this section will review the outlook of the property market and the
demand outlook generated by the population growth, which will give a clear
understanding of the main reasons for the impact on the freehold and leasehold
markets. It will be followed be discussing the development consequences on both the
freehold and leasehold markets.    The outlook of Dubai property market
Real estate performed as a key driver of growth and has also been a robust and
steady player in the last 5 years. With the decree to open up Dubai market for foreign
freehold ownership, there has been an excess demand for residential and commercial
building in relation to the supply. Huge demand for properties has been driven by
international investors and developers, and in the last few years, owing to the limited
supply and rising construction cost, rents and prices have increased significantly
(Dubai Initiative, 2007, p.5).

Figure 4.6 – Views from Dubai urbanization   Source: KAB Real Estate, 2008, p.2

Demand Outlook: Population growth is the major driver for demand in a city like
Dubai; it depends mainly on the natural increase in population and an influx of
expatriates. Expatriates are the majority of the citizens; they represent about 90% of
the total population, and they come to work (labourers and professionals) or to invest
(see figure 4.7). The unemployment rate In UAE does not exceed 4% of the
population (University of Michigan, 2002).

        Figure 4.7– Countries with the highest percentage of international
        migrants in total population, 1990
        Source: University of Michigan, 2002

Dubai started as a small populated city of about 1,500 inhabitants in 1833, and has
grown slowly till its population reached 59,000 in 1968. With the rapid urbanization
in Dubai, a significant increase in the population occurred, recording 1.3 million in
2005, and the projected population is expected to reach 1.9 million in 2010 (see table
4.2). This strong population growth shows how sustainable is the current demand is
for residential units (UAE Ministry of Economy, 2007).

Table 4.2 – Population projection for Dubai (2007 – 2010)
Source: Dubai statistics center, 2007, p.

                                                                                   46   Impact on Freehold Market
According to Price WaterHouse Coopers (2008), the freehold market of Dubai has
undergone many key developments since last year. The market is maturing; with
buyers becoming more selective, property prices have become more stable, the
secondary market is recording higher sales, and developers are constructing less on a
speculative basis. Nevertheless, there is no sign of slackening in the demands for
housing. Given the increase in the population growth rate, the estimated additional
demand for housing units is between 40,000 to 50,000 units annually (p.46). The
flow of expatriates is still continuing, the incomes level is rising, many projects are
presenting off-plan sales; all these signs indicate that the real estate market is
softening on a gradual basis rather than all at once, see figure 4.8.

Figure 4.8- Summary of the Freehold Market development
Source: EFG-Hermes, 2006, p.5

Many economists and analysts are expecting that the prices will probably start to fall
in 2008, taking into account the actual proportion of forecasted supply that will come
to the market and how high the demand is. Consequently, two scenarios have been
conducted for the anticipated supply of the residential units. The first scenario
indicates that a huge supply will start from 2008, taking into consideration that all
announced projects will meet delivery schedules. For the second scenario, based on
the assumption that there will be delays in deliveries which is - according to EFG-
Hermes - more realistic, it is expected that only 50% of the supply will meet the
schedule and enter the market. It assumes a major risk in the 2008 supply and the
same delay will take place in delivery dates between 2009 and 2010. As a result, this
scenario indicates that an average of 62,000 units will be added annually between
2009 and 2010 (EFG-Hermes, 2008). Therefore, and based on the market supply-
demand forecast, an over supply in residential units is expected, starting from 2008
(see figure 4.9).

        Figure 4.9 - Expectation of Dubai property prices.
        Source: EFG-Hermes, 2006, p.33

It is observed that there are many factors contributing to the delay in the supply and
also affecting the long term outlook of the property industry, which could result in
developers and investor losing the interest to invest in Dubai in future. These factors
include (see appendix B for details):

   1. Limited number of contractors causes delay in supply and deliveries.

   2. Limited supply of material and increase in construction cost.

   3. The remaining land bank belongs to few people.

   4. Possibility of mortgages payment failure.

   5. Decline in economic condition.

From all of the above we observe that, although there are pockets of weakness, the
freehold market will mature, once the supply exceeds demand the market correction
occurs. There is a risk of over supply in the coming years; however, there are other
concerns which may affect this market and discourage further development in Dubai.

       Figure 4.10 – Map for the freehold ownership in Dubai
       Source: EFG-Hermes, 2006, p.12

The legal framework governing the ownership of properties in Dubai is a significant
issue surrounding the prosperity of the freehold market. Until recently, there was no
legal framework to control the property ownership for the city of Dubai. In March
2006, a freehold property law was issued; it helped in boosting the market by making
ownership legal for foreigners but only in designated areas (see figure 4.10). The
foreign buyers are now assured about registering their properties and preserving their
title deeds in their own names. The registration of the title deed in the owner’s name
is done through mega developers e.g. Emmar and Nakheel. Once the full payment
has been made, the developer carries out the full procedure to issue a residency visa
for the owner (COLLIERS Int., 2008). There are still a few legal concerns
surrounding this law, however, mainly about the inheritance, maintenance of
common properties, land ownership, mortgage registration and tenants’ rights in
high-rise towers and apartments. These are presented in more detail in figure 4.11
(EFG-Hermes, 2008, p.12).

Figure 4.11 – Dubai's Freehold law caveats
Source: EFG-Hermes, 2006, p.13

Accordingly, by eliminating these grey areas in the legal framework, investor risk
will be reduced and more confidence will be built in Dubai's property market.

                                                                                     50    Impact on Leasehold Market
The leasehold market has also faced major development over the past few years. The
rental rates became a hot issue, with residential units rents increased for about 40%
in 2005 and by a further 30% in 2006 (see figure 4.12). The reason behind the rental
rise is that demand is faster than supply. This increase in rental rate has impacts on
the leasehold market: it causes market segmentation and divisions into three parts:

       1. Low cost residential units

       2. Residential units targeting middle-income people

       3. Residential units targeting high-income people

This market segmentation has led to a geographical segmentation; the city has been
divided into two main segments. The first one is the Old Dubai area, including Deira,
Rigga, Karama, Ghusais, Muraqqabat, and Satwa, these being most affordable and
preferred residential areas for the low and middle income segments. The other
segment is the New Dubai area, including Dubai Marina, Sheikh Zayed Road, Umm
Suqueim and the new developments areas carried by the big developers, and these
areas cater to the high income segments (EFG-Hermes, 2008, p.15).

Figure 4.12 – Rise in rental rates                   Source: EFG-Hermes, 2006, p.14

There has been a dramatic increase in the demand for low cost units, owing to the
continuous flow of expatriates, especially the blue collar workers (EFG-Hermes,

2008, p.15). The rents for these units in Old Dubai have increased by about 30% over
a year (see figure 4.13).

The middle income people mainly comprise workers living in Bur Dubai, Satwa and
Ghusais. The shortage in low cost units has caused the increase in rents to be as high
as those of the units targeting the middle income people (see figure 4.14). As a result,
the middle income segment seems to be disappearing as the lower segment rents rise,
and reducing the market division into two layers of rent rates, although it continues
as three divisions (EFG-Hermes, 2008, p.16).

In addition, the development in the leasehold market has impacted not only on the
market in Dubai but also on the nearby emirates close to the Emirate of Dubai. The
high rents in Old Dubai have pushed many people to look for housing in the nearby
emirates of Sharjah and Ajman, which is less than one hour away from Dubai.
Consequently, the new high demand in nearby emirates has pushed their rents up by
about 55%. It is expected that the flow of workers moving out of Dubai will continue
until rents rates gap between the emirates narrows (EFG-Hermes, 2008, p.16).

Figure 4.13 – Low cost units rent increase    Figure 4.14 –Lower rent Increase in middle
                                              income areas
                                              Source: EFG-Hermes, 2006, p.15

It is important to note that the differences in economic growth cause socio-spatial
differences between high and low income people in the city (as what happened in
Old Dubai and New Dubai), and probably social conflict. In Dubai the domination of
up-market residential neighbourhood give huge areas of the urban spaces an
exclusive character. On the other hand, it's not a government priority issue, to
introduce an appropriate strategy for the management of social polarisation which
may tax the powers of the city and urban planners.

Will Dubai's property bubble about to burst?
We have noticed from what has been discussed earlier that the significant problem
facing the property market in Dubai is supply and demand. The question which
would arise here and by many people is will supply and demand cause the real estate
bubble to burst? A key person in the financial sector said in an interview, " Yes there
is a risk of the bubble bursting because the economy is still construction- / real
estate-based and depends on the very vulnerable sustainability''. On the other hand,
by reviewing some market reports and analysts opinions, it has been found that there
was no significant increase in the rents over the last three months, indicating that the
market is maturing. It is definitely good news for Dubai's residents, who are always
frustrated by continuous rental increases stretching their wallets. However, the
growth in the current rents is lower than for last year, but still the figures are
extremely high.
It seems that the recent slowdown in the US market has not affected the investment
climate in Dubai, given that the latest inactivity in the property market does not
reflect a slowdown. Therefore, indicators do not show that the bubble is going to
burst, although it is possible.

4.2     The urban environment
Over the last three decades, the unrivalled growth period has not come without a
price tag. The rapid urbanization and development in Dubai have considerable
impacts on the urban environment of the city itself and the country as a whole
(Walters and Kadragic, 2006, p.85). The most critical issues influencing the built-
environment include air pollution, the degradation of marine and coastal
environments, land degradation and desertification (UNEP, 2004).

4.2.1   Air Pollution

At present, the level of air pollution has reached dramatically high levels. United
Arab Emirates has been ranked as one of the biggest per capita air polluters in the
world (Walters and Kadragic, 2006, p.85). It has also been marked as one of the four
nations in carbon dioxide generation (harmful pollutant) and in per capita fossil fuel
consumption. These have resulted significantly from urbanization and motorization.

               Figure 4.15 – Traffic congestion in Dubai, 2008

The increase in the number of citizens and tourists using vehicles has contributed
mainly to the increased of carbon emission in the air. Records show that Dubai has
scored a 13% increase in carbon emission compared with 4.7% in Canada, 2.5% in
Virginia and 2% in Michigan; these statistics were measured by using an On-road
Vehicle Emission Measurement device. The scoring system was based in two
variables: the number of cars during the time the test was taken and the level of
emission from the cars. On both variable counts, the score of Dubai was seriously

high, comparing with that of developed countries, owing to the massive number of
cars and cars emitting more pollution (Arabian Business, 2008).

Further investigation and tests have been carried out by Dubai Municipality to define
future pollution-reduction measures in the city. The resulting statistical data showed
that the average annual increase in motor vehicles is about 12%. Dubai has around
541 vehicles per thousand people; that is higher than other developed countries e.g.
New York (444), London (345) and Singapore (111). These data helped the official
to address the percentage of vehicles exceeding the emission limit compared with
other countries of the world. Accordingly, and with the addition of the fact that
roadways are always clogged at peak hours owing to the accidents and traffic jams
that regularly cause terrible congestion on the highways, the government suggested
two solutions to mitigate these problems: first to reduce the number of journeys by
car by introducing a new mass transit system such as the Dubai Metro project (see
figure 4.16). Second, reduce the emission from the cars by banning cars that are more
than 10 years old (Arabian Business, 2008).

                      Figure 4.16 – Dubai Metro under construction, 2008

Figure 4.17 – Dubai Metro Rout Map, 2008

Figure 4.18 – Dubai Metro Rout Map, 2008

Despite all these pollution problems, Dubai has been ranked surprisingly the 4th best
in the New Environmental Report 2008 conducted by MasterCard Worldwide -
Urbanization and Environmental Challenges in Asia/Pacific, Middle East and Africa
(see Appendix C).

Briefly, the report data were drawn from 21 key commerce centres in the world,
based on three indicator groups, including indicators under government control,
indicators not under government control and subject to climatic change, and
indicators linked to natural environmental risks (Zawya Ltd, 2008). For more details
see Appendix C. It has been noted from the analysis of this report that the cities with
higher income have been capable of improving the environmental quality; as the
Economic advisor to MasterCard Worldwide says, "The overall picture for Dubai is
that by and large the city has done exceptionally well in creating a high quality
environment within its urban setting, managing increasing population growth and a
degree of unpredictable environmental impacts to ensure a good quality of life for
residents" (Zawya Ltd, 2008).

4.2.2   Water scarcity

Another environmental issue is the water level; Dubai has been considered to be one
of the largest consumers in the world over the last 20 years following the rapid
growth and construction activities in the city. Moreover, it is assumed by the
governmental agencies that the water consumption level will increase by 44% by
2025. Ground water level has been falling by one meter annually in the past 30 years.
UAE is ranked as the second largest producer in the world, after Saudi Arabia, of
desalinated water, which is very expensive economically (Walters and Kadragic,
2006, p.85).

4.2.3   Demand on Natural Resources:
The increase in the city urban growth, generated mainly by population growth and
construction activities, has imposed great pressure on Dubai's infrastructure, public
services and natural resources. Latest reports on environment which were issued by
WWF (World Wildlife Fund) in 2003, illustrate the ecological footprint which
weight human consumption of natural resources that are generated by biologically
productive sea and land, and also the amount of resources required to absorb the
waste generated (WWF, 2006). It shows that UAE is ranking number one with the
highest ecological footprint (see figure 4.19). It is noted that the rapid growth of
Dubai has put a significant burden on natural resources, and is also straining the
capacity to provide public services such as energy, health care and education,
sanitation and transportation. However, as seen in previous chapters, Dubai has high
income and economical revenues which would support the government to provide
the necessary services and infrastructure to maintain the quality of life and its
wellbeing, but, perhaps owing to the speed and amount of growth, these have not
been planned properly within the strategic master plan of the city. A key person in
the study area, when interviewed about the authority role in implementing the new
development into the strategic master plan, said, ''buildings control and procedures
have been relinquished from Dubai municipality to 5 other area groups, which are
government of Dubai subsidiary real estate offices, which are currently in their
infancy and fairly inefficient and without over all ability to control or influence the
infrastructure strategic plan, which is becoming a disaster in terms of sewage and
waste disposal together with traffic and the inability to supply water and electricity''
(Author interview).

Figure 4.19 – Ecological footprint per person, by country, 2003
Source: WWF, The living planet report, 2006, p.14

4.2.4    Degradation of marine and coastal environments

Poor water management is causing environmental damage in Dubai, and unregulated
urban growth is also now causing extensive environmental damage. Recent evidence
shows that Nakheel, the government-controlled development agency which is
responsible for Dubai’s offshore developments, has carried projects that have
negatively impacted on the environment. Many environmentalists and divers have
complained that Nakheel's projects under construction ''The Palm and The World'' –
artificial islands- (see figure 4.20) have destroyed the marine ecosystem, destroyed
the nesting areas of endangered turtles and rerouted natural currents. The director of
environment and protected areas in Dubai says '' the fish died because of construction
work on the sea where they are building Palm Islands'' (Walters and Kadragic, 2006,

Figure 4.20 - Artificial Island: Palm Jebel Ali, Palm Jumeirah, The World, and Palm Deira.

Obviously, the massive waterfront projects, The Palm and The World, form a highly
noticeable impression on the landscape of Dubai, while, back down at sea level, the
marine environment is suffering from critical damage caused by re-depositing of
sand and dredging for the construction of these islands. The clear blue water of
Dubai gulf has become harshly clouded with silt. The real estate boom and
construction activity have destroyed the marine environment, buried oyster beds,

coral reefs and subterranean fields of sea grass, and endangered local marine species.
Investigations have shown that two inches of sediment have covered the oyster beds,
and beaches are gradually eroding owing to disruption of natural currents
(Mongabay, 2007). When interviewing a member of the British Business Group in
Dubai about the environmental issues, he said ''The world and palms and satellite
islands have destroyed all the coral in a radius of 10 miles offshore and it will take
many years to recover. In my opinion it is a pointless destruction which will become
an embarrassment'' (Author interview).

Nakheel Properties admit that its manmade archipelago projects have destroyed the
reefs and changed the environment; at the same time they argue that the company is
trying to reduce the impact by building artificial reefs after completion of the project,
as mitigation to this problem. The company also employed a marine biologist to
examine and rehabilitate the marine life. Recently, it has been observed that water
channels between the fronds of the palm have become an ideal place for seagrass
meadows and other species of seagrass, because the protection provided by the
crescent (40 hectares of rocky reef) offered a suitable environment for the fauna and
flora (Mongabay, 2007). The executive Chairman of Ports, Customs and Free Zone
in Dubai Says '' The new habitat offered by our projects is more diverse than the
previous ones found in the site; the fauna and flora are taking advantage of that''
(Author interview).

Figure 4.21 – Corel Reefs in UAE

Figure 4.22 – Damaged Corel Reefs in UAE          Figure 4.23– Reclamation for Palm Deira
Source:                          Source:

                Figure 4.24 - The Palm Jumeirah main divisions
                Source: (

                Figure 4.25 - Water channels in Palm Jumeirah Source: (

In investigating the role of the government and local authority when studying these
projects, one of the members of the British Business Group in Dubai was
interviewed, and he said '' The planning authority is now firefighting and not
planning in a strategic way; most of these projects haven't been studied with the
master plan of the city'' (Author interview). It has been interpreted that the state
environmental authorities in Dubai do not have enough staff and expertise to address
the current and accumulating environmental issues. However, this situation is
starting to change, with the emergence of environmental NGOs, who are promoting
for national efforts to save the environment (Walters and Kadragic, 2006, p.85).

Briefly, Dubai is depending on waterfront projects to promote for the city intensified
costal and marine developments for various activities, including recreational and
tourist facilities, and urbanization, associated with poor regulations and management,
will cause degradation and loss of biodiversity in the marine habitat (Mongabay,

4.2.5    Influences on the city's architecture

The economic prosperity, accompanied by the discovery of oil in the 1960s and the
financial boom in the 1970s, encouraged the emergence of modern construction
materials and technologies. It has transformed many aspects of the society which
resulted in affecting the architecture and the built environment. The construction
industry in recent years has introduced glass, steel, concrete and other modern
materials. This has transformed Dubai into one of the most contradiction-laden cities.

Although, the new image of Dubai, which mainly resulted from competition in real
estate market, was discussed in the first part of chapter 4, it is better to discuss the
impact of the Dubai image in terms of architectural style and design in this section
since the cultural changes in architecture affect the built environment.

The introduction and use of new building materials was done by local and foreign
architects. With reference to chapter 3, in which examples of these projects are listed,
we can see shiny glass towers and skyscrapers, reflecting the burning sun, and a

massive manmade island changing the urban landscape of Dubai city. Because of the
hot climate in Dubai, air-conditioning is essential in all buildings; therefore cooling
these vast numbers of glass buildings is energy-consuming, beside the large areas of
lawn consuming large amounts of water in irrigation. All these will affect the coming
generation and the sustainability of development in terms of energy and resources

Figure 4.26 – Different view of modern Dubai

In addition, and despite the impressive urban growth, some complain that the city has
become soulless with every one in transit and no identity, while others prefer the
modern approach and consider it a step to modernity and development. On the other
hand, few consider the vernacular architecture as images of the poor and unwanted
past, while many praise it and consider it as an image of identity.

Nevertheless, there are some projects which reflect the culture of Dubai, such as the
sail-shaped Burj Al- Arab and the palm-shaped island of Jumairah - projects which
are symbols of Dubai culture and heritage. In addition, the Bastakiya village – a
traditional old village along Dubai Creek - has been restored as the traditional village
of Dubai. Yet, the government of Dubai addressed the fear of losing the identity of
the city, and is focusing on promoting the indigenous art, culture and architecture.
This has been reflected in some new projects have been designed with the traditional
architecture style of the city, such as the Mina Al Salam Hotel (see figure 4.27)

Figure 4.27 - Al Bastakiya Village

Generally, the new modern architecture and technology in Dubai are considered to be
an imitation of western architecture (as is the case in most third world countries) to
satisfy the desire of making an image and profit. This viewpoint about the issue of
identity and heritage is essential, because its impact will be on the architecture and
the built environment of not only the living generation but also of future generations.

Figure 4.28 – Modern designs and traditional designs, Mina Al Salam Hotel on the right.

In brief, architecture must represent all aspects of the city's past, present and future,
and there should be cultural break between the old and new architecture. The next
challenge to Dubai is to represent architecture that respects the identity of the place,
people and the environment on one hand and new materials and designs on the other

4.3    Conclusion

This chapter indicates that the today's real estate market in Dubai was the product of
its ruler's ambitions to make Dubai the hub of commerce, business and tourism. This
ambitious and vision of Shaikh Mohammed has speeded up and enlarged the scale of
urbanization and development in the city. It has been found that ongoing rapid
development, including massive construction activities and waterfront projects, has
not only increased the economic prosperity of the city, but also has extensive impact
on the real estate market, resulting in high selling and renting prices, and threats of
losing foreign interest in future investment as a consequence of lack of sufficient
regulations. In addition, it resulted in the degradation of urban environment, which
includes high air pollution, scarcity of water, pressure on natural resources and
infrastructure, damage to the coastal and marine environment and loss of city's
identity and culture.

By looking to Dubai's future vision and current economic growth, it is recognized
that the rapid, planned/unplanned urbanization and the natural rapid population
growth will continue to increase. Consequently, the negative environmental impacts
will continue as well. Therefore, the role of the government is essential in regulating
coastal developments, besides raising the awareness of the investors and developers
about environmental issues, cultural identity and marine habitat management.

Chapter 5: Conclusion
This dissertation was undertaken to study Dubai's rapid development and its impact on
the property industry and the urban environment. Two key questions have been
constructed to reach the aim; the first question is: ''what has made Dubai's
urbanization and - especially its real estate - development possible?'', and the second
question is ''What are the consequences of this rapid development in relation to Dubai's
property market and urban environment?". Therefore, this final chapter aims to
provide an overview of the answers to these questions.

To answer the first question, an investigation was made to study the main strategy
and drivers which made the real estate and construction boom possible. The financial
prosperity of the oil years played a major role in transforming Dubai from a coastal
trading village into a modern cosmopolitan city. HH Sheikh Mohammed bin Rashid
Al Maktoum – the ruler of Dubai- is considered responsible for Dubai's growth and
development. His vision to establish Dubai as the hub of commerce, business and
tourism has played a significant role in directing the growth and development in
many sectors, especially the real estate and construction sectors, as discussed in
chapter 3.

Dubai’s Strategic Plan 2015 was introduced by the government, with its main goal to
make Dubai a ''Global city'' and “globally leading Arab city”. It has made Sheikh
Mohammed’s vision a reality. The master plan focused on tourism, trade, financial
services, transport, real estate and construction as the key drivers to support its
economy. In addition, the decision made by Sheikh Mohammed in 2002 to open the
market for freehold property rights, enabling the non-UAE nationals to own
properties within the master planned development, has sky-rocketed the foreign
property investment in the city, as indicated in chapter 4. This has attracted many
local and multinational companies, as well as expatriates, to invest and work in
Dubai. Thereafter, Dubai became the Gulf's most sophisticated and largest
construction market in the Middle East region.

As discussed in chapter 4, the key drivers to the real estate and construction boom
include mainly high oil prices, increased liquidity, significant economic growth,
economic diversification, repatriation and transfer of funds from USA to Middle East
region following the terrorism activities, increase in population growth, and the
introduction of new property regulations allowing foreign ownership. What has
supported the property market is that the government ensured an attractive market by
having a well-organized bureaucracy in the public sector, a hyper-free market
economy with no restriction and boundaries on funds, high technology infrastructure,
easy and fast visas processes, and political stability and security.

The real estate industry currently plays a vital role in the economic prosperity of
Dubai and UAE as a whole, with construction industry and real estate services
contributing to about 25% of Dubai's GDP. On the other hand, this rapid growth has
impacts on the city of Dubai, which will lead to answering the second key question
of this research. The impacts of Dubai's rapid development will be focused on two of
the most impacted fields: the real estate industry and the urban environment.

The impacts on the real estate industry have been studied from three aspects of the
city, including the city image, the freehold market and the leasehold market. As
discussed in chapter 4, the real estate and construction boom have been marketed by
the emergence of ''mega projects'', accompanied by a striking promotion and cautions
about the ''biggest, tallest, and so on''. Over the last 5 years, Dubai has shown many
images, representing the desire of many of the expatriate population and foreigners
living and working in the city. Still, Dubai lacks a single image or symbol
representing the city. The government realized this, and assigned the marketing job
to DTCM organization to promote for Dubai. They were successful in promoting the
sail-shaped Burj Al-Arab Hotel as a symbol for Dubai, but there are many symbols
emerging yearly by competing investors to ‘own’ the attraction. The variety of
images Dubai is presenting is successful in reflecting Dubai’s lifestyle, tourism,
finance and real estate. Yet, focus is needed to be able to construct a destination with
an image.

The impact on the freehold and leasehold markets started when a decree was issued
to open the market to freehold property rights to foreigners. The population growth
increased, Dubai attracted investors, international buyers were looking for a second
home market, expatriates and labourers were looking for jobs and a better life. As a
result, an excess demand for residential and commercial building occurred in relation
to the supply. Over the last few years, owing to the limited supply and rising
construction cost, rents and selling prices have significantly increased.

The limited supply is attributed to delays in delivering the units, which have been
caused by many factors, such as limited number of contractors, limited supply of
material, etc., as indicated in chapter 4. Consequently, this will affect the freehold
market in the long term, which would result in the loss of future interest by
developers to invest in Dubai. In addition, another issue that could threaten the
prosperity of the freehold market is the legal framework governing the ownership.
Although a freehold property law has been issued, ensuring that the properties are
registered in the buyers’ own names, there are still gaps such as inheritance, land
ownership, etc. which need to be addressed to reduce investors’ risk.

On the other hand, the significant increase in rental rates has impacted on the
leasehold market causing market segmentation and geographical divisions. As
indicated in chapter 4, the city has been divided into two parts: Old Dubai, targeting
the low- and middle-income people, and New Dubai, targeting high-income people.
This resulted in socio-economic problems as discussed in chapter 2.

In studying the impact of the rapid development on the urban environment, it has
been found that, as a consequence of the speed and scale of development, this has
resulted in significant degradation of the urban environment, leading to effects such
as high air pollution, scarcity of water, pressure on natural resources and
infrastructure, damage to the coastal and marine environment and loss of city's
identity and culture.

As discussed in chapter 4, Dubai has been ranked as one of the biggest per capita air
polluters in the world. The increase in the population’s use of vehicles has
contributed to the increase of carbon emissions into the air, as well as accidents and

terrible congestion on highways. The increase in population and construction
activities has resulted in Dubai now being considered as the largest water consumer
in the world over the last 20 years, which makes it the second largest producer of
desalinated water. Also, it is ranking number one with the highest ecological
footprint, which indicates the great pressure on natural resources, energy and

The most critical impact is on the marine habitat: extensive damage to coral reefs and
endangered species has occurred following construction work in the waterfront
projects, such as The Palm and The World, carried out by Nakheel Company. The
loss of identity is another issue threatening Dubai; urbanization has introduced new
construction materials and technologies, transforming Dubai into one of the most
contradiction-laden cities in the world.


The key to the real estate market success in the Dubai will be:

       Continuing the open market strategy to foreign ownership.

       Introducing clearly defined real estate regulations, policies and entitlement
         to fill the gaps in the current law, and to insure maintaining future interest in
         Dubai market.

       Providing more balanced alternatives among all real estate categories (i.e. to
         propose projects targeting high-income, middle-income and low-income

       Maintaining an attractive tax free environment and reduced tariffs.

       Enabling the support of infrastructure and public services to keep pace with
         property developments.

       Regulating coastal developments through the government by introducing a
         monitory body.

       Raising the awareness of the developers about environmental issues, cultural
         identity and marine habitat management.

      Mitigating the impact of rapid development on the built environment by
         introducing a national sustainable development plan and a national
         environmental plan.

In brief, until now urban growth and development is not yet well managed as is the
case in most developing cities. Dubai's current economical growth and future vision
indicate that the rapid urbanization and growth will continue. It will continue to play
a vital role in the environment, economy and people's lives. Dubai’s challenge is to
manage to live with rapid development while using its benefits and dealing with the
negative consequences in a manageable way, by considering sustainability
dimensions to maintain a sustainable economic growth. The fast pace of Dubai's
development and construction would take us to questions about the sustainability of
these projects and the construction quality, which would be interesting for further

Word count: 15,854


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Appendix A: Sample of Interview

Position: Director Finance, UAE and Government Relations
Field of work: British Business Group, UAE

About Urban Growth in Dubai:
   1. What is the impact of the rapid development that facing Dubai nowadays?
      (Socially, Environmentally, Economically) both positive impacts and negative
      The positive is that it has created a vibrant society with tremendous
      opportunity for all.
      Negative the growth has vastly exceeded infrastructure and has decimated
      local culture and heritage which can never be replaced i.e. 100 years growth
      in 7 years.

   2. What are in your opinion the strengths and weaknesses of rapid urban growth
      using real state sector to achieve it?
      High risk with inflation at 20%+ and a false unsustainable economy.

   3. What are the procedure and process of acquiring the building permits for the
      mega projects in Dubai city especially with the enormous number of projects
      and developments? Are there specialized local authority dealing with that?
      The Dubai municipality has relinquished its building control and procedures
      to 5 other area groups which are government of Dubai subsidiary real estate
      offices which are currently in their infancy and fairly inefficient and without
      over all ability to control or influence the infrastructure strategic plan which is
      becoming a disaster in terms of sewage and waste disposal together with
      traffic and the inability to supply water and electricity.

   4. What is the role of the government in furthering or hindering the growth of
      Their ability to get investment in the light of negative press together with the
      inability to control inflation ***** greed for growth without the concern for
      maintaining economic and community stability.

   5. What is the role of the Planning authority in furthering or hindering the
      growth of Dubai?
      The planning authority is now fire-fighting and not planning in a strategic

   6. What do you think are the main challenges that face Dubai nowadays in the
      real estate sector and urban growth?
      Avoiding major bankruptcies in the inevitable over supply which may cause a
      crash in properties that have escalated 100% in 2 years.

   7. What are the main factors supporting and distinguishing UAE from other
      Gulf Countries, and until when it would remain as the hub given the strong
      competitions rising in the region?
      The GCC through political instability from 1990 has caused investors and
      major companies to centralize in the most stable being Dubai and that has
      brought with it the fertilization for investment included in which is massive
      Russian and Iranian funds.

   8. Some analysts and economists expect a risk of the bubble bursting. Do you
      agree or not, why?
      Yes because the economy is still construction / real estate based and depends
      on the very vulnerable sustainability.
          -   If Dubai bubble occurred, what do you think are the main challenges
              facing Dubai development and how do you think Dubai is capable to
              face future risks?
          -   It is the investors not the government that face the risk the latter in the
              recent past having diversified to overseas investments in a very
              shrewd manoeuvre.

Mega Projects:
   9. How realistic do you consider the need and necessity for all these mega
      projects? We see Jumairah Beach Residence, a lot of Business clusters being
      developed. How has the need for these projects been identified?
      A good idea at the time and in the most part badly considered and do you
      realize that a lot of the projects being announced never happen and that the
      number that do are not exactly as advertised.

   10. How are usually theses mega projects been implemented in the master plan of
       the city, has it been studied thoroughly with the government and local

   11. What are, in your opinion, the projects with most dramatic impact on Dubai's
       future image and urban fabric?

       The demolition of SATWA which is a major central area of Dubai is
       destroying a community and the ability of the office and shop workers to be
       able to afford to live in Dubai and in it-self is destructive to stabilized growth.
   12. The Arabian Canal is an interesting project, which has been stated to be the
       biggest project in the world. What impact do you think those projects may
       have on the environment (reclamation, coral reefs)?
       The world and palms and satellite islands have destroyed all coral in a radius
       of 10 miles offshore and will take many years to recover. In my opinion it is a
       pointless destruction which will become an embarrassment.

Vision about Dubai Future:
   13. UAE has been ranked No. 37 globally on the Davos World Competitiveness
       Index 2007/2008, and first on the Arab World Competitiveness Index. What is
       your opinion about Dubai city future international positioning within global
       economy, will it improve?
       No it is my opinion that Dubai is currently at the peak of its development

   14. What are the main factors to enhance the drivers of growth and development
       for Dubai in the Arab world and globally?
       The ability to maintain its reputation of return on investment being ahead of
       the world and above 8 to 10 %.

   15. In your opinion, what are going to be the future challenges of the real estate
       sector in Dubai?
       The ability to sell by not exceeding demand to a point that properties remain
       sellable without loss to the investor.

Finally, are there any other significant issues that you like to talk about regarding
Dubai rapid development?
That Dubai does not loose sight of its allure to the world of being a quality
destination of immense cultural heritage and affordable cost of living and being
value for money.

Appendix B – Main Delay factors in Dubai supply market
There are main factors contributing to the delay in the supply and also affecting the long
term outlook of the property industry. These could result in developers and investor
losing the interest to invest in Dubai in future. These factors include:

    1. Limited number of contractors causes delay in supply and deliveries
    There is a limited number of well-qualified contractors, local or foreign, working in
    Dubai. Their tight delivery schedules and the shortage in skilled and unskilled labour
    have pushed the delivery of projects of 2007 back to 2008. Thus, the delay in
    deliveries and the failure of developers to find reliable contractors to carry out the
    construction work may cause developers and investors to be less enthusiastic about
    commencing future projects.

    2. Limited supply of material and increase in construction cost
    Given the high level of real estate activity, the construction costs have increased over
    the last two years by about 15%, and also there is a shortage of raw construction
    material e.g. steel, sand and cement; all these has have caused delays in construction
    and deliveries.

    3. The remaining land bank belongs to few people
    The property market in Dubai has become more fragmented and much large
    developers have sold their lands to other private developers, yet, over 50% of the
    land is still in the hands of large scale developers such as Nakheel, Emmar and
    Dubai Properties. The massive work of these companies, and the large scale,
    duration and investment of their projects mean they will have fewer resources to start
    new developments.

    4. Possibility of mortgages payment failure
    Defaults on mortgage payments have occurred because the rental yield exceeded the
    mortgage rates. When the property prices go down and rental yields fall, mortgage
    companies will still be dangerously exposed. With cash flow mismanagement, the
    investors will not be able to make their payments.

    5. Decline in economic condition
    Any slowdown in the economy will affect business activity and mainly construction
    work, because this would tend to reduce the number of expatriates flowing into the
    country. This in turn would cause lower demand for residential units.

Appendix C- Environmental Report 2008 conducted by MasterCard
Urbanization and Environmental Challenges in Asia/Pacific, Middle East and Africa

Table 1: Combined Ranking among commerce centres in the world

Looking at the first group of indicators considered to be under government control,
such as water availability, water potability and waste removal, one can see that Dubai
has been listed fifth (see Table 3). This indicates the existence of good standards of
water cleanliness and access, a good sewage system and low levels of diseases and
air pollution, although Dubai has been marked as one of the worst in traffic pollution.
On the other hand, Dubai has a lower score – 14th - in the second group of indicators
(see Table 5), that is subject to climate change which includes water scarcity, the rise
of the sea level and hurricanes. In this group, the geographical location of Dubai, it
being a coastal city, affected the city ranking (Zawya Ltd, 2008).

Group 1- Indicators under Government Control
Table 2: Weights of Indicators in Dimension 1

Table 3: Rankings in Dimension 1

Dimension 2- Indicators subject to Climate Change

Table 4: Weights of Indicators in Dimension 2

Table 5: Rankings in dimension 2


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