‘Transformational’ decade in Dubai real estate

By JLL Meghraj
The opening of Burj Khalifa, the tallest built structure in the world, marks the end of a ‘transformational’ decade in Dubai real estate. As part of its ambitious plans to establish Dubai as a truly global city, the government embarked upon a hugely ambitious program of both physical construction and legal / regulatory reforms. The fruits of this investment created a thoroughly modern and efficient city, but have also resulted in a burgeoning level of debt (conservatively estimated to be in the range of $80 to $100 billion), primarily from infrastructure and real estate projects.
A significant amount of this debt has been incurred by real estate developers such as Nakheel (which forms part of the government-owned Dubai World Group). It was the controversial circumstances surrounding the repayment of a major tranche of this debt that placed the spotlight of the global financial community firmly on Dubai in the final months of 2009.
This bond was eventually repaid in full on the due date (December 14), with resource rich neighbour Abu Dhabi providing $10 billion for Dubai’s financial support fund, thereby avoiding an embarrassing default. This repayment provides firm evidence of the unity of the main states, in the United Arab Emirates, and has been interpreted as a significant change in the operation of this moderate, 38-year old Federation.

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