United Arab Emirates: Thursday, May 27 - 2004
A Short History of Dubai Property: Part 1
This article looks at the early history of Dubai real estate and how the late Sheikh Rashid's mega projects transformed the emirate's economy.
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Dubai is a city built on free trade, openness to foreign investment and good business practice. This is nothing new.
In 1901 Sheikh Maktoum bin Hasher Al Maktoum established Dubai as a free port, abolished all tariffs and began a programme to persuade merchants from the Iranian city of Lingah to relocate to the Dubai Creek.
A natural harbour the Creek was critical to the early development of Dubai. But even by the Second World War Dubai was still a small town with a population of around 20,000.
Dubai's real economic development began in the 1950s when the late Sheikh Rashid bin Saeed Al Maktoum dredged the Dubai Creek, significantly expanding its capacity and rapidly repaying a loan from the Emir of Kuwait. Sheikh Rashid also founded the Dubai airport and established the first hotel in Dubai in 1959.
This gave way to the first Dubai construction boom of the early 1960s which took the population to around 120,000 at the end of the decade. It included the construction of Port Rashid with a five berth container terminal for the biggest ships of the time, and was greatly hastened by the discovery and development of oil reserves in Dubai.
However, it was in the late 1970s – with the help of high oil prices and revenues - that Sheikh Rashid made his most grandiose development decisions. As early as 1972 Sheikh Rashid stunned his advisers with a decision to build a huge new port at Jebel Ali, and the initial phase of 66 berths was completed in 1983.
At the same time the construction of the massive three basin, one million ton capacity, Dubai Dry Docks project was entrusted to his younger son Sheikh Mohammed bin Rashid Al Maktoum, today Crown Prince of Dubai, which opened in 1979; and the 33-storey Dubai International Trade Centre was also built in the early 1970s.
All three of these projects were truly 'visionary' and widely seen as hopelessly uneconomic at the time. The $3 billion port became the Jebel Ali Free Zone, one of the world's most successful ports and a key to the development of Dubai. The Dubai Dry Docks and Trade Centre also proved hugely successful, and contributed greatly to the commercial development of the city.
Yet to put this vision into perspective, the cost of The Palm, Jumeirah project today – an artificial island being built off the coast of Dubai - is estimated at around $2 billion.
At current prices the Jebel Ali port would cost more than $9 billion today, and was thus far more ambitious than any development project in Dubai in the present construction boom. Even the $5 billion Dubailand theme park will not match this earlier project in scale.
This is the legacy that Sheikh Rashid bequeathed his sons when he passed away in 1990, although they had already been in charge of the emirate's affairs for some years. The next article in this series will look at progress under their rule.
