Risk averse developers break from build and they will come
In the past two weeks, three of the leading government controlled property developers in Dubai have made the same comment when asked about their strategy for future real estate projects.
The words have attracted little attention, but they indicate a dramatic shift in the way Dubai now develops projects following the 2008/09 property crash.
Rather than committing to extravagant spending plans, the developers have all said that they will build new projects based on market demand. The change has come because Dubai has become much more risk averse over the past five years, and although major projects have started to be built again, they are adding to existing developments rather than taking the risk of building new ones.
That may have been the reasoning for moving the worlds largest shopping mall, the Mall of the World, from Mohammed bin Rashid City, a new masterplanned development outside the existing city, to a more central site on Sheikh Zayed Road, where there is already proven demand for retail across the road at Mall of the Emirates.
While this may seem like a rational approach to those new to Dubai, this tactic is in stark contrast to the years before 2008 when the build and they will come mantra dominated decisions made on new projects. Although not acknowledged or publicised, the implied philosophy of developers in Dubai today is: come and we will build.
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