The Emirates in the world

The Emirates in the world

Thursday, August 21, 2008

The Emirates' Top Trump

It seems obvious that the real estate market in The Emirates is not afflicted by an economic bubble.

In Dubai, for instance, the war in Iraq in 2003, the threat of terrorism, persistent inflation, traffic congestion, and high-profile corruption cases in large property development firms have not had a significant effect on the expansion of the real estate market. This indicates that there is an intrinsic value in the properties being bought and sold by residents and investors in the country.

Looking at one popular type of property, condominiums, one observes that the specifications and quality of such properties is converging to a similar global standard in most of the advanced urban areas in the world. From Yale Town in Vancouver to Mont Kiara in Kuala Lumpur condominiums have almost an identical feel to them with all their high-tech facilities and black-marbled kitchen counter tops. So there is a factor beyond the quality of what is being offered in the market that makes Dubai's condominiums in such a high demand regardless of regional and global threats.

That factor is perhaps the standard of living in The Emirates. From India to Morocco, the major cities in The Emirates enjoy the highest standard of living in the entire region. In terms of services and amenities, it is comparable to many western countries. This fact is The Emirates' top trump.

The high standard of living creates an increasing demand in moving into and remaining in the country, which keeps the price level in general continuously rising. However, that rise in the price level cannot be called a natural rate of inflation. The inflation rate increases variably regardless of the income growth of the country as a whole.

Policy makers in The Emirates have to take into account this factor when tackling any economic problem. The aggregate demand pull can put a halt to any corrective action taken by officials to boost the well-being of the economy.

More importantly, preserving the pleasant lifestyle of The Emirates must be a top priority. Needless to say, the job of preserving it must be taken up by all since all residents are affected by the standard of living in the country.

Any asset taken for granted and not properly accounted for can be severely undervalued. If the quality of life in The Emirates is undervalued then deterioration could set in. Therefore to preserve this asset, contributions from all residents -through paying taxes, getting involved in environmental initiatives like car pools and recycling activities...etc- should be an obvious next step.

At present, it is people's tastes that make The Emirates such a success, and the officials know how to prolong this identity. But one cannot deny that people acquire new tastes as well.