Saturday, March 14, 2009

Finally, a balanced article on Dubai

...and hysterical tabloid misreporting.

A couple of days ago there was a short article in the Financial Times commenting on Dubai's current situation and the media stories about it.

It's one of the most accurate, well informed pieces I can recall reading over the past few years.

For several years we had the breathless, sometimes hysterical and often inaccurate articles about the growth, the lifestyle, the opulence, the riches, the excesses.

A few months back we started to get the tall poppy syndrome articles cutting Dubai down, reporting its collapse, again often ill informed and inaccurate and repeating dinner party rumours as facts.

These articles reported that there's nothing underpinning Dubai's economy because the oil has run out and our economy relies totally on real estate. Now the property bubble has burst the economy will collapse.

A quote in the FT article sums up the real situation brilliantly:

"Disneyland Dubai has crashed," as one Dubai-based banker put it, referring to headline-grabbing property projects, "but the core business model of Dubai remains sound."

And that's what all the stories about Dubai don't mention, the basis for Dubai's existence, its history of trading. They're based on the misrepresentation that Dubai began a decade or two ago based on oil income, that real estate is all we now have.

The fact is that Dubai evolved from a fishing village into a trading centre around 1830 and has been an international commercial centre ever since, our location being then and now a critical factor in the city's success.

A hundred years ago Dubai had the largest shopping district in the area with over 350 shops in Deira. It had a huge pearl trading industry and gold re-exporting industry. Shipbuilding was an important part of the economy too. Doing business was Dubai's reason to exist and it always will be.

Oil was an unexpected bonus, not the foundations of the economy - production only began in 1969 - and the economy which was based on trading was thriving without it.

In 1960 the international airport opened and then in the early sixties the then Ruler Sheikh Rashid borrowed money from Kuwait to dredge the Creek so that trade could not only continue but be expanded. Port Rashid began operating in 1970 to develop even more trade.

When Beirut imploded in the early seventies international companies moved out, mainly to Athens and Cyprus. They soon gave up on those cities because of the lack of infrastructure, telecommunications in particular. Dubai had invested in the future and offered what they wanted, so very many of them moved here.

There have always been rumours about Dubai's demise by the way. When Jebel Ali Port was opened in 1979 I remember people laughing that it would be a white elephant, a complete waste of money. It's now one of the world's busiest ports.

They said the same about Dubal which opened the same year, and that's now one of the world's leading producers of aluminium, contributing billions to Dubai's economy.

Also in 1979 the Trade Centre opened, to more derision and rumours that it was tilting and sinking into the sand. At Jumeirah dinner parties they're saying the same today about Burj Al Arab!

Meanwhile Dubai carries on as a commercial centre, with now even more diversification and investment in infrastructure than ever.

You can compare the FT article with the tabloid nonsense being published with these two links.

In another example of the poor and biased reporting I regularly complain about, last week the UK Sunday Mirror ran a story headlined 'Celebs losing £80,000 a week on their Dubai mansions'.

First there's the stupidity of the claim. No-one loses money unless and until they sell a devalued asset.

Then readers with any kind of intelligence can work out for themselves by what's written that the thrust of the article is rubbish.

It claims that: Celebs who bought the properties in their droves over the last few years have seen prices halve, with pads worth £3.2million in October now on the market for £1.6million.
And with the world's superwealthy cutting their losses and selling up, Dubai's bubble has well and truly burst.

It also says that England footballers were some of the keenest buyers. "When the squad stopped off in Dubai on their way to the 2002 World Cup in Japan and South Korea, they were shown plans for Palm Jumeirah...(eight of them) put down deposits on £800,000 sixbedroom villas at a special rate.

The article goes on: But last October, amid the global recession, Dubai was hit by a housing market crash, which has now cost investors billions.

Four bedroom villas worth £3million a couple of months ago are now being sold for £1.5million.

So if four bedroom villas are worth £1.5 million, what do you think six bedroom villas are valued at? Remember they paid less than £800,000 for them - so how does the 'journalist' work out that they are losing £80,000 a week? The figures he gives actually suggest their investment has doubled at the very least.

It's a good example of the way the international media is now reporting about Dubai, the thrust of the articles being negative regardless of the facts they include.

You can read the tabloid nonsense here, then you can read the sensible article here.


Anonymous said...

Finally I read a "sensible article" about Dubai.

I am sick of explaining to people that Dubai is NOT a GHOST TOWN as the rumors keep spreading around in emails and on some UK based websites.

true... very true... the Dubai "Property Booming" bubble is burst... and many people who work in the property market lost their jobs including members of my family and relatives... however, Dubai as a trading and business hub never changed, not as busy as before (due to the crises which is happening all over the world) but Dubai is still busy in the hospitality and retail market.

I see whats happening in Dubai is good for us... prices are stabling down, rents going down... streets are less busy.

good article.

Anonymous said...

What about some links on your blog to some accurate, well informed pieces from local Dubai newspapers? Or is it one rule for the sometime excessive, albeit free, western media but another for the sycophantic local press which hardly ever prints any criticism of local rulers or holds them to account? It's interesting that the corrective piece that is the subject of your post comes from another foreign newspaper, the Financial Times, and not a local one.

The exaggerations in some of the reporting of some UK newspapers are completely dwarfed by the upbeat nonsense printed everyday in the local UAE media, with its constant praises for the 'vision' of local rulers. Look closer to home for breathless, sometimes hysterical and often inaccurate articles.

Seabee said...

Anon@7.38, if the subject was the lack of freedom for our local press I would have included it.

The subject is the irresponsible, inaccurate stories printed in the western media - which is free to print what it likes but abuses the freedom.

They either don't even bother to check the accuracy of what they write, or they tell deliberate lies.

They print contradictory information within a few sentences, they give their millions of readers nonsensical rubbish - such as the Mirror's 'losing £80,000 a week' headline.

That is inexcusable for a free press.

Anonymous said...

Seabee, how is it irresponsible, inaccurate stories printed in the western media ?

The properties were sold to selected celebs by Nakheel at "special rate" on the basis that they would be used as marketing and advertising tools. Or do you not know that? It was not a free lunch was it? On the backs of these celebs Nakheel then made billions, did they not?

So the property of the Beckams, for instance, cannot not be valued at the "special rate", now can it? It should be valued the same as if they had bought it with no frills attached!

Seabee said...

Anon@9.43 you're completely missing the point.

Of course we know the 'celebs' were given a special rate as part of the marketing of Palm Jumeirah. There's nothing unusual in using 'celebs' to promote a product, it's a normal part of marketing.

And of course Nakheel benefited from it, as does every other company using 'celebs' in their promotions. That's the point of the marketing.

But that has absolutely nothing to do with the fact that the Mirror published misleading information which promoted an untrue claim. And it has absolutely nothing to do with my post.

I said: In another example of the poor and biased reporting I regularly complain about, last week the UK Sunday Mirror ran a story headlined 'Celebs losing £80,000 a week on their Dubai mansions'.

You want to know "how is it irresponsible, inaccurate stories printed in the western media ?

Read the story in the Mirror, look at the figures they use.

They say the England footballers paid less than the £800,000 list price for six-bedroom villas and that four-bedroom villas are now selling for £1.5 million. That means the footballers' villas are worth more than double the original list price when they bought them.

Yet the paper claims that they're losing £80,000 a week.

"So the property of the Beckams, for instance, cannot not be valued at the "special rate", now can it? It should be valued the same as if they had bought it with no frills attached!"

I have no idea what your point is - but it seems you don't understand investments.
Let's say they even paid the list price of £800,000 for their six bedroom villa. They are currently being advertised for sale at over £4 million. That's an excellent investment.

And another point I made in relation to the 'losing £80k a week' nonsense - they haven't lost anything. Nor have they gained anything. An investor only gains or loses when he sells, and they haven't sold.

Anonymous said...

well see it as they are getting it back for all the careless irresponsible advertising and bullshit PR that dubai has done over the years to market all these junk. when it was predicted dubai might burst, the whole of dubai had apoplexy denying it and rejecting any such thought for the next 100 years. so it si only natural at the first sign of it, those who have been waiting to be proven right jumps on it. what you serve is what you get back! big deal if the world sees dubai through coloured prism. that is exactly how dubai often falsely projected itself to the rest of the world.

Anonymous said...

Let us all wait and see which is a balanced article, and which is not. As you would say, there is data insufficiency right now to make any predictions on how Dubai will rise again because all fundamentals are in place. I would beg to differ on the so called fundamentals, but besides that, it precludes all other negative eventualities that can make dubai sink like a stone in the future again in a moments notice, like a war in the region, or terrorist issues internally. of course, of course, we all know, these things never happen in dubai, but we did hear that too about the real estate crash much before it tanked.were there any takers at that time? not the ones who are crying now.

in any case, writers write to support their emotional premise and agenda, openly or hidden. one group wishes it sinks, other one writes the empire will rise again.

Dubai Property said...

To gossip is what we all love doing but to gossip in press and article is unethical because there are people reading it and form notions based upon thoughts spread through articles therefore reporting the truth must be the motto.

Anonymous said...

oh really...? did you try speaking to gulf news, khaleej times, the national, and dubai holdings official press releases that all publications in dubai are forced to carry? forming notions from published data in the middle east? not much hope for you my friend. as for the rest of the world..depends what you read. crap exists everywhere, it is not a new thing.

Seabee said...

Anon@1.30 firstly the post isn't about the local media but is about the unbalanced, biased reports - both fawning and critical - we've had in the international media.

Secondly, that's a huge statement you make: "official press releases that all publications in dubai are forced to carry?"

'All' publications? That includes What's On, Time Out, Ahlan, Property Weekly, The Times, Financial Times and the like does it?

'Forced to carry'? How are they forced? By government decree? By threats?

You make these claims and state them as fact - would you care to disclose your source and give us the evidence?

Publishers and editors of my aquaintance have never complained of that.

Anonymous said...

Some of you are both right and wrong. The Mirror story meant they are losing 80,000 a week from their value at the peak of the market last year. So you are right in the fact that the celebs are not 'losing money' on the price thry bought at but if they wanted to sell at peak, that would be the amount they have lost since then...

All the media based in Dubai cannot criticise the government or institutions. Nakheel is part of Dubai Holding, so we cant write negative press stories.

If the story is anti-dubai from overseas, the link is blocked to that story.

The official lines on visa issuing outweighing visa cancellations is just such an example recently....

Seabee said...

Anon@9.04 the links to anti Dubai stories are not blocked, I have given links to the stories here on my blog. Click on them and you'll go to the stories. Like so many people you're simply repeating another urban myth, stating a rumour as fact.

Anonymous said...

Sorry Seebee, I work in the media and on more than 3 occasions, Etisalat has blocked the link to a story...even if it was for a couple of days...

If you work in a free zone, than you can see anything you want as there is no proxy server.

But that is due to change so I hear (oops, dont want to embellish and cause panic!)

Seabee said...

Anon@12.21, I don't work in a free zone. I regularly put links to articles including those which are highly critical of Dubai - the proof is right here on this blog if you care to click on those various links. There's even one in this posting.

Anonymous said...

seabee, must be all the sea breeze you had recently in aussie land, or maybe all the travelling is making you crabby.

you make fairly vague statements which create the impression that
1. no media is uae is controlled
2. uae media is under no obligation at all to carry anything pro government.

forget mine, do not insult your own intelligence. many here knows that local media is controlled. is great example of a fairly harmless site blocked for being critical. if yours is not blocked, or the ones you have linked is not blocked, it does not preclude that they have not blocked others, does insufficiency my dear statistician. where you are sitting, you are hardly likely to find out what is blocked there :-)

and as for nitpicking, when did ahlan and others even classify as publications, they are more under toilet paper i would've thought.

how do i know all this...oh just incidental. work in advertising, does PR events, have even worked on Dubai Holdings business.

Anonymous said...

That toilet paper sells over 10,000copies per week.....

Right about though and that is not 'spreading rumours' seebee....smell the coffee mate.

Seabee said...

Anon@8-02 you're reading something which I didn't write.

The post is about a story in the international media, it has nothing to do with any restrictions the local media works under.

I have never suggested nor implied that the local media does not have restrictions, that it does not have to obey the publishing laws, that it does not practice self censorshp.

Secret Dubai was not blocked in the UAE for being critical, there were many critical posts. The block happened after a post which made scurrilous claims about members of the royal famly. As we all know, that is not allowed under publishing laws.

when did ahlan and others even classify as publications, they are more under toilet paper i would've thought is a childish comment more suitable for the schoolyard. Whether we like them or not they are indeed publcations.

Cat Russell said...

Hi Seabee. Goodness it is amazing to me how people can firstly entirely miss the point of the article by not reading it properly, and then still be so rude and opinionated in their comments all the while hiding behind an "anonymous" posting.

Anyway, I wanted to make a different point entirely - I love that you include links in your blog, its always nice to read the source story, but may I offer you a suggestion (feel free to ignore it of course)? Its very easy to create your link to open in a new tab or browser window. This is useful when the link is for a news site, where you (or me at least as the reader) will often end up clicking on more than one link once there. This way you (or I) can just close the extra window when I am done and keep reading the blog in the original window. If you fancy this do the following: once you have added the hyperlink take a look at the html source, you will have the href code between the < and >. After the closing " at the end of the URL add a space and then the words target="new" before the closing >. The link will now open in a new tab or browser window. Viola!

I hope you don't mind the advice!

Seabee said...

Cat no I don't mind the advice at all. In fact it's a good suggestion - I'll have to try to remember it when I'm adding links.