DUBAI’S TOURISM-LED RECOVERY
Dubai’s market recovery in 2012 was largely led by the tourism industry. Following the outbreak of the Arab Spring in early 2011, traditionally popular tourist destinations in the Middle East like Cairo lost their appeal amid heightened security concerns. Dubai’s safe haven status, aviation hub, world-class hospitality and retail offerings, meant it was well placed to benefit.
The housing market reached peak performance in 2013 when it was announced Dubai would host the Expo 2020, fuelling speculation on its impact on job growth and tourism. High profile announcements of new schemes such as the Mohammed Bin Rashid City (a multi-billion dollar mixed-use development) further buoyed confidence in the recovery.
DUBAI AND MIAMI PRIME HOUSE PRICE INDICES SINCE THEIR GFC LOW POINT
To avoid a market oversupply new laws introduced by the Real Estate Regulatory Agency controlled the off-plan sales market and construction. Coupled with higher transfer fees and revisions to the mortgage law, this helped to deflate a potential real estate bubble.
With this emerged a re-branding strategy to shake off Dubai’s negative image following the downturn. Known for being the leading financial hub in the Middle East and North Africa (MENA), Dubai positioned itself as the frontrunner of creativity and innovation in the region. Government funding encouraged a favourable environment for artists and entrepreneurs.
ART AND TECH HUBS
Specifically designed art hubs and fashion venues like the Al Serkal Avenue and the Dubai Design District offer dedicated exhibition spaces and learning opportunities (e.g. Short Course programmes from the University of Arts London) aimed at attracting a young and creative generation. In early 2016, the Dubai Chamber of Commerce and Industry together with IBM launched the ‘Dubai Digital Entrepreneurship Hub’, to support technology start-ups in the emirate. Similar efforts include AstroLabs Dubai, the only Google tech hub in MENA.
As Dubai hopes to attract young, innovative and tech savvy individuals through similar initiatives, developers have realised the need to develop real estate that caters for a range of consumer income levels. A comparable review of the current market supply of residential product versus upcoming projects reveals that developers are reducing the size of apartments in order to make them more affordable.
Miami is also re-inventing itself as a creative and technology industries hub, with implications for the real estate market.
While Florida has long attracted wealthy residents and businesses thanks to tax incentives, such as no income tax, Miami-Dade County is encouraging business development in other ways. 2014, Microsoft launched its first U.S.-based Microsoft Innovation Center in Miami-Dade County to generate more high-tech jobs.
Perhaps the biggest driver of Miami’s transformation from sunny vacation spot to the cultural and liveable city that it is today is Art Basel. Launched in Miami Beach in 2002, this premier arts and culture event established Miami as a key destination for ultra high net worth individuals every December - encouraging many to take up residence for longer stretches of the year. Consequently, art districts, new restaurants and galleries opened, helping to transform Miami into an international center for art and design.
Residential development led the charge in Miami’s recovery and retail is just now coming to fruition. The Brickell City Centre supermall, Miami Design district shopping area and Wynwood Arts District are top retail destinations, and the past decade also gave rise to many of the city’s cultural venues such as the New World Center concert hall, Pérez Modern Art Museum, and Frost Science Museum.
The arts, culture and sophistication that Miami offers has attracted a younger generation. Some of the elite private schools from New York are looking to develop in Miami as well appealing to affluent families. The University of Miami has also enhanced its curriculum with its business and law schools now among the top ranked in the country.
Miami’s housing market recovery was largely driven by foreign capital as international investors took advantage of soft prices coming out of the recession and advantageous currency exchange rates. Over time, the broader domestic market sought out luxury properties at discounted prices.
Since 2013, as the market recovered, most of the residential development has focused on the ultra-luxury market of larger units where high-end finishes and technology packages are commonplace. Developers have also recalibrated their amenity offerings post-recovery, gone are the small gyms and billiard rooms, and in their place are art studios, yoga studios and smart home technology.