Real Estate East & West Meet in MIT/CRE Travel Course
Part I: United Arab Emirates
Seeking to better understand the interplay between global real estate markets, MSRED students traveled to the Middle East and London to visit innovative eastern and western development projects, and meet the real estate professionals who made them happen. Managing Director Marion Cunningham accompanied the students on the 3-credit course -- running January 12–24, 2008 -- sending back news of the team's adventures via these images and travel notes.
***** Travelogue *****
Day 1 – January 12, 2008
We started our day at the Mall of the Emirates. It's currently the largest mall in Dubai, with about 500 stores, a cinema, and even an indoor ski slope! With all the snow and lights, it's hard to get a really good picture of the winter park without going inside, but here are a few shots from the outside. It's all a bit surreal. There were children on sleds, people snowboarding, and people coming down the indoor slope on skis – all in the middle of desert!
Most of the stores in the mall were familiar – Debenham's, Border's, H & M, Carrefour, The Sunglass Hut, Aldo Accessories, McDonald's, Johnny Rocket, etc. - all further indications that there are very few real territories any more. All companies are stretching beyond their boundaries. It also leads to a sense of familiarity no matter where you are. But does it also mean that local cultures have a harder time asserting themselves?
After visiting the Mall of the Emirates, we went on a desert safari, which included dune bashing, camel rides, a visit to a camel farm, sand surfing, food, and a belly dancer. After the camels were led to their stables, the safari closed with a bonfire.
Day 2 – January 13, 2008 – Abu Dhabi
We started the day visiting ALDAR/Laing O'Rourke. This partnership is developing an $18 billion mixed-use development called Al Raha Beach. It's expected to take a decade to complete. The project will have 11 precincts - or communities - with a total of 120,000 residents, office towers, hotels, a canal, light rail system, and housing. Currently, the site has 50 cranes. At its development peak, the project will have 150 cranes, the most on any development project in the world. 50,000 to 60,000 people will be needed to complete the project. The two challenges facing the project are labor and escalating construction costs.
Following our tour and presentation of the Al Raha Beach project, we had some free time. We had planned to visit the Emirates Palace, but President George W. Bush was visiting the area, and the entire country was on high alert. He was staying at the Emirate's Palace, so visits were not possible. In fact, his presence led to a public and private holiday with no one on the streets until after 6pm on Monday! This put a bit of a cramp in our plans for Monday which included a visit to The Palm.
We ended our day in Abu Dhabi with a visit to the Abu Dhabi Men's College, one of the colleges in the Higher Colleges of Technology. We were treated to a wonderful dinner and a tour of the facilities by Dr. Emre Reczey, Chair of Business Programs at the College.
Day 3 – January 14, 2008 – Dubai
One of the goals of the class is to show how real estate markets are different, similar, and interdependent. Well, President Bush's visit to the middle east shut down the city of Dubai. A national holiday was called and cars were banned from the roads from 6am until 6pm. Apparently, this was unprecedented. Streets that had previously been teeming with cars were now completely empty.
At 6pm, when the curfew lifted, our group boarded the bus and visited the Bastikia, old Dubai. "Old Dubai" is a replica of a village and was built about two years ago. The tour was topped off with dinner.
Day 4 – January 15, 2008 – Dubai
We started the day with a visit to the sales office of Dubai Properties. They are building Jumeirah Beach. According to the work prepared by the student covering Jumeirah Beach, "Jumeirah Beach Residence is considered the largest single-phase residential and commercial project in the world, at a cost of $1.6B. Jumeirah Beach caters to a community of over 25,000 residents with 22 million square foot gross floor area." The project has 36 residential towers and 4 hotel towers.
After our visit to Jumeirah Beach, we moved to the Nakheel sales office where we were ushered into an amphitheatre and treated to drinks and a very slick presentation on the Palms developments – the Palm, the World, and the Palm Jumeirah. Nakheel is also a master builder. Sand was transported to Dubai and the islands were constructed. Upon completion, the Palm Jumeirah, the smallest of the islands will have 60,000 residents and 25,000 hotel guests. Following the presentation, the representatives fielded our questions. While they answered our questions, questions about the development process – approvals, market research, were met with questioning looks. The perks of being one of the master builders – little process!
Rasis Developers was a marked contrast to our previous visits. We met in a trailer on the construction site. By now we had had three days of rain (very unusual for Dubai) and the lack of a drainage system was evident. The construction site was muddy, but our hosts were quite gracious. Rasis is building one million square fee of office space in six buildings. Since they are not a master builder, they have to get approvals from the emirate. They have assessed the market and feel confident that the location of the project near the airport will serve a need for small tenants.
We had to make up a little ground since we missed seeing Emaar the day before, but they graciously agreed to a visit at the end of the day. Emaar is the developers of the Burj Dubai, the tallest building in the world after Rasis. Emaar is actually in the midst of building several projects, residential as well as mixed-use development. On site we saw both the model and from a distance the actual building. Shortly after we left we heard that the final floor had finally been laid. In an attempt to ward off competitors, this had been a closely guarded secret. We ended our visit to Dubai with a visit to Madinat Jumeirah, an upscale souk of sorts.