Business Bay in Dubai – The Next Global Commercial Hub

When Sheikh Mohammed Al Maktoum outlined his ‘Vision of Dubai,’ an integral part of the process was to reduce the reliance of Dubai on its traditional oil revenues, and to turn it into one of the world’s primary business and financial centres. Dubai’s strategic location, between the global superpowers of the west and the east, offered Dubai an opportunity to become a true global business and commercial hub. Unhindered by an ageing infrastructure the Vision of Dubai outlined an ambitious plan to build a new city, which would in time become one of the world’s largest business and financial centres. At the very heart of that plan was the new development in Business Bay, and the plan to turn it into the main business centre of the modern day Middle East.

The master plan for the development saw it as a ‘city within a city.’ A financial centre of the Middle East, to sit alongside the trading centres of Manhattan, Ginza and the Square Mile in New York, Tokyo and London. Business Bay was to become a regional home for some of the world’s largest corporations. The very scale of the Business Bay plan is indeed inspiring, a development which saw the Dubai Creek dredged for an extra 11 kilometres towards the coast to create the new Business Bay area. When it is completed in 2010, Business Bay will be home to over 230 towers and will cover over 64 million square feet, housing some of the world’s largest companies.

Central to the commercial appeal is its free trade zone status, ensuring highly favourable trading conditions for all companies and employees who reside there. Previous free trade zone developments in Dubai including Dubai Media City and Dubai Internet City have proven highly successful in previous years at attracting major corporations to the emirate. This free zone status, coupled with the high tech nature of the developments and the strategic location has resulted in a large number of companies already purchasing office space in Business Bay.

In the ancient past, the prosperity of Dubai relied heavily on the waters of the Dubai Creek, and traders from all over the world would come here to trade in a variety of different produce. Given the impending global emergence of Business Bay, it seems that this will once more become the case, as international companies from all over the world base themselves in the Middle East’s most important commercial centre.

Bay Area Foreclosures: Scenic, But Not Immune to the Housing Bust

The San Francisco Bay Area is one of the most beautiful regions in the world. From the hills of the City itself, the quaint towns of Marin, to the open space magnificence of the East Bay, it’s no wonder so many people strive to live here. The high cost of housing in the region historically kept population growth down, but this changed with the housing bubble. During the boom, the population growth in the region consistently outpaced the rest of the state. Access to sub-prime loans and the high number of new housing developments enabled a migration to the region that put a lot of financial pressure on people of limited means. An unfortunate corollary to the appeal of living in the area drawing more people to give it a shot was an increase in Bay Area foreclosures.

During the housing bubble, the population of the area increased dramatically. Housing developments sprouted up overnight in scenic spots, such as hillsides overlooking grape orchards out in Livermore, or around community parks in towns like Pleasanton. The availability of low down/low interest mortgages put people in gorgeously appointed houses well beyond their means. People who never could have accomplished that in an era of more stringent underwriting and a stricter regulatory environment found themselves living in relative paradise. Along with the home equity wealth during the bubble, came an increase in spending that rippled out to the benefit of local businesses and service providers, boosting sales and further fueling an economic expansion was characterized by luxurious lifestyles often funded by credit card debt.

This virtuous cycle was nice while it lasted, but the housing bust put an abrupt end to it and the region has been reeling ever since. Beautiful housing developments stand empty or half completed. A reverse cycle of tightened credit, shrinking wallets and layoffs triggered the closest thing to a panic that the region has ever seen. The impact was felt all over the area and the ensuing increase in Bay Area foreclosures came as no surprise. A common scene on courthouse steps these days is a trustee auction.

Not surprisingly, the worst hit areas tend to be neighborhoods populated by folks most recent to home ownership as the adage “last in first out” plays out time and time again. These people tended to squeak into their homes by the skin of their teeth by qualifying for sub-prime loans. When the recession struck, many of them were laid off, forced to take a pay cut or simply could not service the higher interest payments on their mortgages and credit cards. Once homeowners begin to fall behind on payments, it becomes increasingly difficult to recover lost ground and pull out of the tailspin in order to hang onto one’s home and avoid foreclosure.

This is happening all over the country, of course, but the surreal nature of this particular brand of hardship is more pronounced in the Bay Area. How can a place so stunningly beautiful, so filled with great activities and family centered fun be such an utterly inhospitable place to live in terms of making ends meet? The struggles so many people are going through to avoid foreclosure so they can continue to live in arguably the most wonderful place in the world is ironic to say the least. The image of a public trustee auction on a foreclosed property taking place on the courthouse steps with the breathtaking beauty of Mt. Diablo in the background drives this point home better than the statistics can ever convey.

Traditionally, prices at auction were slightly discounted, but with the glut of foreclosed properties saturating the market in many parts of the country, trustees are so eager to unload that they are often opening bids at incredibly low prices.

Kevin Roberts Broker California DRE 00858916