When I hear news like this, I see endless possibilities in the growth of our industries, particularly in the real estate sector.
Along with the several changes the U.A.E has implemented in 2018, such as full foreign ownership in…
By Hussain Sajwani, Chairman, DAMAC Properties
I’m sure we’ve all experienced the feeling driving around Dubai: turning a corner and finding a road, or a bridge, or a building we never noticed before, like it had just sprung up overnight out of nowhere. I sometimes wonder how our satnavs keep up with the pace of change in this city.
The numbers are quite staggering. In 2015, the total daytime population of Dubai was 3.5 million. The majority (2.4m) were residents, but there was a big (just over 1.1m) number of temporary residents – tourists, family visitors, business and commercial travelers.
Over the past decade, the population of Dubai has roughly doubled. Every week for the last 10 years, around 3,000 people have decided to move here for a better life.
When you take a global view – over Asia, Africa and Latin America – the numbers become mind-boggling. Roughly one million people each week move from rural to urban areas, with no intention of coming back. That’s equivalent to about 20 new Dubais created every year.
The demographers say that 2008 was the year when the proportion of urban dwellers overtook the rural population; for the first time in mankind’s history, more than half of the world’s population lived in cities.
Just thirty years ago, the proportion was about 35 per cent; thirty years from now, it will be 70 per cent. It is an unstoppable flow of mankind, flowing towards cities. It is the reason our satnavs are struggling, or indeed why we need them in the first place.
It is also the reason that the work of developers like DAMAC is so crucial to the process of urbanisation. Our job is to help build cities that meet the needs of the vast numbers of people who have decided that their lives will be better in cities. Cities have always been at the heart of historical progress. Ancient Greece and the Roman Empire grew to such global influence because they had vibrant cultural and commercial centres at their heart, Athens and Rome.
The Golden Age of Islam coincided with the development of Baghdad into the biggest and richest city the world had known until then; the Ottoman empire reached its apogee only after Constantinople had become Istanbul.
Nearer our own time, London and New York were at the centre of the great empires of the North Atlantic – the British and the American – that dominated the world in the 19th and 20th century respectively.
Who can say that new city-empires will not grow up in this century? Beijing and Shanghai are rapidly becoming the political and commercial capitals of Asia, as the leading urban centres of what is destined to be the biggest economy in the world, China.
We in the UAE understand the importance of cities in the development process. The two biggest urban centres in the country, Dubai and Abu Dhabi, are rapidly closing the 130km or so distance between them.
It is not inconceivable that sometime in the not-so-distant future they will meet in the middle to form a gigantic urban dynamo that will be an economic, cultural and social magnet for ambitious people from all over the Middle East, North Africa and South Asia.
People move to cities for a number of reasons: the rigours and uncertainties of rural life; the desire to be with family and friend who’ve already made the move; the conviction that life will be easier for them and their children. The streets of all cities – not just London – are paved with gold, of course.
Whatever their motives and the practicalities of achieving them, the new urbanites have one thing in common. They all want and expect a higher standard of living in their new homes than in the countryside towns and villages they have left behind. Better housing, education, healthcare, shopping, communications. In a word, infrastructure, both hard and soft.
In many parts of Asia, families are making the transition from rural peasantry to urban middle class in a single one-generation leap.
This simple fact represents a challenge for policymakers, investment strategists and developers like DAMAC who are at the heart of the urbanisation dynamic: how to provide and finance the facilities and services the aspiring new city-dwellers seek?
Just as important is to provide an urban environment that people can afford, and which offers them value as their aspirations increase. The move from village to a city only makes sense when the migrants have the financial resources to pay for the better things in life. At DAMAC, we keep a close eye on the competitiveness of our product, and derive satisfaction from surveys that show Dubai, for example, offers better value for money than many other cities.
The 2017 Wealth Report 2017 by Knight Frank, put Dubai near the top for value in a ranking of 20 global cities. If you have $1m to spend, it would buy you a lot more in Dubai than in cities like Hong Kong and Monaco.
Governments of course have a crucial part to play in drawing the basic road-map for urban development. But increasingly the private sector is doing the heavy lifting by providing the funding to build the hardware and provide the services the new urbanites demand, as well as actually building them.
A new class of investor has grown up that sees the world not as a disparate collection of nation economies, but as a series of urban economies strategically located around the world. The top level of global cities – running from east to west- includes Tokyo, Shanghai, Singapore, Mumbai, London, Sao Paulo, New York, Los Angeles and an aspiring Dubai..
The second rank comprises such aspirants as Jakarta, Istanbul, Frankfurt, Lagos, Chicago, San Francisco and Buenos Aires, among others.
The economists point out that the local economy of a dynamic city often itself grows at a much faster rate than the national average for the country. Jakarta and Lagos are growing at nearly twice the respective economies of Indonesia and Nigeria, for example.
This is music to the ears of the financial analysts who have to justify each dollar of investment by private equity firms or infrastructure funds. It means they can home in on fast growth by looking for investment opportunities – in construction and real estate, education and health care, retail and leisure, or mobile communications and internet services – that are city-focused.
It is no coincidence that two of the fastest growing companies in the world – Amazon and Uber – exist specifically to serve the new urban masses. In the UAE, we have seen the growth in sectors like construction and real estate, but also healthcare and education, over the past decade. This is all directly attributable to the dynamics of urbanisation.
So the next time, think before you curse the satnav for mis-directing you. We are but atoms in the greatest movement of people in the history of humanity.
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