Blast from the past

I spend a lot of time reading about the property market in the UAE and today by chance I stumbled upon an old blog about Dubai from 2005 called

sinkingsands

. Here's the

. Reading things like this makes me feel like an archaeologist, excavating the history of a oft-misunderstood and singular economic development.

Read more after the jump:

's another ancient artifact from the

Los Angeles Times

on October 13th, 2005. Megan Stack calls Dubai a "zany boomtown afloat in plastic fantasy, unbridled ambition and rivers of cold cash".

Salem al Moosa

talks about his inhabitable pyramid in Falconcity of Wonders (which is still a go, according to the company).

There is one quite prescient post in sinkingsands on Wednesday, Sept. 21, 2005 (in the UAE property sector, we always talk about a year ago or two years ago, much less nearly four years ago!).

The author writes in a post titled "who's gonna buy all these houses":

"If we were to consider that only households in Dubai with a combined annual income greater than AED 420,000 (US$115,000) could actually afford a freehold property, then the potential home buyer market shrinks to roughly 11,100 total households between 2004 and 2010, or approximately 1,600 new households purchasing residential property per year, according to analysis and the most recent Income and Expenditure Survey conducted by the Dubai Municipality in 1998. If we assume an additional one per cent of all households within the UAE that are living outside the emirate of Dubai as potential secondary home buyers or investors in Dubai, this increases the overall potential UAE market to roughly 13,900 households between 2004 and 2010, or approximately 2,000 new households purchasing residential property per year, according to analysis and the last national census carried out by the UAE Ministry of Planning.With over 15,000 freehold residential units anticipated to come on-line within the next three years, which would satisfy UAE homebuyer demand through 2012, why do developers continue building?"

The blog unexepectedly ended on October 9th. Does anyone know who this person is? I'd like to hear what they think of how the market has evolved.

This long-forgotten post shows that the question of the core demand for property in Dubai (and the UAE) has long been a mystery and matter of discussion. Building a massive property economy in a short period is not a common event anywhere in the world, so it is obviously something that cannot be easily predicted. And for awhile, this discussion was not the priority. There was enough demand, boosted by speculators, to sell every new building out within a matter of days, if not hours.

What we are seeing now is developers being forced to really think hard about this question. This is why so many of them are talking about middle-income buyers - i.e. people who live and work in the UAE and have a basic need for a place to live. In some cases, buildings are being cancelled. In others, they are being delayed or redesigned. The slowdown has brought the conversation back to the key point brought up by sinkingsands -  how many genuine buyers of property are out there in the market and how can developers attract them to buy a home they can afford?