“What do such large, loose, baggy monsters, with their elements of the accidental and the arbitrary, mean?” Henry James asked in 1921 about the evolution of cities.
A city could be exciting and resonant and yet “of no more use of expressing a main intention than a wheel without a hub is of use for moving a cart”. The loose, baggy monster problem bedevils rapidly urbanizing cities in their quest for creating meaning and opportunity for millions, even as superior infrastructure is constantly modernized and refreshed to attract new residents and monies in response to the changing landscape.
There is no doubt Dubai has captured the imagination of the upper-income echelon the world over. Luxury home sales continue to boom as multi-millionaires and billionaires set up family offices in the city, capitalizing on the business-friendly regulations that set the stage for the next phase of growth. But what of middle-class aspirations, those that have yet to get on the bandwagon of home ownership?
More options, less risks
Unlike the past, they have a plethora of options to choose from, with payment plans that cater to every income stream, as developers take on the role of financing. Amidst a blizzard of options - where payment plans range from between two- and 15-years - decision-making becomes quite confusing as arithmetic seeks to blur rather than clarify options. Of course, they have to worry about developer risk and quality; but as the pendulum has shifted towards the ready market, that risk has been minimized, leaving only the prospect of the community development to consider.
However, in Dubai, which repeatedly reverses the polarity between downtown hubs and the suburbs, there always exists a risk for capital gains, as newer communities keep popping up. It is here that the quest for authenticity and meaning swims into focus.
As these areas develop, so too does its character and unique flair. Infrastructure serves as a platform for residents in these communities to express themselves in newly imaginative ways - from the corner shop selling carpets to the coffee shop selling the latest local flavor of tea and pastries. These “qualia” factors then decide the path trajectory of future price gains, with certain areas gaining in values, while others continue to remain somewhat more stable.
At a granular level, we even see price gains in specific buildings that are outsized relative to that of the community, reflecting not merely the superior build quality but also of the owner/tenant/retail mix that expresses itself in the form of demand as desire to live in that area expresses itself. Surprisingly, we see this price stickiness in various middle-income areas like IMPZ, JVC, Sports City and Dubailand. This price stickiness, however, was not observed during the downturn of the luxury segment during 2015-20, primarily because gated communities have a) a relatively predictable price path dependence and b) speculative elements that could not hold on to their investments were weeded out as properties changed hands.
The subsequent price resurgence in this strata perhaps is indicative of some frothiness, indicating that these values might moderate as capital flows once again into the mid-income segments that define the zeitgeist of the city.
Payment plans for upcoming communities will always prove popular as Dubai continues to gentrify and urbanize. Investment opportunities that will distinguish one from the other will reflect the feel of the community, where the city will be found in all of its brassy bravado and its loud and messy magical - yet heartfelt - glory. In other words, to make the final decision of where to invest, look beyond simply the arithmetic of payment plans and the warm light of the vintage tungsten (or its sustainable LED equivalents) and towards the agglomeration of the melting pot that is boiling over with creativity and restlessness, where life is expressed by being unposed and uncurated.