It is different market circumstances awaiting developers, investors this time
The Palm Jebel Ali – with the sweep of its waterfront along with commanding views of the city – halted in 2008 because of the financial crunch. It’s now back.
To possess such a view, to see it flat and enameled in the midday sun, silvered by moonlight was a privilege in itself. But the dream that possessed the city planners, as well as investors, gripped an imagination that had vibrations of expectations of a ‘city’ that would be magically unlike any other.
Something described by the writer Gabriele D’Annunizio as the ‘most wonderful union of art, commerce and life’.
The vision of the Palm Jebel Ali, serene yet minutes away from mingling with the bustling metropolis, is as (if not more) breathtaking now.
Even as demand for ultra-high networth properties has altered the market landscape – and redefined development opportunities – the sheer size and scale demands projects that are not only classified as being on ‘billionaires’ row’ but also capture the vibrancy of the city’s heartbeat.
In the midst of all this, as investors await details of pricing, there has already been some commentary about the effect on pricing that it would have on Palm Jumeirah. Given the demand for all things offplan, there will be deployment of capital towards Palm Jebel Ali.
A new direction to investments
As we have seen through market cycles, demand for luxury product will likely accelerate the redevelopment and refurbishment of villas in Palm Jumeirah. Even as a new batch of investors make their way towards Jebel Ali.
Investors would also do well to keep in mind the scale of the project takes time, not because of lack of resources or the vagaries of market cycles (although both play a role). Rather the ambition of the project takes time for fruition.
Market data indicate that after the first boom-bust cycle that culminated in 2008, prices in Palm Jumeirah took more than a decade to scale new heights. Undoubtedly helped by exogenous forces like Covid and the Ukraine situation. But also because of the extraordinary development of Palm Jumeriah itself, which underwent continuous redesign and development process that has made it lionized by all.
Details of the Palm Jebel Ali will be unveiled steadily as pricing, projects and a dazzling array of amenities are announced. Project scheduling will be even more scrutinized this time around, and while its too early to speculate as to what this means for pricing trends, we know that
It is an integral part of the Dubai Urban Plan 2040.
Waterfront projects and the surrounding areas (such as Veneto, Badrah, Jebel Ali Hills and even Dubai South) will get an uplift. And
Redevelopment of projects will accelerate hand-in-hand with new construction activity, giving investors and end-users greater options as the city reinvents itself yet again.
This has been part of the drama of the city’s evolution, where every impression of the present and the glimpse of the future has been freighted with stories of the past.
Dubai has always looked confidently into the future, and along with real estate, it has developed sectors such as finance and technology.
A different sort of visibility for Palm
With the new critical mass achieved, the visibility of Palm Jebel Ali is unlike that in the last decade, when it was compared to the ‘unfinished palazzo’. With the development of capital markets enjoying a renaissance, developers and investors will be nimble and quick to ‘carpe the diem’ (a quote from Succession).
Posthumous analysis, laced with skepticism, has its place in commentary. But the city’s determination to be practical, pragmatic yet retain its flair for the magical has been its secret sauce. A variable that has only recently been recognized by the rest of the world.
With improved capital structures, along with liquidity mechanisms, the pace of construction will likely astonish anew. Just as the Palm Jumeirah continues to do so more than two decades after its launch.
A new island frontier
For developers and investors, it is a new frontier. While they will continue to navigate the price vagaries, there is a sense already that the boisterous exuberance of 2008 will not be repeated.
A foreign newspaper commented recently that the Palm Jebel Ali’s shadow always lurked over the property market in Dubai. These words will prove to be prophetic, although not in the way the author intended.
For Dubai, The Palm Jebel Ali had captured the imagination more than any project since it was announced. Its relaunch may have been delayed. Its impact and ripple effects will resonate far greater in the years to come.
Sameer Lakhani
The writer is Managing Director of Global Capital Partners.
