Page 58 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

42 Dubai & Co.

lavish and reflect high levels of prosperity, the core motivation for
real estate development and infrastructure investment is rooted in
more fundamental factors. Oil windfalls in the 1970s and 1980s led
to a “baby boom” in the region—in Saudi Arabia and Oman, for
example, over 50 percent of the population is below 25 years old.
For the other GCC states, the figure is between 30 and 45 percent. 6
Rapid population growth has put a strain on local housing and
infrastructure. Visitors to Dubai—where many commuters spend
hours each day stuck in traffic—will quickly appreciate the need for
more roads and public transportation facilities.
The infrastructure needs of Saudi Arabia, which has the
region’s largest population by far, provide a telling example.
Upgrading the country’s electricity infrastructure to meet the needs
of its growing population may require over $120 billion in invest-
ment. Managing the water supply in a parched desert environment
7
may call for another $90 billion or more. Such large-scale require-
ments for meeting basic needs reflect the critical importance of
infrastructure investment to the region.
Airports across the GCC are being upgraded. Abu Dhabi,
Bahrain, and even Dubai—whose airport is already a global hub
used by 100 airlines—are planning or already in the midst of large-
scale airport expansions. Qatar is building a new airport in Doha
with a whopping price tag of $5.5 billion. The first phase is expected
to be completed by 2009.
One unique real estate trend is the creation of man-made
islands, typically for high-end housing and hotels. Dubai was
the pioneer of this phenomenon in the region, announcing the
construction of the lavish Palm Islands in May 2002. The self-
declared “Eighth Wonder of the World,” these islands are
designed to be an archipelago in the shape of a palm tree and to
include housing, hotels, shopping malls, and even theme parks.
Dubai has since announced the creation of the “World Islands”—
300 small, private islands with prices beginning at around $7 mil-
lion each. Among the purchasers of World Island properties is Sir
Richard Branson of Virgin, who snapped up the island representing
Great Britain. Bahrain has announced a $1.2 billion artificial-island
development called Durrat al-Bahrain (“the Pearl of Bahrain”), and
another multi-island project called Amwaj Islands (the “Wave”
Islands). 8