Middle East Focus: Dubai Economics 101: first Destroy the Demand, then Destroy the Supply…..

Arabia Deserta

Dubai Economics 101: first Destroy the Demand, then Destroy the Supply…..

Walking on water

“A glut of vacant office space is continuing to spiral, despite the economic crisis, thanks to the forests of new tower blocks started by developers as the boom reached it peak in 2007, researchers said. With some "holes in the ground" awaiting further development already being filled in, further radical solutions to the problem are needed, said the authors, researching for the property firm Jones Lang LaSalle. "The best prospect for reducing vacancies lies with initiatives to limit future supply and encourage the withdrawal of existing buildings from stock through conversion to non-office buildings or even demolition," the report concludes. Dubai's central belief, summed up frequently as "build it and they will come", has served it well in the past. Critics queried its determination to build its ports in the 1960s but it has now become the biggest trading hub in the Middle East…….”

Okay they suggesting that shifting the supply curve (to the left) to offset the big downward shift in the demand curve. One way to firm up real estate prices, the Dubai way. But then, that is the way they are doing things in parts of Detroit and other U.S. cities, but the "supply reduction" is not methodical or planned.
Cheers
mhg

m.h.ghuloum@gmail.com