Dubai bubble lesson for the realty market
The world's tallest building, Burj Dubai, was opened in Dubai recently, with the UAE city still reeling under its worst financial crisis. This should teach China a lesson to guide its real estate market toward real prosperity instead of creating bubbles, says an article in Chongqing Times. Excerpts:
The world's tallest building, Burj Dubai, would have been a perfect symbol of fortune and luxury if the UAE city were not facing its worst debt crisis.
Today, this tower built amid crisis seems more like a house built on sand, driving home the point that prosperity based on speculation is at best an illusion. Even the Burj's grand opening ceremony will not change that.
Such is the crisis that Dubai's showpiece will face difficulty in getting buyers for all its apartments and commercial blocks. In fact, the whole city of Dubai faces the same problem.
The real estate markets of Dubai and China face the same problem: overemphasis on stimulated prosperity and neglect of real economy.
Of course, China's giant consumers' market and huge foreign investment may prevent the bubble in its real estate market from bursting as abruptly as it did in Dubai. But combined with the widening gap in people's incomes, the problem is no less serious.
The world has seen many bubbles burst, and Dubai is unfortunate to be the victim of one of them. As an economy with giant development potential, China should learn from the bubbles.
Hence, it should restructure its industries and stimulate its real economy, instead of creating bubbles in the real estate market.
(China Daily 01/08/2010 page9)
