Dubai as Metropolis

Everyone likes to compare Dubai to SimCity (plant some residences here, throw down a few business areas there, all close to instantly), and hail the creation of a shining city from the desert in a relatively short time. I see their point. I write this in just such a shining tower in an area that was empty air and hot sand less than 10 years ago. But I still maintain that the more apt comparison is Metropolis in Fritz Lang's classic film of the same name. I enjoy the views, the ocean, the nice cars, (almost) tax-free income and generally not having to lift a finger for anything, knowing that someone, somewhere is taking care of it. But I also know that there is another side, and life for the underclass is very different. The work camps might as well be in a different country as my Marina-based existence. They aren't a secret, as in Metropolis, but they are invisible (at least one sprawling workers' area doesn't appear on any maps), and they definitely live different lives.

My view while eating dinner tonight
(click for larger version)

Work area outside of Dubai taken the same day
(click for larger version)

The Hype is Moving West-ward

A few years ago, it was not uncommon to see ads for Dubai real estate in the US, specifically the DC and New York newspapers (those being the two US cities in which I spend the most time). There were even quasi-fraudulent "get rich investing in Dubai real estate" weekend seminars held in hotel ballrooms. Now that the market has stabilized (and may even go down a bit as more buildings are finally completed and go online, the marketing fury has moved on. I initially assumed it had just died down a bit to more rational levels, but my recent extended stay in Moscow suggests otherwise. There, ads for Dubai real estate about, with even flashing neon billboards and banners hanging from high rises touting apartments (sometime it is villas, but mostly apartments) here in DXB.

The advertising has even gone a step further. I am currently considering purchasing an apartment in Moscow (I would have done so already, but spending 1,300,000 Euros for a one bedroom, even a nice one, seems a bit much, and there isn't a lot of real estate that isn't either over budget or poor quality, which means I'm still looking), and I am starting to get annoyed by the number of listings, officially in Moscow, that are really for units in Dubai. I guess the idea is that anyone with money to buy real estate in Moscow could be tempted to spend instead in Dubai. The tactic must work, as these listings are everywhere, enough so that real Moscow sellers stopped using them and I've basically given up on independent listings and am sticking to Moscow real estate agencies and their own vetted listings. It's a real pain though - Moscow agencies don't usually cross list, which means that I have to work with several agencies to see a good range of places.

The Growing Credit Market in Russia

I am a strong supporter of mortgages, as for many families they are the only means of ever building any real equity in anything; trying to save and invest money while also paying rest is just too hard. I've never had one, but I get car loans, as in many cities (including Dubai) the lack of option in getting around by any other way make cars are a necessity, although some aspects are more distasteful, including higher interest rates, the tendency to sell cars according to the monthly payment rather than total cost to the buyer, and the willingness of dealers to extend credit to people who really can't afford it, long-term (just like mortgage brokers, they resell the loans while getting a commission for making it, so long-term default rates don't really bother them). Credit cards and other consumer credit programs are another story; they are quite often deliberately usurious and use tricks to make it difficult to pay the bills or avoid additional hidden fees.

All of this is a real issue in the US, where poor mortgage decisions and high debt (credit card and otherwise) have made it very difficult for some families to live solvently and spend any money in the economy. The Russian economy is still growing, but I see worrying signs that credit is about to Reach Russia in a big way. Car loans are widely available, at least here in Moscow, and credit cards are promoted everywhere. The waiting couch at my neighborhood travel agency even had fake credit cards pushing debt as a means of paying for vacations. The small room also had a large banner offering up to 600,000 rubles with no interest for 90 days. On the metro I see little paper ads promising credit in one hour for up to 3500 rubles for all citizens of the Russian Federation, while the magazines, television and the two fashion channels on TV promote a lifestyle 95% of the country can't afford. Hopefully things won't get too out of hand, but the way things are looking now many Russian consumers are heading down the same credit-abuse path of the US, if not planning to exceed it.