Dubai's "build and they will come" model is in a state of flux, rather than broken, as the emirate suffers growing pains in its evolution from emerging economy to global business hub, one of its key developers said.

President of Dubai Pearl, the developer of the recently revived $4 billion Pearl project, Santhosh Joseph said Dubai's property sector weakness had been exaggerated by those who had little or no first-hand insight into the market.

"My firm belief is that the same people who are talking down Dubai will be among the first people to come back," he was quoted as saying by our sister newspaper the Gulf Daily News.

"I believe that by 2012, the troubles of last year will be forgotten. It is a young city, and like a young human being, it must suffer growing pains," he said on the sidelines of the MIPIM real estate trade fair.

In less than 60 years, Dubai has evolved from barren desert into one of the world's most-developed urban landscapes, studded with one mega-project after another, including vast skyscrapers and man-made islands visible from outer space.

However, many properties have become empty trophies for their developers as the speculative building model stimulated oversupply of high-end offices, hotels and homes.

Despite this overhang, Joseph's team restarted construction at the 20 million square feet Dubai Pearl project earlier this month, reflecting confidence in Dubai's post-crisis market.

"For me, that model has worked for the last 20, 30, 40 years, why should it stop working now?" he asked.

"By 2012 and 2013, I expect the majority of Dubai's commercial space to be absorbed. In residential, there is supply of between 16,000-18,000 apartments per year for the next 3-4 years but the annual population growth is almost 10 times the supply of apartments," Joseph said.

The Pearl developer has tweaked old designs to create a more environmentally-sensitive project, which it said marked a "new era" in the evolution of Dubai.

Joseph is not worried that scores of Western corporate occupiers will not sign up to appreciate these efforts, after quitting plans to expand into Dubai after its economy nosedived.

"That is another misconception. We are not simply building for Westerners but also for Asians and the rest of the Arab world. I don't think more than 15 per cent of the property in Dubai is either bought or occupied by the Western world," he said.

Those companies confident enough to make a move into Dubai today would reap the benefits of a depressed rental market, which has slashed the costs of business start-ups, Joseph said.

"Now we have a sustainable rental market for companies coming in. Rents had gone beyond $200-250 per square foot in some places at the peak. Now it is around $50-60 per sq ft which is far more affordable and will help Dubai a lot."

"Of course the global meltdown has affected Dubai but there are no Dubai-centric problems as we see it. Dubai was the last to crash and I believe it will be the first one to truly recover to pre-crisis levels," he said. – TradeArabia News Service