Foreign businesses threaten to snub pricey Dubai :: ITPBusiness.net

Quote:

If the latest figures are anything to go by, the days of international companies flocking to Dubai in search of cheap start-up costs could be numbered. Year-on-year rental price hikes coupled with a sharp spike in construction costs are threatening to hinder the reputation of the booming emirate as a destination for foreign businesses.

But while this could be bad news for the UAE’s second city, lesser-developed trade centres across the region could benefit as chief executives seek out more cost-effective locations to call home. According to a recent study by CB Richard Ellis, one of the world’s largest commercial real estate companies, office space in Dubai is now more expensive than in more established business locations including New York, Munich, Zurich and Milan.

The author of this article treds close to a classic fallacy. Demand driven increases in prices do cause buyers to seek alternatives and some take those alternatives. But the increase in demand that caused the increase in price does not go away when prices increase. What is true is that sellers would prefer that customers not be able to find alternatives. What is not true is that Dubai sellers are worse off as a result of the increase in demand.

As Yogi Berra stated the point:

Nobody goes there anymore. It's too crowded.

Read the whole thing. It's got several tidbits of interesting information about controlled prices of cement and apartments, as well as some comments about the alternatives to locating in Dubai.