The History of Dubai Real Estate: Origins & Oil

The Early Days

Situated along the southern coast of the Arabian Gulf, the Emirate of Dubai was long considered a back-water and a small-trading outpost mostly known for its pearl-rich coasts. Traders from the Indian sub-continent (mostly Mumbai) frequented the Emirate with commerce in the 19th century peaking around 1897. 

It was as a result of this growing commerce, that the ruler at the time HH Sheikh Maktoum bin Hasher Al Makhtoum surmised that Dubai was situated perfectly to facilitate regional trade. In 1901 Sheikh Maktoum bin Hasher established Dubai as a free port, with no taxation on imports or exports and also gave merchants parcels of land and guarantees of protection and tolerance. A move that would be replicated with enormous success 100 years later by his successors as well. 

The establishment of the free-port was done to capitalize on and attract disaffected merchants that had previously made Lingeh, today Bandar-e-Lengeh in Iran their home after the Persian Government of the day levied increased taxes on its commercial class. The free-port and the subsequent parcels of allotted land began, and formed the earliest origins of the modern and contemporary Real Estate market in the Emirate that we see today. 

Throughout Sheikh Maktoum's reign, the Emirate and its trading power expanded, with it becoming the center point of trade amongst the Trucial States (the Emirates of the Gulf). From a small population of 10,000 people to a thriving metropolis of 3.2 million people, the Emirate, its land and the localities' journey through time are the backbone of the economy that we see today. 

As time went on the Emirate faced numerous challenges both from within and externally. The most tedious and debilitating being the cultivation of artificial pearls from Japan hitting the global markets in the mid 1930s. With Dubais’ primary export being pearls, this complete collapse in demand during the 1930s and 40s led to a contracting economy, dwindling global interest and a net out-flow of already limited capital. 

However, a glimmer of hope and a silver lining in the darkest times of the Emirates came in the form of oil exploration contracts signed in 1937 with western oil companies that guaranteed royalty rights to the Emirate of Dubai as well as concessionary payments to the Sheikh of Dubai: Sheikh Saeed bin Maktoum. This led to a renewed interest in land acquisition in the Emirate, albeit subdued and immature by modern standards. The expression of capital interest manifested itself in many forms, but the acquisition and development of Real Estate and that of the Emirate itself, was at the forefront of domestic and foreign appeal. 

In spite of all of the above, and as a result of the breakout of World War II - all oil exploration plans were halted and oil was not struck until 1966, at the Fateh Oil Field 60 kilometers off the coast of dubai. A moment in time and a turning point that would change everything for the Emirate, the region and the world.