Dubai Marina has long claimed some of the best waterfront views in the emirate, but a vast canal in the heart of the city is starting to turn the heads of new investors.
The AED 2.7 billion (US$735 million) Dubai Water Canal, which opened in October, was one of the most ambitious projects launched before the city’s property bubble burst in late 2008. An extension of the ancient trading waterway known as the Creek, it is a liquid timeline linking old and new Dubai.
At one end, battered old timber boats called "abras" still ferry people across the water to the gold and spice souks for an inflation-defying fare of one dirham (US$0.27), that has remained the same for decades. At the other, shiny, new air conditioned water taxis glide beneath the shadows of the gleaming new skyscrapers of Business Bay, the city’s modern commercial heartland.
"It is very much a bridge between old and new Dubai," said Faisal Durrani, the head of research at Cluttons, who explained that its location is its biggest advantage, offering easy access to the commercial hub of the city around Dubai International Financial Centre as well as the old residential neighborhoods in Jumeirah and Umm Suqeim.
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The district that almost wasn’t
The canal very nearly became a casualty of the Dubai property crash of 2008 when it had reached almost as far the city’s main highway as construction projects stalled across the city. There it remained for another five years until the project was revived and the remaining few kilometers was dug to the sea—effectively turning old Dubai into an island and adding thousands of acres of development land with water views.
Creating waterfront development land has been the kernel of the Dubai real estate phenomenon ever since the dredgers started to scoop up sand from the seabed to make the first palm island. It continues to drive the market, and the Dubai Water Canal is the latest gift to developers seeking to sell spectacular views.
Lessons learned from the Marina
The 3.2 kilometer waterway extends from the old Creek through Business Bay and is between 80 meters and 120 meters wide.
The new waterway reaches the coast in the Jumeirah district, about 20 kilometers north of Dubai Marina and about 12 kilometers south of the mouth of the Creek.
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But unlike the Marina, which today boasts a population of more than 100,000 and quickly became a victim of its own success in generating traffic congestion, the canal district is being developed with infrastructure planning taking the lead.
Even before large-scale residential construction has commenced and before any significant numbers of people have begun moving into the district, there are already 1,600 parking spaces in place and five water taxi stations. There is also a 3 kilometer running track and a 12-kilometer cycling path.
"The Canal can learn the lessons of the Marina," said Simon Townsend, a veteran of the Dubai property scene who heads the strategic valuation advisory business of CBRE in the city. "They are learning from the Marina in terms of infrastructure, the movement of people and putting the lifestyle in first."
"The first launches in the Marina were residential, but the first launches in the Canal have been hotels," Mr. Townsend said. "They are trying to make sure the service offering is there. The Marina played catch up, but the Canal is leading with the facilities so that the residential will go in when the location already has a value."
More than 960 hotel rooms and 5,000 homes are planned for the immediate area around the development, which as yet is largely uninhabited, in three districts known as Gate Towers, Jumeirah and Peninsula.
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This last element is being developed at the end of the Canal and extend to what was the old Jumeirah Beach Park by adding about one kilometer of new beachfront.
Despite the proximity of several existing major shopping malls, the development plan also includes a three-level mall extending across 300,000 square meters with 400 retail outlets and a park on its roof.
Luxury hotels including the St. Regis, the W Hotel and the Marriott Marquis are already operating in the district, while Damac, one of the city’s biggest developers has kickstarted the construction of luxury residential units in its $2 billion Aykon City development, which will include at least six towers and is targeted for completion in 2021.
An integrated community
Mr. Durrani sees the Canal district as being better integrated into the surrounding city than Dubai Marina, which he describes as a "parachute" development, albeit a hugely successful one.
The Dubai Marina "has two metro stations, ferry stations, and a vibrant thriving community. You can probably count the available plots left on one hand," Mr. Durrani said. "It will soon have the world’s largest ferris wheel, it is the world’s largest manmade marina and so it has got a lot of firsts and a lot of reasons why people want to live there."
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"The Dubai Canal on the other hand is more of a city-type development," Mr. Durrani continued "It won’t have the same density from what we understand, and in terms of location, it is much closer to all of central Dubai. There will also be a lot of green space which the Marina doesn’t have."
The potential that the location holds is already visible during weekends, when it attracts large crowds of people strolling and jogging along its banks even before large-scale construction of new homes has begun.
Mr. Townsend said he was surprised to discover that the Canal area already has the feel of a more established district even though the canal itself was only opened in October.
"I took my family there a few months ago and we couldn’t get in the first few water taxis that stopped. They were full, and not just of people taking photographs but of people there for a purpose," he said. "Its lever is that it is basically connected to everything and from an investment point of view, it is an area that people are talking about."