The John Buck Company (TJBC) and Shanghai China-News Enterprise Development (SCNED) are poles apart. The former is a Chicago-based real estate firm, the latter is owned by the Chinese government. But the two now share the same boat with UAE firms Mubadala and Emaar.

On March 31, TJBC launched a joint venture with Mubadala, Abu Dhabi's strategic investment vehicle, for a specialized integrated real estate development. Days later, in Shanghai, Dubai-based developer Emaar Properties, signed a Memorandum of Understanding with SCNED to explore mixed-use property and infrastructure development projects in key Chinese cities. Such tie-ups suggest the housing industries across the world are feeding each other like never before. The Middle East region, which is living through an impressive housing boom of its own, ignores this shift at its peril.

The blistering pace of construction in the Gulf is projected to continue into the foreseeable future, and that has attracted several foreign firms to this part of the world recently. Singapore's developer, Hayden Properties, has announced the launch of a campaign in Dubai to promote its luxury residences in Singapore. Imagine Homes, a provider of UK property investment, has also launched a Dubai office, opening up more than 500 million dirhams ($136.2 million) worth of UK property to an investment-hungry GCC market.

On the face of it, the industry's progress here seems detached from the crisis in the US, where bursting housing and credit bubbles threaten to spill over into consumer spending, reducing growth and dragging the country into a deeper recession. But already, the contagion is spreading to Europe, which could then threaten the Gulf region (despite smooth assurances from some of the larger players here). Other factors to watch include the rising cost of raw materials because of growing economies in China, India and Brazil. Such are the drawbacks of hyper connected markets.

One Hong Kong real estate tycoon, Ronnie Chan of Hang Lung Properties, cautioned at a recent Dubai conference that it was "dangerous" to integrate too tightly into the international markets because financial crises are no longer localized. However, cutting off an economy from those global networks is even worse.
"You're damned if you do and damned if you don't," he said.

The impact of America's has been felt as far off as India and China. If Europe were to slip into similar chaos, investors from these markets could withdraw Gulf investments to offset their losses. An April 14 New York Times report suggests that financial churning has begun in Asia. "With stock markets down sharply after reaching heady levels, people do not have as much cash to buy property. Sales of apartments in Hong Kong, a normally hyperactive market, have slowed recently, with prices for mass-market flats starting to drop." With much of Dubai's property market selling to upscale expat workers, such a scenario here isn't out of the question. It may only be a matter of time before regional developers and investors become more cautious and slow down the industry.

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