Around this time last year, I blogged about the correlation between the completion of skyscrapers and recessions. Having just returned from the UAE, which is getting ready to open the spectacular Burj Dubai in December, I can confirm the relationship remains in place. Certainly, the opening of the tower doesn’t mark the beginning of the end: we’re way past that. But we’re also nowhere near the recovery phase yet. The attendees list at the Cityscape real estate trade show was only down 20% on last year, one conference official told us, but actual footfall was apparently down 50%, and I got a real sense that those who attended did so with gritted teeth, in an attempt to send a message of confidence to the world. Most of the people we talked to said they were skipping it this year, and there were no announcements to get even remotely excited about. No sign of Catherine Zeta Jones or Michael Douglas either. Dannii Minogue was in Dubai for X Factor recently but Risk Watchdog is more of a Cheryl Cole fan and she apparently preferred Morocco. (Actually, so did lots of our contacts in asset management and private equity firms out there… interesting.)

I still believe in the Dubai story – it’s an efficiently run city in a very inefficient region, it has great capacity as a financial and trade hub (even if it did run up huge debts in the process of building this capacity), the tourists love it – where else can you ski and sunbathe? – and it has a generous benefactor in the form of Abu Dhabi. It seems that the extent of the bailouts goes a long way beyond what makes the headlines, but a few more public gestures – the purchase of the second tranche of Dubai’s US$20bn debt issue, for example, and the repayment of the US$3.5bn Nakheel bond – will shore up confidence. But I can’t see what’s going to drive a real estate recovery any time soon. Just look at the amount of properties on offer. You can pick up a whole labour camp for under US$3mn. Just as all this supply has come onstream, demand has of course collapsed.

Dubai reminds me a bit of the biblical story of the prodigal son. It has taken its inheritance early, gone out, spent, lived a decadent life, lost everything and is now back, cap in hand, to beg for another chance. Abu Dhabi, the older brother who has remained at home, working away on the family oil rig and spending conservatively, has good reason to feel frustrated now, as Dubai waltzes back in to reap the benefits of its prudence. But like the prodigal son’s older brother, it hasn’t got a lot of choice but to kill the fatted (sovereign wealth) calf. OK, I’m going to stop labouring this analogy. But my point is that Abu Dhabi will not let Dubai collapse. It has too many development plans of its own that would be messed up by having a completely failed experiment two hours up the road.

When are things going to get better? When world trade picks up, when banks start lending (sensibly) again, when fears over debt defaults subside, the private sector will start growing. Not like it was in 2004-08, and not sufficiently to bring the real estate sector back to where it was – the supply-demand mismatch is too big. But it might bring people back to live and work there. Dubai is noticeably quieter and more subdued than it was this time last year, but most of our clients agreed that this had made it a nicer place to live. It has lost a lot of people, but at least you can get a taxi/ plumber/ hotel room now, and the traffic is a lot better. In the long run, this, and the limited recovery prospects for the global job market, should bring people back. The salaries commanded by what some locals described as ‘very mediocre people’ have fallen sharply, and the job market is now much more competitive. I still believe that Dubai will come through this, learn some lessons from its older, wiser sibling and (eventually) prove itself a productive member of the family rather than just a drain on the finances.