DUBAI. You know the story. It was the world’s biggest Ponzi property scheme.

When it collapsed during the credit crunch, building stopped, government debt ballooned and people fled, leaving a landscape dotted with hollow-eyed, half-completed skyscrapers: monuments to the ultimate boom and bust. At least, that was the story.

It turns out it’s not so easy for a bricks ‘n’ mortar junkie to go cold turkey. Dubai is building again.

It is just after dawn at al-Furjan, a dusty desert outpost next to one of the new motorways that carve black streaks across the desert. Asian construction workers step off lines of white buses and begin mixing cement, cutting steel and pouring concrete.

Al-Furjan, a development of hundreds of townhouses and villas, was put on hold after developer Nakheel ran out of cash.

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The firm has restructured its debts and resumed building. It’s the same story across the emirate.

More than 100 projects, including vast developments such as the pound stg. 20 billion ($30.6bn), 140sq km Al-Maktoum international airport, are back under way.

And it’s not just pre-planned, half-built developments being completed. Dubai’s leading private developer, Damac, has already completed 28 buildings, mostly skyscrapers, and intends to deliver eight more by the end of this year and at least another 35 by 2015.

Standing next to his newest tower, the 84-storey, curved-glass Ocean Heights in Dubai’s fashionable marina, Damac managing director Ziad El Chaar says: “We’re very bullish on Dubai property.”

With 30,000 new houses coming on the market in the next 12 months alone, another 20,000 due by 2015 and prices down 65 per cent, surely new real estate is the last thing Dubai needs.

Some developers have little choice but to start building again.

The slump in property values means many developments are now worth less than the buyers’ deposits, which are ring-fenced in escrow accounts. Under Dubai law, if a developer does not complete a building, it must return deposits to the buyers, so it is now cheaper for developers to finish projects than to walk away.

“Developers are caught between a rock and a hard place,” Credit Suisse senior property analyst in Dubai Ahmed Badr says.

But other developers are building again because they sense the property market has bottomed out and prices will soon begin to rise.

With construction costs down about 40 per cent on 2008, interest rates low, banks beginning to offer mortgages again after a two-year freeze and the population rising because of political unrest elsewhere in the Arab world (people are moving to Dubai from Bahrain), they believe now is the time to gear up.

“Property has hit the bottom,” El Chaar says.

“Prices are beginning to rise in good areas. We have a land bank and we intend to use it. It’s time to look forward.”

According to a report published last week by investment bank Nomura, prices for residential properties have begun to stabilise.

The rise in construction is one of a number of signs that after a wretched and humiliating two years, when critics sniggered at the spendthrift sheiks who got too big for their dishdashas, Dubai’s fall may finally be over, if only because things could not get any worse.

New figures for the key transport, tourism and trade sectors are encouraging.

Dubai’s best-known brand, airline Emirates, posted a 52 per cent surge in profits last month to $US1.5bn ($1.4bn) for the year to March 31, compared with $US964 million last year. Also last month, the airline successfully marketed a $US1bn bond.

Tourism, a mainstay of Dubai, is also on the up and, according to the emirate’s biggest hotel group, Jumeirah, occupancy and room rates are back to 2007 levels, as a result of 9 per cent growth in tourist numbers this year.

“Towards the end of 2010 . . . we saw a really strong resurgence, coming back almost to the levels that we enjoyed in 2007 and early 2008,” Jumeirah’s Irish-born executive chairman, Gerald Lawless, says.

“There were periods in the first quarter of this year where we actually exceeded our best average room rates of 2007.”

Arab world unrest has boosted the financial services sector, badly hit after the credit crunch.

Bahrain is Dubai’s closest financial services rival and many bankers have relocated from strife-torn Manama to Dubai.

Meanwhile, new banks from the Bric countries (Brazil, Russia, India and China) have begun to arrive and bank deposits have climbed to their highest level in more than two years.

Traffic through Dubai’s vast port terminals rose 14 per cent last year as operator DP World, which made its debut on the London stock exchange last month, pushed into emerging markets, notably Africa and South America.

The high oil price has boosted activity throughout the Gulf, with new figures showing Dubai’s economy recovered last year, growing 2.4 per cent.

It is projected to expand by 3-3.5 per cent this year.

Growth is so strong that economic index provider MSCI is examining whether to reclassify the United Arab Emirates from “frontier” to “emerging market” by the end of the year.

An upgrade would attract new liquidity to Dubai’s bourses and encourage investment.

THE SUNDAY TIMES