Emirate comes back from bailout

By Loveday Morris

Despite closed sites and shelved projects, extravagant development plans are back on Dubai's drawing board.

Dubai is already home to the world's tallest building and the world's tallest residential building. Photo / AFP
Dubai is already home to the world's tallest building and the world's tallest residential building. Photo / AFP

A four-wheel-drive vehicle encrusted with silver and gold coins glints in the winter sun at a national day parade in Dubai. This is not a city with any qualms about appearing ostentatious.

However, after its humbling debt crisis and subsequent bailout by the federal government, the emirate - one of seven that make up the United Arab Emirates - has been forced to rein in some of its natural extravagance over the past three years.

But now the headline-grabbing mega-projects that defined its boom years are back. In the past fortnight, the emirate has unveiled an array of grand development plans, including a new "city" which will rise from the sands just outside central Dubai and contain 100 new hotels and green space a third bigger than London's Hyde Park.

Breaking records is a favourite pastime for Dubai. The emirate is already home to the world's tallest building -the 829.8m Burj Khalifa - which dwarfs the dozens of gleaming towers that would, in any other city, be a dizzying skyline on their own. In the Burj Khalifa's shadow sits Dubai Mall, the world's biggest by area, where after browsing designer shops, visitors can go scuba diving in a shark tank.

The new city, to be named after the emirate's ruler, Sheikh Mohammed bin Rashid al-Maktoum, will include the even larger Mall of the World, with the capacity to welcome 80 million shoppers a year. Attached to it will be a Universal Studios branded "entertainment centre".

The mammoth project, which will also contain art galleries and a golf course, was announced by al-Maktoum with typical bombast. "The future does not wait for those who are hesitant. We do not anticipate the future. We build it," he declared.

Just days later came the news that a £1.7 billion plan for five new theme parks had also been approved.

The stock market surged on the news and the local press jumped on the announcements as evidence of a recovery.

"Dubai on a white-knuckle ride to revival," read a headline in the English-language newspaper the National.

All the indicators are positive, particularly when it comes to tourism. Dubai's hotel occupancy is at a healthy 82 per cent and the number of foreign visitors grew by 10 per cent in the first half of the year. Over the past decade, the city has managed to position itself as a tourist playground, despite a steady drip of stories of foreigners who have fallen foul of the strict laws on sex and alcohol.

Its bars and restaurants, many of them offshoots of familiar overseas establishments, remained thronged with expatriates and tourists in search of a good time.

While Lebanon and Egypt have seen their tourism industries badly hit by recent unrest, the UAE has benefited by remaining an insulated safe haven - in part due to a no-tolerance approach towards dealing with dissent.

After diving in the wake of Dubai's debt crisis, the property market is also showing signs of recovery; rental prices have risen by 17 per cent over the past year. In scenes reminiscent of Dubai's headiest days, speculators can once more be seen queuing outside sales offices to invest in new developments.

"Dubai has turned a corner," said Simon Williams, a senior economist at HSBC. "Those who rushed to dismiss the emirate as nothing more than a bust real-estate story back in 2009 have been proved wrong."

But some question if it is too much too soon. The costs of Mohammed bin Rashid City have not been announced, but are expected to comfortably run into billions of dollars - raising concerns about financing when banks are still so cautious to lend.

"It is a hell of a statement to make in a pretty subdued international market," said a Dubai-based partner at an international property firm, who pointed out that investors in previous pie-in-the-sky projects that have since been shelved indefinitely may not be happy about the announcements.

The emirate is yet to fully disentangle itself from the fallout of the 2009 crash. A special tribunal set up to resolve disputes related to the bailout of Dubai World and subsidiaries is still sifting through claims. A quarter of the city's residential units are empty, yet new building continues.

You don't have to look far in Dubai to see the consequences of dreaming too big. An archipelago of artificial islands, shaped like a world map, is slowly being reclaimed by the sea.

In the desert outside the city stands the shell of the last large-scale leisure development - a 277sq km entertainment complex called Dubailand which was meant to house the world's largest array of theme parks. The signs for what would have been Universal Studios are whipped by the sand, and its gate leads nowhere.


Problem Projects

Palm Jebel Ali

Work to reclaim the huge palm-shaped island from the sea was completed in 2007, but the project was shelved in 2008 with building yet to begin. Fifty per cent larger than the Palm Jumeirah, the island was meant to contain theme parks and six marinas. A third palm island has also been mothballed.

The World

Another grand reclamation projects, the archipelago is in the shape of a world map, and two-thirds of its 255 man-made islands have been sold. The only one developed is Lebanon.

Dubai City Tower

At 2.4km high, the Dubai City Tower never made it off the drawing board. The 400-floor building would have been three times higher than the Burj Khalifa and seven times taller than the Empire State Building.


- Independent

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