Bigger, taller, glitzier - it's how they do things in Dubai, and little problems like a property crash aren't being allowed to dampen the mood. Chris Barton reports.
Dubai is another planet. They do things differently there. Inevitably, I make some faux pas. The first is describing Dubai's property market before its crash as "artificial". Reasonable, I thought, given that the emirate teetered on the brink of default in 2009 after Dubai World, one of three "government-related entities", sought a "standstill" on US$25 billion of debt. Plus it's hard to ignore the artificial bounty - fake islands, fake water, "the world's largest" indoor ski resort, an Olympic size ice rink and "the world's most spectacular" dancing fountain - clamouring to be noticed in a surreal desert landscape at the edge of the Persian Gulf.
"I wouldn't say it's artificial" interrupts our PR minder as we take high tea in the lobby lounge of the Ritz-Carlton - "a casual indulgence" including Valrhona chocolate fondue, hand-rolled truffles and macaroons "dipped in rich dark ganache". Expat Kiwi Dave Bradley, who runs Vantage Point, "a research based growth advisory firm" in Dubai, explains that while there was indeed "huge money" available before the recession, that has "certainly equalised" or "become more realistic." Rule one in Dubai: remain relentlessly positive; growth is returning - because to say otherwise would be to admit the possibility of an unsustainable delusion.
No one wants to be reminded that if it wasn't for its oil-rich emirate neighbour, Abu Dhabi, coming to the rescue with a US$20 billion bailout in 2009, the city-state would be in even deeper trouble. Dubai's real estate-led boom began in 2003, following a decree allowing foreigners to buy and own freehold property in select areas. It was part of the ruling al-Maktoum family's ambition to transform the second-largest of seven sheikhdoms that make up the United Arab Emirates into the Middle East's tourist and trade hub.
The grandiose plan to achieve global-city status involved a US$129 billion borrowing binge that saw government-related entities battle to outperform one another in developing the biggest and the best. The result was enormous projects - some would say garish and overblown - including: the world's tallest skyscraper, Nakheel's Palm Jumeirah and The World islands, Tatweer's US$64 billion ultra-theme park, Dubailand, the sail-like Burj al Arab - "the world's only seven-star hotel", and Hydropolis, the world's first luxury underwater hotel.
The boom ended abruptly with the global economic crisis in late 2008, and machinations to restructure the state-owned companies' debt are underway. Complicating matters are Sharia law-compliant bonds, known as "sukuk" where there's a real underlying asset on which the issue is based - such as real estate - and where there are no guarantees saying the investor can't lose. Risk has to be shared between borrower and lender. Conventional, interest bearing bonds are not permissible in Islam.
Since the crash, construction has slowed, if not halted. Extravagant schemes have been cancelled and property values have halved. Bradley says the upside of the crash is that whereas once you paid Dh40,000 (emirati dirham - $13,000) per year for a one bedroom apartment on the outskirts of the city, now you can get the same in a much better location for about Dh20,000.
In the face of all this, "artificial" seems a mild word. Here's AA Gill in Vanity Fair last year: "The only way to make sense of Dubai is to never forget that it isn't real ... Dubai is Las Vegas without the showgirls, the gambling, or Elvis. Dubai is a financial Disneyland without the fun. It's a holiday resort with the worst climate in the world ... Dubai suffers from gigantism - a national inferiority complex that has to make everything bigger and biggest. This includes their financial crisis." Such criticism was too much for the Emirate, which had the offending pages cut out of the issue on sale in Dubai.
Germaine Greer in the Guardian, in 2009 had a similar view: "Dubai has been built on the premise that nothing succeeds like excess." She also described the world's tallest building, the Burj Khalifa as "outrageously megalomaniacal ... a new Tower of Babel."
Will Self in the London Review of Books: "My response to this Xanadu - powered by jet fuel and misted by the evaporation of desalinated water - was to stop flying altogether: I no longer wished to pick up any airmiles that contributed to such a future."
The property malaise has spread to other sectors, notably the UAE's stockmarkets. Average daily trades this year on both the Dubai Financial Market and the Abu Dhabi Securities Exchange are US$16 million - down on Dubai's US$32 million and Abu Dhabi's US$27 million average last year. And making the heady days of 2007, when Dubai's daily average was US$425 million, a distant memory.
But while real estate and stock trades may be sinking, other segments of the economy are in good heart. The annual Dubai Shopping Festival (DSF) continues to bring good cheer - especially for Sandra Skeirjeh and her daughter Hanna, who each won half a kilo of gold in one of this year's many promotions. Spending in 2011 reached Dh15.1 billion, says Dubai Events and Promotions Establishment, with Dh5.9 billion coming from regional and international visitors. Dubai Airport, home to the biggest Arab airline, Emirates, is also in growth, handling a record 51 million passengers last year, 8 per cent up on 2010.
It's amidst this incredible show of wealth - gold adorned buildings, souks laden with gold jewellery that looks too heavy to wear, gold ATM machines and shopping malls so big you can feel the curvature of the earth - that I make my next blunder. Asked by the PR director of the Ritz-Carlton how I'm finding Dubai so far, I confess to being overwhelmed by the opulence. What I should have said is "Fantastic" or perhaps "Wow". After all, luxury is the Ritz-Carlton's stock in trade. "The Gulf States are big on leisure time - mostly Saudis," she says. "They want to be here for the shopping, relaxing and the prestige of the Ritz-Carlton brand." Expats will tell you something similar - that as well as earning lots of loot thanks to Dubai's tax free economic zones, they enjoy the lifestyle of the rich, especially the idea of everyone being able to afford a live-in maid.
Another faux pas: don't say construction in the city seems to have ground to halt. Dubai was said to have had 30,000 cranes but today they seem to have all but disappeared. Building sites seem deserted. It's also evident that The World has stopped. The manufactured real estate - an archipelago of 300 islands in the shape of a world map, with a total development cost estimated at US$14 billion - was created by piling 321 million cubic metres of sand dredged from the Gulf on top of 31 million tons of rock. It is indeed an engineering wonder. But while many of the islands sold for outrageous prices, today the World seems to be slowly sinking back into the sea and developers are trying to cut their losses.
The "Build it, and they will come" philosophy that permeates the UAE is sounding a little hollow. But many I spoke to insisted construction hadn't stopped; it had simply slowed down. The recovery is coming. "What's that?" I asked, pointing to a new pile of sand just off the beach along from the Burj al Arab. "No one knows," said the tour guide. "Except that it's one of Sheikh Mohammed bin Rashid Al Maktoum's new projects. That's how things happen here - they're often kept secret at the beginning."
They also get renamed. Moments before its grand opening in early 2010, the 200-storey, almost kilometre high tower was given a new name - the Burj Khalifa - in honour of Sheikh Khalifa bin Zayed Al Nahyan, ruler of the UAE and Abu Dhabi, who provided the funds, not only to complete the building, but also to avoid national bankruptcy. Conceived as the Burj Dubai, the re-christened tower is now "the manifest symbol of Dubai Inc's fall from grace and subsequent submission to the 'mother-ship', Abu Dhabi," says Alexandra Frasca in Dubai, Debt, and Dependency: The Political and Economic Implications of the Bailout of Dubai.
The Burj Khalifa also revives the "skyscraper index" - the idea that extreme height is a bellwether of irrational exuberance. In the Dubai's case, the theory that the world's tallest buildings are constructed on the eve of economic crashes appears to have credence. Frasca argues what the Burj Khalifa really signifies is that Dubai is now very much under the more conservative Abu Dhabi's control. "Furthermore Dubai's crash brought to light not only how far the entrepreneurial city-state had strayed from her sister emirate and the federation as a whole, but also how far Dubai Inc's business practices had strayed from international best practices."
It's not a good idea, either, to ask about exploiting migrant workers to build this city - as outlined in Building Towers, Cheating Workers: Exploitation of Migrant Construction Workers in the United Arab Emirates. Or Johann Hari's "The dark side of Dubai" in the Independent. "We are here on contract. End of story," says a worker (not in construction) from Pakistan who has lived in Dubai all his life and loves what it has to offer. "We can go back home." But he does acknowledge some construction workers have had a raw deal. "They are the ones who built all these hotels - the cement forest - and yet they are also the ones who can't ever go in them." Later our PR minder brings written details of new labour laws - including "the midday break rule" prohibiting work from 12.30pm-3pm in the summer months to protect against heat exhaustion.
Despite the exploitation, the architecture of Dubai is a sight to behold - bright, glitzy and striving to be noticed. Architectural historian Joseph Rykwert says it's a genre that's come about partly because of new imaging technologies. But also because "developers and financial institutions increasingly require that their major achievements become distinctive easily identified elements in the urban landscape." Rykwert cites Dubai and Abu Dhabi as the epicentres of this architectural trend, which he dubs the "Emirate style". The process involves commissioning "starchitects" and buildings which "assume an ambivalent relation to advertising since their entire bulk is in fact a trademark."
Such "object-buildings", found all over the Gulf States, also provide an extraordinary spectacle of 21st-century power and cultural philanthropy, fed by oil revenues. Abu Dhabi, for example, recently announced new completion times for several stalled projects, worth US$27 billion. They included the Louvre Abu Dhabi, designed by Jean Nouvel, now expected to open in 2015; the Zayed National Museum, designed by Lord Norman Foster, and the Guggenheim Abu Dhabi, designed by Frank Gehry.
Nearby Doha in Qatar appears to be playing catch-up with Dubai - following the same "build it and they will come" model. Outcomes vary from the kitsch Villagio Mall complete with painted sky, a canal and motorised gondola ride; to the astonishing voluptuous Sidra-tree shaped Convention Centre designed by Aarata Isozaki. These sorts of collisions of culture with luxurious wealth - the convention centre sports a giant 9m spider sculpture; the Ritz-Carlton has a "wine wall" with 3100 bottles on display that must be covered with a curtain during Ramadan - keep even the most jaded traveller entranced with this uniquely weird part of the planet.
Perhaps the most surprising aspect of Dubai is that there's an awful lot of water on show - in fountains, cascading off buildings, in waterfalls and reflective pools, not to mention the thousands of kilometres of irrigation pipe constantly watering roadside lawns and gardens. It's as though Dubai is in desert denial and has never heard of conserving scarce resources.
On the other hand there are moves, led by Abu Dhabi, to invest in green energy. That includes the Shams solar power plant - a 2.5 sq km array of parabolic trough mirrors and solar collectors due to be operational by August which will contribute 100 megawatts to the Abu Dhabi power grid. Abu Dhabi aims also to produce 7 per cent of its energy by 2020 through its emission-free Masdar City - a scheme costing US$18-US$19 billion and housing 40,000 residents when complete. Small beginnings in response to a 2006 report which found the UAE was five times more unsustainable than any other country in the world. Having the highest water consumption levels in the world - 378 litres a day per head compared with 189-265 litres per day elsewhere - doesn't help. Especially as almost all of it comes from energy intensive desalination plants.
Dubai, which has the world's highest per capita energy consumption - 20,000kWh per year, with air conditioning of its buildings accounting for up to 60 per cent - is yet to implement anything on the scale of Abu Dhabi's green plans. But work has begun on green building standards. In the corner of the Al Fahidi Fort, built in 1799, part of the Dubai Museum, there's a "barjeel" or windcatcher, a traditional Persian design used for centuries to passively cool buildings. It offers a glimpse of what might have been had Dubai looked to old ways rather than spending like there's no tomorrow.
Chris Barton travelled to Dubai as a guest of Emirates Airline and the Ritz-Carlton with support from Arabian Adventures, Dubai Mall and Dubai Tourism. Emirates flies four times daily from New Zealand to Dubai via Australia