Dubai back in mega-project mood after fiscal dive

Published Nov 28, 2012 12:00pm

View from Burj Khalifa’s “At the Top”–Photo by Eefa Khalid

DUBAI: Dubai is suddenly rediscovering its old habits. That means relentless hype and construction plans loaded with superlatives. Case in point: A proposed Taj Mahal replica four times bigger than the original.     

Leaders, too, are back swaggering with a mojo that seems aimed to wipe away memories of the city's humbling fiscal collapse just three years ago. ''We do not anticipate the future,'' said Dubai's ruler Sheik Mohammad bin Rashid Al Maktoum in announcing plans for a new ''desertopolis'' that will bear his name. ''We build it.''

It all rings very familiar. The same type of super-charged ambition reshaped Dubai beginning in the 1990s and left an impressive legacy including the world's tallest skyscraper, a villa-studded island shaped like a palm, malls packed with top retailers and tourist and business networks that are the envy of the Middle East. But it also helped drive the emirate over the edge.

The global financial crisis smacked Dubai particularly hard after years of increasingly shaky construction funding schemes, where state-linked developers often used money collected for one unfinished project to start another. As credit dried up, the deeply indebted Dubai government had to scale back sharply just to meet its bills.

It took a $10 billion bailout from oil-rich neighbor Abu Dhabi in 2009 just to give it some breathing room to begin selling off assets and negotiating with creditors for billions more owed by the city-state.

Now with another generation of outsized projects on the drawing boards some are questioning whether the pre-bust creed of bigger-is-better still makes sense in a more cautious world.

The Great Recession pummeled the type of high-risk investors who would once sink money into a project that was still just a plot of sand and desert brush. But Dubai is still betting heavily on long-term appetite for the kind of self-contained, mega-scapes that were among the main casualties of its fiscal meltdown. The new wave of projects also marks an important shift for Dubai away from housing-oriented developments toward more entertainment and tourism, particularly with visitors from China sharply on the rise. The proposed Mohammad bin Rashid City named after Dubai's ruler  includes a shopping complex that will surpass the world's largest, the Dubai Mall, just down the road. Nick Maclean, the managing director of property advisers CB Richard Ellis Middle East says the investment climate is on the rebound. Dubai's economy grew a healthy 4.1 percent for the first six months of 2012 compared with the same period last year, officials said Monday. But Maclean and others still cast wary eyes on frontier areas such as desert outskirts where many of the giant projects are planned.

''We tell developers that the time is not right for them to build speculatively because we see very limited demand,'' he said in an interview this month with Big Project Middle East, which follows major development initiatives in the region.

Consider the marketing push ahead for the proposed satellite city: 100 hotels, a theme park in collaboration with Universal Studios, a green space somewhere in size between London's Hyde Park and New York's Central Park, and the mother of all malls.

But there's no lack of confidence from its namesake. ''The current facilities available in Dubai need to be scaled up in line with the future ambitions of the city,'' said Dubai ruler Sheik Mohammad.

Another planned development literally just over the horizon delves even deeper into the Dubai's penchant for alternative realities such as an indoor ski slope or an archipelago shaped liked the world's continents.

The lavishly named Falconcity of Wonders was first unveiled during the height of Dubai's white-hot growth five years ago, but later fell victim to the financial crisis. It's now back on the agenda with ethnic-themed sections that include replicas of the Eiffel Tower, the Giza Pyramids and the leaning Tower of Pisa.

So far, the only significant outrage from abroad is over a proposed version of the Taj Mahal  the ''Taj Arabia''  that's four times larger than the original in Agra south of New Delhi.  ''It is patently wrong and absurd,'' a former Agra legislator, Satish Chandra Gupta, told Indian media.

The developers, however, predict it will be a major draw for wedding parties among Dubai's large Indian community and growing tourism from the subcontinent.

The Indian outreach doesn't end there. A Bollywood theme park is part of a $2.7 billion five-park complex announced by the office of Dubai's ruler. It also seems to be Sheik Mohammad's grand response to the fiscal nosedive that shutdown plans for several theme parks, leaving more than one colorful gateway-to-nowhere in the desert.

''Hubris,'' said Christopher Davidson, an expert on Gulf affairs at Britain's Durham University, referring to the blitz of new mega-projects.


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Comments (20) (Closed)


Atul
Dec 04, 2012 06:03am
Instead of using a huge sum to imitiate the Taj the available resources should be well used for upkeep of the infrastructures already made.Money available be used to construct &improve hospitals educational institutions.civic facilities making lives still better for the citizens there. ----Atul
rafe
Nov 30, 2012 04:39am
when they will learn, commiting the same mistakes again and again. Rather waisting money in all these useless construction they should invest in building universities with par of MIT, Cambridge, Oxford and Haward. Oh ALLAH plz be kind on us and give us rulers having this type of thinking that should posses a dream of taking out whole muslim world from dark ages.
rafe
Nov 30, 2012 04:31am
and that will help them to make their economy stronger and than all this useless construction can easily be done to promote tourism.
sami
Nov 29, 2012 06:34am
Dubai is going to sink in desert.
Tamilselvan
Nov 30, 2012 03:37am
They can build all that with slave labor and low wages to the people of South Asia and from the money borrowed from Abu Dhabi which at least has oil. On the positive side Dubai is modern compared to her neighbours and because of them millions of S. Asians have made a decent living and should be thankful too. It also shows that distribution of wealth among the people reduces radicalism and terrorism too
Sunil
Nov 29, 2012 04:02pm
History tells us time and again. Those glorious empires fell and disappeared in time. It's easy to maintain moderate life-style but very difficult to maintain the expensive one. Specially maintaining infrastructure buildings, machinery, those skyscrapers. For which money have to flow constantly in. Little blink of an eye and here goes everything down the drain. As someone has pointed out here, to spend money on development of other aspects of human life. World has to rethink it's priorities.
afeefa
Nov 30, 2012 07:47am
instead of wasting money on buliding of replica, dubai govt. must try to invest in education by asking world top class universities e.g. harvard, cambridge etc to open their campuses in dubai thus facilitating students not only from middle east but also from all over asia.
Dr Qureshi
Nov 29, 2012 09:34pm
All promises of 'Government backed/guarenttee's on previous projects proved false. The sheikhs don't care as thousand's of investors lost their life savings in projects that stalled. Everything is fake, don't get burnt.
mansoor
Nov 29, 2012 03:26am
they are going again towards speculation. Taj Arabia, Bollywood theme park, Pyramids replicas etc etc. Dubai will become completely Indian centric economy. Is it sustainable? I think another bubble is going to burst in near future.
Yawar
Nov 29, 2012 03:36am
What are they thinking? Instead of all the glitter and gold, why not subsidized Islamic universities at par with MIT and Harvard and scientific research centers at par with those in Europe and the USA?
zain
Nov 29, 2012 12:35pm
Dubai economy is not transparent. Another bubble on horizon.
asif
Nov 29, 2012 10:38am
Instead of wasting their wealth in useless constructions, hotels and casinos they should build up their nation through education, that is some thing which will be ever lasting and we would be able to see at least one well educated nation in middle east.
Sam
Nov 29, 2012 05:30am
WHO CAN AFFORD TO LIVE THERE?UAE WILL NEVER LEARN FROM THEIR PAST.
Sy
Nov 28, 2012 06:19pm
When will they build the worlds best University's, Hospital's, 4 times bigger than the original Silicon Valley ?
Pakistan.Voice
Nov 28, 2012 07:02pm
why would they spend trillions on projects sucj as these when theres the muslim world is without any proper platform for education! i mean instead of just letting the money go to waste with no future benefits they could make education centers, colleges, unviersities that would rival the likes of Hravard and Cambridge! its a shame to watch all this money go to waste!
n.qureshi
Nov 28, 2012 12:43pm
i guess they will never learn.
Cherian (Melbourne)
Nov 28, 2012 01:06pm
Some people never learn from their mistakes
s
Nov 28, 2012 03:02pm
mistakes continue
MJ
Nov 28, 2012 03:09pm
They ( Dubai ) are $117 billion in the hole, now building the Taj and the amusement park for $3 billion ........ but what is a few billions between friends? ( borrowers and lenders )
AOP
Nov 30, 2012 01:22am
He didn't loose any money. Only lots of middle class their hard earned money lost on hysterical development wiyhout any fundamental to support it.