Brash and upbeat: Dubai gets its bling back – but is it ready?

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The Independent Online

A four-wheel-drive encrusted in 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 from 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.

Now the headline grabbing mega-projects that defined its boom years are back. Over 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 spaces 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, which dwarfs the dozens of gleaming towers which would, in any other city, be considered themselves to be part of a dizzying skyline. In its shadow sits Dubai Mall, the world's biggest by area, where after browsing the designer shops visitors can go scuba diving in a tank of sharks.

The new development, 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 Sheikh Mohammed with typical bombast: "The future does not wait for those who are hesitant. We do not anticipate the future. We build it."

Just days later came the news that a 10bn dirham (£2.7bn) plan for five new theme parks had also been approved. A Bollywood-themed park showing live shows will cater to affluent Indian visitors.

Timed to almost exactly coincide with the third anniversary of Dubai's $10bn bailout from Abu Dhabi and subsequent property market crash, it is clear the country is keen to push the narrative that it has come full circle. The stock market surged on the news and the local press jumped on the announcements as evidence of a recovery.

Indicators are looking positive, particularly when it comes to tourism. 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. While other regional holiday destinations such as Lebanon and Egypt have seen their tourism industry decimated by recent unrest, the United Arab Emirates has benefited by remaining a safe haven – in part due to a no-tolerance approach towards dealing with dissent.

"Dubai has turned a corner," said Simon Williams, 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."

However, some question if it is too much too soon, and whether it's wise for the emirate to return to its old ways. The costs of Mohammed bin Rashid City have not been announced, but are expected to run into billions of dollars – raising concerns about financing when banks are still so cautious to lend.

"It's 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 may not be happy.

The emirate is yet to fully disentangle itself from the fallout from the 2009 crash. A tribunal set up to resolve disputes related to the bailout of Dubai World and subsidiaries including Nakheel – the developer behind the artificial palm-tree shaped island that juts off the Dubai coastline – is still sifting through claims.

"Given the ongoing debt structuring and the emirate's various other problems it seems to me the best evidence available of the ruler's ego, his lack of grasp on reality and the real need for sustainable economic development," said Dr Christopher Davidson, a lecturer at Durham University.