Dubai, buy, buy: Gulf state starts to build again

Three years after its debt crisis and bailout, has the emirate lost touch with reality by bankrolling another boom?

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 (2,722ft) 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 Sheikh Mohammed 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 £1.7bn plan for five new theme parks had also been approved. A Bollywood park offering live theatre shows will cater to affluent Indian visitors. While in town they will also be able to visit a replica of their beloved Taj Mahal, four times the size of the original, which will contain a five-star hotel. A Hollywood adventure park, children's park, night safari and marine park are also planned.

Timed neatly to coincide with the third anniversary of Dubai's £6bn bailout from Abu Dhabi, and its subsequent property market crash, it is clear that the country is keen to stress that 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. "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 Britons and other 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 United Arab Emirates 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, including Nakheel – the developer of the artificial palm-tree shaped island off the Dubai coast – is still sifting through claims. Lofty projects such as a new palm-tree island near Jebel Ali, 50 per cent bigger than the first and containing four theme parks, have stalled and look unlikely to be revived. A quarter of the city's residential units are empty, yet new building continues.

"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 and author of Dubai: The Vulnerability of Success.

At the time of Dubai's bailout, there was widespread expectation that there would be strings attached by Abu Dhabi's rulers as the capital attempted to rein in its boisterous brother to the north, and the ambitious new plans are likely to be raising some eyebrows in the capital, where development has progressed with more prudence.

"The challenge isn't to generate growth but to ensure that the pace of growth is sustainable; some of the people I hear already seem to have forgotten the excesses that built up last time around and the damaging bust that they triggered," added Mr Williams.

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 107-square-mile 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.

Pie in the sky: 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 at Deira, which is five times larger, has also been mothballed.

The World

Another of Dubai's 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; its owners opened a beach club in the summer.

Dubai City Tower

At 1.5 miles 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. Its lifts were based on a vertical 125mph bullet train.

Start your day with The Independent, sign up for daily news emails
News
news
Arts and Entertainment
British author Helen Macdonald, pictured with Costa book of the year, 'H is for Hawk'
booksPanel hail Helen Macdonald's 'brilliantly written, muscular prose' in memoir of a grief-stricken daughter who became obsessed with training a goshawk
Sport
footballLive blog: Follow the action from the Capital One Cup semi-final
Life and Style
food + drink
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: Intervention Teacher Required To Start ASAP.

£125 - £150 per day + Negotiable: Tradewind Recruitment: A 'wonderful primary ...

Tradewind Recruitment: Maths Teacher

£90 - £140 per day: Tradewind Recruitment: Our client is an 11-16 mixed commun...

Recruitment Genius: PHP / Drupal / SaaS Developer

£32000 - £36000 per annum: Recruitment Genius: A rapidly developing company in...

Ashdown Group: Application Architect/Developer - Peterborough

Negotiable: Ashdown Group: Application Architect/Developer - Peterborough, Cam...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy