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Dubai: The End of The World?

December 1, 2009

Well, well, well. Looks like Dubai is finally feeling the heat, and not the kind soaked in by filthy rich billionaires on the decks of their over-sized yachts in the Persian Gulf. It’s the kind that causes a meltdown. We could all see it coming; Dubai was an impossible and ludicrous experiment in growth and urban planning, an architectural fantasy gone wrong, a perfect analogy of the insane over-lending, over-spending, and over-building that was happening on a global scale and which led to a worldwide crisis. Dubai’s house of cards has been collapsing since the beginning of this year, but now that the heat is on, we thought it worth taking a look at one of those fallen cards– the mega-developement, called (ironically I might add) The World.

Already in September of this year, the Times Online reported that work on The World had been suspended due to the effects of the global financial crisis. Things got bleak and the world got anxious as news broke earlier this week announcing the government of Dubai’s refusal to guarantee the massive $59bn debt incurred by Dubai World , the company (that owns the company) responsible for The World and other offshore islands like The Palm. Ouch. Now that the financial minister has told investors they should have known better than to “assume” the government’s warranty, will Dubai’s trusted oil-rich neighbor Abu-Dhabi come to the rescue, as it has been doing once-and-again throughout this darned crisis?

Developed by Nakheel Properties and conceived by Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, The World is one of Dubai World’s many unreal estate endeavors. A man-made archipelago of 300 islands dredged from Dubai’s shallow coastal waters and constructed, yes, you know it, literally in the image of the world–a floating map of the Earth. It’s not just cheesy. One of the islands was known to have been offered for sale at a price of $250 million. It’s highly unsustainable, at the least.

The Times Online reported last September:

“England is deserted, Australia and New Zealand have merged, and the man who bought Ireland has killed himself. [The World] has become the world’s most expensive shipping hazard, guarded by private security in fast boats and ringed by warning buoys to keep the curious away.

“The World has been cancelled. It doesn’t even look like the world. Basically there is one island that is maintained that is said to be owned by the Sheikh [Dubai’s ruler] and the rest looks like a pile of muck,” said one local property agent.”

According to the same article, despite being touted as a highly exclusive sandy paradise for celebrities, most buyers were ordinary investors who put down 70% deposits, some of them Anglo-Indians, and others as unfortunate as John O’Dolan for whom the prospect of losing was too much to handle.

And let’s not forget all the migrant workers-cum-boom and bust refugees who risk everything, and ultimately lost everything, as a consequence. For people like them, the end of The World is not just a play on words. For the rest of us, let it serve as a lesson well learned.

Some videos on Dubai’s riches-to-rags story worth watching:
Counting the cost – Dubai world going bust?

Martin Savidge interviews Marcus Mabry on Dubai World

Dubai Real Estate Crash

 

 

 

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