Is Dubai Recession Proof
They were two interesting reports from the past few days covering Dubai, the glittering jewel of the Middle East. The NY Times reasons "Some of Dubai’s more extravagant building projects — the ever-bigger malls, islands and indoor ski slopes — are likely to be dropped if they do not already have financing lined up, bankers say. The credit crisis could also reduce demand from buyers, who will have a harder time getting mortgages." But then low and behold, the very next day Dubai based companies announced plans to build a new city and the Nakheel Tower, which will be the world's tallest building. Do these plans reinforce the notion that Dubai is recession proof? Or will the credit crisis crush the Emirate's dream of a creating a lasting center of finance and luxury in the Gulf?
It's obvious that the Emirates plan on continuing the development, and that they have the cash to pay for it and the oil reserves to back it up. But who are they building it for? The global banks are in chaos and are pulling staff and closing offices, concentrating their resources in certain regions. Their employees are foreign speculators won't be buying those sparkling condos popping up everywhere. Global travel will slow, meaning that those rooms at the ever-growing number of luxury hotels will stay empty, the restaurants won't be crowded, and those massive nightclubs the London and New York operators have signed on to operate won't be crowded. These things were built for foreigners with fat expense accounts, not locals.
This is not to say that the ruling family, Dubai's citizens, and the rest of the U.A.E. aren't still flush with money. They are. But you can build mini-cities and keep building a bigger tower than the one you built last year, but what will it matter if no one shows up to use it? It's a situation that Dubai, Abu Dhabi and the rest of the region is looking at for the next 12-18 months as the global recession occurs. But their investment in infrastructure, Emirates Air and sustainable development helps position themselves to be the financial center they planned on being when (or if) the economy ever straightens out.
Down By The Hipster
Reader Comments (5)
with a little luck, UAE will be the largest real estate bubble in history and oil will fall to $40/bbl due to the global depression, then they along with us will fall to zero, we all go to zero, and start over....with a little luck.
dubai isn't recession proof, but NYC is.
how exactely are we recession proof? * Disclosure: I posted the first comment under WTF
Why is it only the past couple years that Americans have heard of 'Dubai'? Europeans were going in the late 90's & have been saying it's a bubble since 2002/3 ... It's a culturally void disneyland in the desert ... Where you get arrested for being drunk or holding your partners hand or being gay ... It's overly tacky & overly commercial & soon just plain o-v-e-r!
dubai is in recession , i have just been fired