Dubai's Construction

Cash Crunch Halts Work on Dubai Skyscraper
January 14, 2009, 2:48 pm

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In a further sign that the property bubble in Dubai has popped, Nakheel, the state-controlled developer, said it was halting work on a skyscraper that would have stood one kilometer tall, or roughly twice the height of the Empire State Building in New York.

The suspended building is part of a growing list of projects that have gone cold in what was one of the hottest real estate markets in the world. In December, Nakheel stopped work on Dubai's very own Trump Tower - an $800 million project that was to sit on one of the emirate's fabricated palm-shaped islands.

Other projects that are reportedly on hold for various reasons include big names like the W hotel and the Four Seasons Hotel.

Moody's Investors Service sees more trouble on the horizon for Dubai and this week issued its first negative outlook on banks in the United Arab Emirates since it began reviewing them a decade ago. It believes that many small-scale developers that took out loans will go bust as property prices spiral downwards, according to The National newspaper in Abu Dhabi.

The one-kilometer tall skyscraper was part of the $38 billion Nakheel Harbor and Tower project, which had been in the works for a while, but was only announced last fall as the housing bubble was deflating.

The Nakheel tower would have eclipsed the Burj Dubai, another supertall skyscraper, which is being built across town. Sales of condos in the Burj have fallen off sharply, forcing the developer to slice as much as 50 percent off their original asking prices.

Elsewhere in Dubai, residential property prices fell 8 percent in the fourth quarter, which was the first quarterly decline since foreign ownership became legal in the Emirate in 2002. Meanwhile, sales of new homes have dropped by 50 percent.

The boom times have come to a rapid end in Dubai because of a huge liquidity squeeze and the bursting housing bubble. Foreign investors have pulled billions of dollars out of the country, crushing its ability to build more gleaming towers - many of which stand empty.

Dubai has relied on cheap capital from abroad to finance its grand vision to become both a tourist attraction and a financial capital. Much of that money, combined with the oil wealth of neighboring Persian Gulf states, was used to finance dozens of luxurious apartment buildings as well as monumental projects like the world's tallest building, the world's largest airport, the world's biggest mall and several man-made, palm-shaped islands.

Now the emirate is facing one of the world's largest debt loads: its current debt level stands at $80 billion or roughly 1.5 times its gross domestic product.

–Cyrus Sanati

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Cash Crunch Halts Work on Dubai Skyscraper
January 14, 2009, 2:48 pm


In a further sign that the property bubble in Dubai has popped, Nakheel, the state-controlled developer, said it was halting work on a skyscraper that would have stood one kilometer tall, or roughly twice the height of the Empire State Building in New York.

The suspended building is part of a growing list of projects that have gone cold in what was one of the hottest real estate markets in the world. In December, Nakheel stopped work on Dubai’s very own Trump Tower — an $800 million project that was to sit on one of the emirate’s fabricated palm-shaped islands.

Other projects that are reportedly on hold for various reasons include big names like the W hotel and the Four Seasons Hotel.

Moody’s Investors Service sees more trouble on the horizon for Dubai and this week issued its first negative outlook on banks in the United Arab Emirates since it began reviewing them a decade ago. It believes that many small-scale developers that took out loans will go bust as property prices spiral downwards, according to The National newspaper in Abu Dhabi.

The one-kilometer tall skyscraper was part of the $38 billion Nakheel Harbor and Tower project, which had been in the works for a while, but was only announced last fall as the housing bubble was deflating.

The Nakheel tower would have eclipsed the Burj Dubai, another supertall skyscraper, which is being built across town. Sales of condos in the Burj have fallen off sharply, forcing the developer to slice as much as 50 percent off their original asking prices.

Elsewhere in Dubai, residential property prices fell 8 percent in the fourth quarter, which was the first quarterly decline since foreign ownership became legal in the Emirate in 2002. Meanwhile, sales of new homes have dropped by 50 percent.

The boom times have come to a rapid end in Dubai because of a huge liquidity squeeze and the bursting housing bubble. Foreign investors have pulled billions of dollars out of the country, crushing its ability to build more gleaming towers — many of which stand empty.

Dubai has relied on cheap capital from abroad to finance its grand vision to become both a tourist attraction and a financial capital. Much of that money, combined with the oil wealth of neighboring Persian Gulf states, was used to finance dozens of luxurious apartment buildings as well as monumental projects like the world’s tallest building, the world’s largest airport, the world’s biggest mall and several man-made, palm-shaped islands.

Now the emirate is facing one of the world’s largest debt loads: its current debt level stands at $80 billion or roughly 1.5 times its gross domestic product.

–Cyrus Sanati

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Allah's Slave said:

Mnaona Mambo hayo. Sio Vi twin towers viwili vya BOT vinakuwa kero kwa wananchi.

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Pundit said:

Watu wanajenga bila mpango, I was reading somewhere -The Economist kati ya la wiki hii au jana if I am not mistaken- kwamba hakuna demand kwa haya maghorofa, kwamba yanajengwa tu -mengi kwa projections za economic hitmen most likely- na yatabaki near empty.

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Kang said:

Exactly! Tena bubble imebust, real estate prices zimeanguka kwa 40% na kuna prediction kuwa zitashuka 60%!!! Dubai could be in trouble, kuna habari hadi ya kuiuza Emirates kwa Abu Dhabi. Hata line jengo ambalo ndo lingekua tallest in the world wamesimamisha construction.

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Nyani Ngabu said:

Unajua kama hii ndio ingekuwa Dar au mji mwingine wowote bongo mbona dunia nzima ingejua. Maana tungetamba kaa nini...sasa wengine humu wanaua tu ili mradi bila hata sababu yoyote. Kwangu mimi maendeleo ni pamoja na kuwa na mazingira mazuri ya kuishi na kufanya kazi. Wenzetu hawa kwa kweli wamepiga hatua kubwa sana.

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Fundi Mchundo said:

Ndiyo hayo maendeleo unayoyataka? Kwa taarifa yako maghorofa si alama pekee ya maendeleo. Heritage ya Dubai iko wapi? Wanaharibu eco-system kwa upuuzi wa kutengeneza visiwa! Halafu angalia wanaojenga hayo unayoyaoa ya maana wanavyotendewa! Mungu atuepushe na maendeleo kama haya. Hizo twin towers ni two too many!



Ah! Najua ni wivu wa wakristu. Na hali haijabadilika.

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Dubai: The end of "world headquarters"?

A hot tip from within the international intelligence community: "Dubai is a giant ponzi scheme that will make Bernie Madoff look like small change. Many rich and famous people will lose a major packet."

Now that the tarnishing has begun, the so-called City of Gold may need a new nickname: Copper Country.

Dubai's ruler "Sheik Mo" lured multinationals to headquarter in his "global financial center" with huge tax-free advantages -- and snared investment money, too. Most of the development resulting in the world's tallest buildings was financed by foreign loans that cannot now be repaid because of rapidly falling real estate prices.

Construction on the Nakheel Tower, which, if ever built, would be the world's tallest building, has come to a complete halt; its parent company fired 15 percent of its workers, most of whom are foreigners who cannot legally remain in Dubai more than 30 days without jobs.

This is not an isolated case, but a growing trend in Dubai.

More ominous, if one gets into a business dispute with Sheikh Mo, who owns a chunk of everything, it's curtains. An American private equity firm called Capital Partners just discovered this the hard way, having contracted to build a $1.3 billion development on a 38-acre parcel. When conflict arose, Sheik Mo simply "de-registered" the firm without warning, preventing it even from liquidating its assets.

"Dubai doesn't have anything, not even oil," another intelligence source told The Investigator. "Real estate is crashing -- home prices, 8 percent last quarter -- on top of which their buildings are very poor quality. When it occasionally rains, the roof leaks. Furthermore, you can't walk anywhere and traffic is horrendous."

The health of Dubai's banks is also in question, along with its tourism prospects.

Six-year jail terms for sex on the beach in this Moslem Emirate seems to finally be having a negative effect on holidaymakers looking for fun in the sun.

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Laid-Off Foreigners Flee as Dubai Spirals Down
By ROBERT F. WORTH

DUBAI, United Arab Emirates — Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.

Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.

“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”

With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.

The government says the real number is much lower. But the stories contain at least a grain of truth: jobless people here lose their work visas and then must leave the country within a month. That in turn reduces spending, creates housing vacancies and lowers real estate prices, in a downward spiral that has left parts of Dubai — once hailed as the economic superpower of the Middle East — looking like a ghost town.

No one knows how bad things have become, though it is clear that tens of thousands have left, real estate prices have crashed and scores of Dubai’s major construction projects have been suspended or canceled. But with the government unwilling to provide data, rumors are bound to flourish, damaging confidence and further undermining the economy.

Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.

Last month, local newspapers reported that Dubai was canceling 1,500 work visas every day, citing unnamed government officials. Asked about the number, Humaid bin Dimas, a spokesman for Dubai’s Labor Ministry, said he would not confirm or deny it and refused to comment further. Some say the true figure is much higher.

“At the moment there is a readiness to believe the worst,” said Simon Williams, HSBC bank’s chief economist in Dubai. “And the limits on data make it difficult to counter the rumors.”

Some things are clear: real estate prices, which rose dramatically during Dubai’s six-year boom, have dropped 30 percent or more over the past two or three months in some parts of the city. Last week, Moody’s Investor’s Service announced that it might downgrade its ratings on six of Dubai’s most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai’s roads, usually thick with traffic at this time of year, are now mostly clear.

Some analysts say the crisis is likely to have long-lasting effects on the seven-member emirates federation, where Dubai has long played rebellious younger brother to oil-rich and more conservative Abu Dhabi. Dubai officials, swallowing their pride, have made clear that they would be open to a bailout, but so far Abu Dhabi has offered assistance only to its own banks.

“Why is Abu Dhabi allowing its neighbor to have its international reputation trashed, when it could bail out Dubai’s banks and restore confidence?” said Christopher M. Davidson, who predicted the current crisis in “Dubai: The Vulnerability of Success,” a book published last year. “Perhaps the plan is to centralize the U.A.E.” under Abu Dhabi’s control, he mused, in a move that would sharply curtail Dubai’s independence and perhaps change its signature freewheeling style.

For many foreigners, Dubai had seemed at first to be a refuge, relatively insulated from the panic that began hitting the rest of the world last autumn. The Persian Gulf is cushioned by vast oil and gas wealth, and some who lost jobs in New York and London began applying here.

But Dubai, unlike Abu Dhabi or nearby Qatar and Saudi Arabia, does not have its own oil, and had built its reputation on real estate, finance and tourism. Now, many expatriates here talk about Dubai as though it were a con game all along. Lurid rumors spread quickly: the Palm Jumeira, an artificial island that is one of this city’s trademark developments, is said to be sinking, and when you turn the faucets in the hotels built atop it, only cockroaches come out.

“Is it going to get better? They tell you that, but I don’t know what to believe anymore,” said Sofia, who still hopes to find a job before her time runs out. “People are really panicking quickly.”

Hamza Thiab, a 27-year-old Iraqi who moved here from Baghdad in 2005, lost his job with an engineering firm six weeks ago. He has until the end of February to find a job, or he must leave. “I’ve been looking for a new job for three months, and I’ve only had two interviews,” he said. “Before, you used to open up the papers here and see dozens of jobs. The minimum for a civil engineer with four years’ experience used to be 15,000 dirhams a month. Now, the maximum you’ll get is 8,000,” or about $2,000.

Mr. Thiab was sitting in a Costa Coffee Shop in the Ibn Battuta mall, where most of the customers seemed to be single men sitting alone, dolefully drinking coffee at midday. If he fails to find a job, he will have to go to Jordan, where he has family members — Iraq is still too dangerous, he says — though the situation is no better there. Before that, he will have to borrow money from his father to pay off the more than $12,000 he still owes on a bank loan for his Honda Civic. Iraqi friends bought fancier cars and are now, with no job, struggling to sell them.

“Before, so many of us were living a good life here,” Mr. Thiab said. “Now we cannot pay our loans. We are all just sleeping, smoking, drinking coffee and having headaches because of the situation.”

A New York Times employee in Dubai contributed reporting.

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Sober said:

Kama america ita survive recession na kutoingia kwenye depression, Dubai will survive too. Tatizo wazungu wawest wanajiona ni wao tu ndio wanaoweza kuweka mipango sustainable, ni wao tu ndio wenye reliable control systems and so forth. Lakini hii economic recession imefungua macho watu wengi. Huitaji kuwa a Harvard Professor kujua tatizo ni mismanagement na poor regulations kwenye U.S economy ambayo ndio inadrive world economy. Obama kaliongelea kwa kirefu sana hili wakati wa campaign na hata wakati wa transition.

Sheikh Rashid wa Dubai hakuwa stupid!... hakukaa yeye na mashemeji zake tu kwenye kahawa kuplan ile kitu. Waliitwa the best brains from all over the world. Watu wa fani mbalimbali including top economists, and real estate developers kumpa nini cha kufanya technically. Yeye alikua na vision yake ila ni msikivu kwa wataalam. Matatizo ya hii financial crisis itakua quite myopic kuilenga Dubai tu na kusema wao tu ndio wanao suffer, ukiamua kuweka bad news za economic crisis kwa huko marekani nadhani utahitaji pages 100 za hii thread.

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