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[johnslat]

DUBAI, United Arab Emirates � On the surface, this glittering Arabian boomtown seems immune to the financial crisis plaguing the global economy.
The skyline still bristles with cranes � an estimated 20 percent of the world�s total � and the papers are full of ads promoting spectacular new building projects. On Sept. 24, tourists from around the world flocked to the opening of Atlantis, a gargantuan, pink, $1.5 billion resort hotel built on an artificial, palm-shaped island. There was no shortage of people willing to pay as much as $25,000 a night for a room, to gaze at the sharks and rays in a vast glass-lined aquarium in the lobby and to dine at marquee restaurants like Nobu and Brasserie Rostang.

But as recession looms in the West, cracks are appearing in the oil-fueled boom that has made Dubai, with its futuristic skyscrapers on the turquoise waters of the Persian Gulf, a global byword for unfettered growth.

Banks are reining in lending, casting a pall over corporate finance and building plans. Oil prices have been dropping. Stock markets across the region have been falling since June. After insisting for days that the oil-rich Persian Gulf region was fully �insulated� from financial troubles abroad, the Emirates� Central Bank made about $13.6 billion available on Sept. 22 to ease credit problems, in an echo of bailout measures in the United States. Already, some bankers are saying it is not enough.

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.

The shrinkage will be more severe if the financial crisis worsens in the West. Property prices and rents, which have remained steady until now, are widely expected to start dropping soon.

At the same time, investor confidence has been harmed by a long string of high-level corporate scandals, jeopardizing Dubai�s long-term ambition of becoming a regional financial capital.

�Plenty of people are worried,� said Gilbert Bazi, 25, a real estate broker from Lebanon who moved here a year ago. �They are waiting to see if what happened in the United States will happen here.�

When he first arrived, Mr. Bazi said, making money was almost absurdly easy. �Iranians, Russians, Europeans � everybody was buying,� he said. �I didn�t have to call people; they were calling me.�

Now, Mr. Bazi stalks the lobbies of hotels, trying to find clients.

�The market is sleeping,� he said.

In fairness, Dubai still looks rosy when set against the financial turmoil elsewhere. Although it lacks the oil wealth of its sister emirate Abu Dhabi, Dubai has huge budget and current account surpluses, and the government of the Emirates federation is able and willing � like its Persian Gulf neighbors � to inject an almost unlimited amount of money into the system to ease credit problems.

The governments of Saudi Arabia and Qatar have reaped so much profit from oil and gas in recent years that they are more worried about how to spend it than about managing any downturn. But the Persian Gulf�s governments face real economic challenges, albeit ones that are profoundly different from those in the West.

Until recently, credit in Dubai was growing by 49 percent a year, according to the Emirates� Central Bank � a rate almost double that of bank deposits� growth. That unnerved some bankers here, who felt it could lead to a collapse.

�In the U.S., the challenge is about keeping the banks going,� said Marios Maratheftis, chief economist for Standard Chartered Bank. �Here, the economy has been overheated, a correction is needed, and it�s about making sure the slowdown happens in a smooth, orderly manner.�

If that sounds like an easy problem to have, consider the manic vicissitudes of Dubai�s real estate market. Speculators often got bank loans to put down 10 percent on a property that had not yet been built, only to flip it for a huge profit to another buyer, who would do the same thing, and on and on. That was easy to do when housing prices here were surging so fast that some properties multiplied tenfold in value in just a few years.

But the Dubai authorities began getting nervous about this and imposed new regulations this summer to limit speculation.

for page 2, please use the link below:

http://www.nytimes.com/2008/10/05/world/middleeast/05dubai.html?_r=1&pagewanted=2&th&emc=th&oref=slogin

Regards,
John

[veiledsentiments]

[Never Ceased To Be Amazed]

Good contribution, John! I think that the article is spot on!

NCTBA

[Truth Hurts]

A not totally dissimilar take on Dubai in the UK Obsever.

http://www.guardian.co.uk/world/2008/oct/05/middleeast.gender

[johnslat]

And yet, they continue to build grandiose edifices, Perhaps they have an Edifice Complex:


UBAI, United Arab Emirates - With its world's tallest building nearing completion, Dubai said Sunday it is embarking on an even more ambitious skyscraper: one that will soar more than 10 American football fields.
That's about two-thirds of a mile or the height of more than three of New York's Chrysler Buildings stacked end-to-end.

Babel had nothing on this place.

"This is unbelievably groundbreaking design," Chief Executive Chris O'Donnell said during a briefing at the company's sales center, not far from the proposed site. "This still takes my breath away."

The tower, which will take more than a decade to complete, will be the centerpiece of a sprawling development state-owned builder Nakheel plans to create in the rapidly growing "New Dubai" section of the city. Foundation work has already begun, O'Donnell said.

The area is located between two of the city's artificial palm-shaped islands, which Nakheel also built. The project will include a manmade inland harbor and 40 additional towers up to 90 floors high.

About 150 elevators will carry employees and workers to the Nakheel Tower's more than 200 floors, the company said. The building will be composed of four separate towers joined at various levels and centered on an open atrium.

"It does show a lot of confidence in this environment" of worldwide credit problems and a souring global economy, said Marios Maratheftis, Standard Chartered Bank's Dubai-based regional head of research.

As part of government-run conglomerate Dubai World, Nakheel has played a major role in creating modern-day Dubai, a city that has blossomed from a tiny Persian Gulf fishing and pearling village into a major business and tourism hub in a matter of decades.

Besides the growing archipelago of man-made islands for which it is best known, Nakheel is responsible for a number of the city's malls, hotels and hundreds of apartment buildings.

The company said the new project is inspired by Islamic design and draws inspiration from sites such as the Alhambra in Spain and the harbor of Alexandria in Egypt.

"This is nothing like it in Dubai," said Sultan Ahmed bin Sulayem, Nakheel's chairman.

Perhaps not quite. But Dubai is already home to the world's tallest building, even if it remains unfinished.

That skyscraper, the Burj Dubai, or Dubai Tower in Arabic, is being built by Nakheel's chief competitor, Emaar Properties.

Emaar has kept the final height of the silvery steel-and-glass tower a closely guarded secret, saying only that it stood at a "new record height" of 2,257 feet at the start of last month. It's due to be finished next September.

The final height of Nakheel's proposed tower is likewise a secret, as is the price tag. The company would only say it will be more than a kilometer (3,281 feet) tall.

O'Donnell said he was confident that Nakheel could pay for the project despite the financial troubles roiling the world's economy.

He also brushed aside concerns by some analysts that Dubai's property market is becoming overheated and due for a potentially sharp correction.

'In Dubai, demand outstrips supply," he said. "There might be a slowdown, but there definitely won't be a crash.'

http://news.yahoo.com/s/ap/20081005/ap_on_re_mi_ea/ml_dubai_world_s_tallest_building


Hmm, I believe very similar words were uttered previously:

"As the market floundered, financial leaders were as optimistic as ever, more so. Just five days before the crash, Thomas Lamont, acting head of the highly conservative Morgan Bank, wrote a letter to President Hoover. "The future appears brilliant. Our securities are the most desirable in the world."

"Practically every business leader in American and banker, right around the time of 1929, was saying how wonderful things were and the economy had only one way to go and that was up."

http://jessescrossroadscafe.blogspot.com/2007/12/great-crash-of-1929-redux.html