From the Palm Islands to Emirates Bank, grand Dubai, United Arab Emirates, feels the economic crunch
Thursday, March 19th 2009, 9:48 AM
From the Palm Islands to Emirates Bank, grand Dubai, United Arab Emirates, feels the economic crunch. Dubai has thousands of untold stories of deep financial loss and failure, and it is getting worse by the day. Even air flights are being cancelled because thousands of people no longer wish to travel to Dubai.
The Palm Islands, for example, were heralded as “The 8th Wonder of the World” by numerous travel sites. They required a staggering $60 billion to construct, according to their developers. They attracted A-List celebrities from the Jolie-Pitts to the Beckhams toLindsay Lohan. They were, in fact, “one of the most enterprising and ambitious ventures to ever have been imagined,” according to travel Web site Destination 360.
The epic Palm Islands, a series of three man-made islands in the shape of a palm tree, that along with the surrounding city of Dubai, were considered the “it” playground to the stars, a chic status-symbol to the rich, and a mammoth, epic, super-expensive, luxury landmark to the rest of us.
When you”re this high, you've got a long way to fall… And fall they have. Yes, the global recession seems to be official, as the Palm Islands and Dubai have smacked into economic trouble, according to numerous published reports.
“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 cancelled,” the New York Times reports.
And the Palm Islands themselves? Not looking so good. The Mirror reports that the islands'real estate values have plummeted – by about half. Properties that were selling for about $4.5 million are now going for around $2.3 million. Probably not welcome news to celebs like Brad Pitt and Angelina Jolie who own property there, the paper reports.
But it gets worse. Real estate developer, Nakheel, maker of Dubai”s Palm Islands, has suffered recent layoffs, according to ABC News. The Guardian reports that the third of the Palm Islands, the Palm Deira, which was previously under construction, is on hold, and VIrtualTripping.com reports that it is downsizing in scale.
Why the conflicting views on these and other issues swirling around regarding Dubai's economic state? Because both Dubai's government and many of its residents are remaining silent. The New York Times reports that the government generally will not release data on the extent of the economic crisis in Dubai, and the Guardian reports that the general climate is one of denial in that “nobody wants to lose face, and everybody”s trying to put a gloss on the bad news.”
But here's what we do know – and it does not paint a good economic picture. We have personally visited Dubai, and when we met with and tried to get in depth information from local bankers, leaders and real estate people, we found that there seemed to be a systematic effort to hold back information. Now sources such as the New York Times report that the government has essentially put out a message that no information on bad economic events are to be reported or released. But from what we can learn from investors who have actually experienced the Dubai crash, they are losing money in huge amounts.
What this tells us is that Dubai, is closely integrated with the global western economy and even the deep pockets of the older relatives of Abbu Dhabi, are not deep enough to over come the global economic crisis that has swept over the nation. But it would be nice if Dubai had the ability to be transparent and honest about their challenges. It is often easier to fix things when you can honestly admit and then deal with them. As for Americans who read our articles, we recommend that you know, there is a "controlling" and "secret" type of cultural leadership in Dubai. Don't put your eggs, or a huge part of them, in that basket, or you may find them gone forever.