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Dubai on Another Mega-Project Binge

Dubai on Another Mega-Project Binge

Commercial News » Global Property Beat | By Kevin Brass | September 4, 2013 10:01 AM ET



Like a drunken sailor who can't stop telling tall tales, Dubai is once again making grand announcements about mega-projects that will astound the world.

Close your eyes and it's like 2006 all over again. The projects are wild, fantastical and completely out of proportion with reality, in the grand Dubai tradition.

In the last year alone the emirate has announced developments worth more than $130 billion, according to an analysis by Arabian Business magazine.

That's an astounding number, even by Dubai standards. To put the announcement binge in perspective, the Burj Khalifa, the world's tallest building, cost $1.6 billion to build. The GDP of Ecuador is $155.8 billion.

The list of projects includes Mohammad Bin Rashid City, which will feature the world's biggest shopping mall (of course), more than 100 hotels, a Universal Studios theme park and a public park larger than London's Hyde Park. And then there is Bluewater Island, a $1.6 billion man-made island that include the world's tallest Ferris wheel (of course). (Arabian Business has compiled a slide show of the 10 biggest projects.)

Absent from the bold announcements is any recognition that we've been down this road before. Dubai developers apparently believe the public has the collective memory of gnats. Or maybe they hope people don't know how to use "the Google."

It seems like yesterday that Dubai was announcing dozens of wild, spectacular mega-projects that, as it turned out, were never built. Architects devised elaborate plans, investment groups committed funds, investors bought apartments -- and then the projects disappeared into the desert.

These ghost projects aren't listed on some ancient scroll, distant memories of a long forgotten civilization. Five years ago Dubai was actively promoting them to investors and consumers, promising the projects were more than simply really good renderings.

The projects were bold, audacious and, as it turned, completely divorced from reality.

A personal favorite was the Waterfront, which was conceived as a 139-million-square-meter city within the city. Given the opportunity to let his imagination run wild on a grand scale, architect Rem Koolhaas created an interpretation of a modern Manhattan for the Waterfront, anchored by a massive orb, immediately nicknamed "The Death Star."

Most people know Palm Jumeirah, the man-made islands that form one of Dubai's signature developments. But few discuss Palm Jebel Ali, an even bigger islands project which was projected to house 250,000 people and multiple theme parks. Palm Jebel Ali is still listed as "delayed."

Or what about the World, the well-publicized collection of man-made islands, each meant to represent a different country? Today the islands sit empty and forlorn, with little sign of activity. A couple of years ago the developer of the World had to fend off charges the islands were sinking into the sea.
 
The list of delayed, stalled or partially-built mega-projects is long.

These days, as the old saying goes, it's like déjà vu all over again. Home prices are up 30 percent in the last year, the big announcements are rolling in and Dubai is strutting the message of stupendous growth and opportunity.

Only occasionally does a little self-awareness creep into the rhetoric, an acknowledgement that it might be, well, tacky to announce new mega-projects when you never built the old mega-projects. But some developers seem to get it.

"It can't just be announcements; it is critically important to show action and consistent progress," Ziad El Chaar, managing director at Damac Properties recently told a reporter. "Dubai will define its global position in the coming couple of years as international investors watch the speed of delivery for these major projects."

Mr. El Chaar is right, and he speaks from experience, considering Damac has struggled through its share of stalled and delayed projects. Damac recently announced plans to build a $1 billion complex with four towers taller than 250 meters, in conjunction with Paramount Pictures, the Hollywood studio. The industry will, in fact, closely monitor the progress of the project, to see if the new Dubai is different than the old Dubai.

Dubai's leaders want to send the message that the emirate is back. But this might be an appropriate time for a little uncharacteristic humility, at least out of sensitivity to the investors burned in the last binge of mega-projects. 

Dubai is again asking the industry to buy into the dream. This time it might be a tougher sell.

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