The modern naked emperor
This week in our wrap of property news: World headlines are dominated by Dubai's crashing property empire - and the repercussions for the world. Now that the property bubble has well and truly burst, and is threatening to set off another major global financial crisis, every commentator and his dog says we should have seen things coming to a head.
Concrete hallucinations. Few have put it better than Charlie Brooker, a columnist for the UK's The Guardian, who said at the weekend he never fell for the Dubai hype and felt uneasy as everything he heard about sounded impossible. "It was a modern dreamland. A concrete hallucination. A sarcastic version of Las Vegas. Dubai's skyline was dotted with gigantic whimsical behemoths. There were six-star hotels shaped like sails or shoes or starfish. Skyscrapers so tall the moon had to steer its way around them. It had immense offshore developments: man-made archipelagos that resembled levels from Super Mario Sunshine. One was in the shape of a spreading palm-tree. Another consisted of artificial islands representing every country in the world in miniature. As if that wasn't enough, a proposed future development called The Universe would depict the entire solar system."
Hardly surprising really, with all those astonishing property developments, that a major South African newspaper was taken in with claims that the V&A Waterfront's new owners - which included Dubai's Istithmar - had a vision to build similar grand island developments in the sea off Cape Town and, in so doing, creating the best views of Robben Island and Table Mountain.
Dubai: Giant property prick. Sometimes things really are what they seem. Take the world's largest skyscraper, the Burj Dubai, due to open in January. Continued Brooker: "It looks like an almighty shard of misplaced enthusiasm: a lofty syringe injecting dementia directly into the skies, a short-lived spike on a printed readout, or a pin pricking a gigantic bubble. Not a shape you'd want to find yourself unexpectedly sitting on, in other words. Just ask the world's financial markets, once they've finished screaming." Erm, quite.
Mine is always bigger than yours. The man ultimately responsible for driving Dubai's debt-fuelled real estate extravagances in the desert and elsewhere is Sheik Mohammed bin Rashid el-Maktoum, quite possibly this decade's answer to that fairytale figure The Emperor without Clothes whose subjects were too nervous to say what they thought. Now that the problems have been laid bare, these days many in the western world are thinking something similarly impolite about the Sheik as Brooker has about the Burj Dubai.
Who can blame them, when the Dubai announced it would seek a six-month debt standstill on many billions of dollars worth of debt after Middle East markets closed and at the start of the Eid al-Adha holiday? Said the UK's The Observer at the weekend: "There was a certain arrogance in making the biggest announcement to investors in years just when everyone was packing up for the holiday weekend."
David Teather said investors have been "especially spooked" because the Dubai ruler and officials had maintained in recent weeks that everything was fine. However, it turns out they were "just buying time until they could get a bailout from somewhere". The ruler has "suffered a massive loss of legitimacy in the eyes of the business community". "During the boom years, there was no separation between the government wealth and the companies' wealth - they were creaming it off. They can't now have it both ways." Teather notes that the Sheik could end up as "the most bankrupt person in the world".
Tabloid Tuesday reckons the investment community should spend closer attention to the likes of what Charlie Brooker have to say about life and the universe. "To my dumb incomprehending eyes it looked like a collection of impossible follies," said Brooker of the Dubai property mirage. But, he asked: What did I know? "Clearly the people actually paying for all this stuff knew precisely what they were doing."
Actually not. The people really paying for this stuff weren't just hot shot hoteliers like South Africa's Sol Kerzner, who also splashed out loads of cash in a very showy fashion in the region; they are the shareholders of companies like banks listed on European stock exchanges. As the Observer points out: European banks may be in line for losses on an estimated £40bn of exposure to Dubai. There are also question marks over the implications for western companies owned or part owned by the emirate.
Scary stuff. Bin Rashid el-Maktoum could soon become as familiar a name in households around the world as the other, bad Bin. Love him or hate him, keep our fingers crossed the world comes to Bin Rashid el-Maktoum's rescue, or we just might all find ourselves going down with Dubai.
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Comments
The demise of Dubai might yet be over exaggerated. At the top the Sheik has over extended and at the bottom the "flippers" may be caugfht short. In the middle and just as a declining stock market still has some worthwhile individual counters, so to shall . .more
by Kura Chihota on December 02 2009, 15:37
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The development model used in dubai seems to be "look at me" rather than proposing and completing developments that are connected with the existing community and infrastructure. Unfortunately, the burj dubai will be a failure. Suppose you were to live . .more
by John on December 02 2009, 18:52
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