Dubai had the world’s fastest- growing property market until mid-2008 when the subprime crisis originated from US arrived at the kingdom. The collapse of the emirate’s property sector was partly due to heavy speculation where borrowing was as easy as buying groceries from the supermarket. An estimated of 60% in housing prices was wiped out sending speculators fleeing from the market. As a result, about 50% of Dubai real-estate projects were cancelled or suspended thereafter.
Until today the property sector in Dubai is still crawling for a recovery. But Dubai is already talking about reviving mega projects stalled during the 2008 crisis. One of them is the multi-billion dollar backed by Dubai Properties Group – Dubailand, the most ambitious entertainment resorts ever planned. Launched at the height of Dubai’s real estate bubble, Dubailand was reported to cost a mind-boggling AED335 billion (US$91 billion) at its peak.
Dubailand was to rival Disneyland – twice the size of Walt Disney World Resort with seven themed areas, residential developments and the world’s largest shopping center in Mall of Arabia (*whoa*). The plan was to attract 15 million tourists by 2020 to diversify its economy which is currently petrodollar-driven. The UAE is now planning to scale back the size of the project but nevertheless it has to be at least the same size and scale of Disneyland.
Besides tie-ups with Universal Studios, Legoland and theme park giant Six Flags, there was also a plan to create a theme park project with Star Wars director George Lucas and the resort, “The Magic World of Dubai”, was to be linked by monorail to Dubai Airport. But the plans crumbled after the credit crunch hit and the biggest barrier in reviving the projects now is the financial constraints. Nevertheless Dubai Properties Group is now determine to pick up pieces from the grand plan and is negotiating some new deals based on the original concept.
Already its neighbour, Jordan, has announced a deal between US media giants Paramount and CBS and entertainment firm Rubicon Group Holding to launch a $1 billion theme park and resort, Red Sea Astrarium, a a 184-acre entertainment resort in Aqaba, Jordan which will also include a Star Trek-themed attraction. The time for dreaming and wishful thinking is over for Dubai. It has to accept the fact that a solid plan and financial means which is realistic should be adopted instead of boasting of wanting everything to be the biggest and tallest.
Dubailand website still boasts the venture at AED235 billion covering an area of 3 billion square feet with a minimum of 55 hotels and would consists of 45 sub-mega projects. UAE and Dubai should go back to the drawing board to ensure a proper and thorough feasibility study is carried out which makes business sense and not to serve one’s ego. Of course big brother UAE can still come running bailing out little brother Dubai but it can’t undo a massive 3 billion square feet of unfinish ghost infrastructure, if the project fails.
The government should realize that nothing is too big to collapse. The 2008 crisis should make them more prudent in spending and build whatever that is needed only. You can build in phases but definitely not choking yourself with more than what you can chew.
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