The 3 Multi-Billion Mega Projects Dubai May Never Finish Building
Dubai doesn’t need any introduction. The city is known for its extreme projects, such as the most luxurious hotel in the world (Burj Al-Arab), the tallest tower in the world (Burj Khalifa), the largest mall in the world (Dubai Mall), the biggest artificial ski slope in the world, the biggest picture frame in the world, the biggest fountain in the world, the largest candy shop in the world and other ridiculous worldwide records.
However, as immense as they may seem, all of these projects were built to generate greater financial revenues thanks to tourism. They play a part in the desire of Dubai’s ruler to transform his city and make it the first worldwide touristic destination in the world in order to generate wealth and free Dubai from its oil revenues.
Dubai seeks diversification at all costs. However, as we are about to see, its ambitions might be too big in regard to what it can achieve.
A Short History of Dubai
Dubai is the capital of the Emirate of Dubai, one of the seven emirates of the United Arab Emirates. Originally a fishing village, it signed an agreement with the British in 1892 and placed itself under their protection. In 1966, the British did no longer have the resources to protect Dubai and the UAE became independent in 1971.
Dubai’s main export at the time was the production and export of pearls. The industry took a serious hit when the Japanese started producing cheaper pearls in the 1920s and was further damaged in the global recession of 1929.
The 30 years that split the end of the pearling industry from the discovery of oil were extremely difficult for the inhabitants. Once the revenue of oil came to release financial pressure, the leading family (the Maktoum dynasty) decided to invest and diversify as soon as possible to avoid making the same mistakes of being dependent on one source of revenue like they were with the pearl industry.
This philosophy has been accompanying Dubai in its development until today. Everything Dubai has ever initiated was aimed at creating wealth and value for its people to ensure independence and prosperity.
Dubai does not spend. Dubai invests.
The revenues of the oil and the tourism industries are reinvested into other sectors such as arts, culture, academia, and others to ensure a constant flowing of resources and talents, whatever happens.
Out of all economic sectors, Dubai has historically focused on the tourism industry.
Investment in Tourism
Dubai heavily invested in tourism with the building of numerous hotels and amusement parks.
The architects of the vision of Dubai saw big and nothing was too crazy for them not to realize.
However, the various crises that the world has known (2008, 2020) fragilized both global trade and travel, which greatly impacted the city.
As such, three multi-billion mega projects that were launched years ago may never see the light of the day now that the world has been completely reshaped due to the pandemic.
Dubai Creek Tower: Price: $1 Billion
Dubai Creek Tower is an observatory tower supposed to be as tall or taller than one kilometer once it will be finished…if it ever is. The building of the tower started in 2016 and the opening had been planned for 2020 at the occasion of the World Expo. Later, it was delayed to open in 2021. However, in 2018, the construction stopped.
There aren’t any official reasons as to why the building of Creek Tower has been halted. The emirate is very careful in its communication and reputation and does not communicate on failures. As such, we can only take guesses.
The first reason concerns the real estate market. There are way too many homes and hotels for the number of people that live in the city.
Dubai is a tax-heaven, whose population is 80% foreigners. When the worldwide economy runs well, people fly to the city to work. They enjoy a high salary and amazing standards of living.
When the economy slows down though, foreign workers flee as they are usually unable to bear the immense cost of living when they don’t have a job.
The second reason why Dubai stopped building the Creek Tower is the decrease in oil prices.
Ever since the US started producing shale oil, the price of oil has collapsed. In January 2020, the US became the first worldwide oil producer, exceeding the production of Russia and Saudi Arabia.
Lower oil prices mean fewer revenues for Dubai. Even though the emirate is not nearly as dependent on oil as it used to be, the worldwide prices of oil still impact its economy because Dubai uses its revenue from the oil industry to invest them in tourism projects.
As such, we may imagine that the rulers of Dubai decided to pause the construction of the tower, to redirect funds towards better-suited sectors, such as hospitals, for example.
The World: Price: $13.3 Billion
The World is an assembly of small artificial islands representing…the world. The purpose was to create a new neighborhood with offices, houses, and shopping malls.
The World began building in 2003. Shortly after, about 60% of islands were sold to real estate developers with a lot of promises to build hotels, shops, housing, and other entertainment structures.
Such as many other projects, it was halted in 2008 due to the financial crisis. In 2010, it was reported that the islands were sinking, which was later denied by the consortium in charge of developing them.
In 2012, the first island (Lebanon) opened with a beach club. Later on, another island on the north-west began construction but has not yet opened to the public.
It has been 12 years since the financial crisis and as we speak, the World remains 90% empty.
It’s difficult to assert why it is not moving forward as neither Dubai nor the real estate developer are officially communicating on the matter.
The real estate boom and its subsequent overcapacity are probably the main reason why developers remain cautious regarding the addition of housing facilities in the area.
Obviously, the pandemic has not improved the situation, as worldwide tourism is on hold until safety is restored.
Will the World ever see the light of the day?
Personally, I doubt it.
Dubailand: Price: $64 Billion
Dubailand was originally a mega entertainment complex made out of 6 smaller amusement parks in which 45 big projects had to be developed with 200 smaller projects.
The park began construction in 2003 but was halted in 2008. It resumed in 2013.
The story of the park is a mess. Several projects were announced, then canceled, such as the biggest Ferris wheel in the world, the development of a Universal studio theme park, a Marvel park, and several other parks.
Legoland, which was interested in being part of Dubailand for example, eventually opened 35 km away as the project did not advance further. DreamWorks, which was also interested to build a park, eventually built its own at Dubai Parks and Resorts, another entertainment complex.
The only “park” that was eventually built in Dubailand was the Miracles Garden, a giant park with 50 million flowers and 250 million plants.
Tatweer, the Dubai consortium in charge of the project, was eventually relieved of the development task by Dubai Properties Group in 2012, and no further advances have been noticed, despite securing $55 billion in 2013.
The Bottom Line
Dubai has a lesson to teach the West in that they have a positive outlook on the future. They are also extremely dynamic. They don’t waste time with analyses and discussions and start building their projects right away. “Just do it” could be their mantra.
In this regard, the Burj Khalifa, Dubai Mall, the Burj Al-Arab, and the numerous artificial islands were a great success. They helped put Dubai on the international scene and attracted more than 16 million tourists to the city in 2019. We often speak of China as a remarkable example of development, but Dubai deserves its fair share of recognition.
In regard to these achievements, we must question what went wrong with the further development of the three projects we highlighted.
For certain, the 2008 financial crisis was a massive blow. It fragilized international investors and slowed down tourism, which in turn decreased the return on investment of the different projects.
Furthermore, the city might have overestimated the enthusiasm of both international workers and tourists to come to the city.
While it may be one of the “most entertaining” cities in the world, it remains PG-13 for everybody.
There are no casinos in Dubai, women must dress a certain way, alcohol consumption is extremely tight, it is strictly forbidden to display signs of affection in public (kissing), and cross-dressing will send you to jail.
Let’s not even talk about the prohibition of anal sex, extramarital sex, everything related to being gay, the impossibility to get drugs, the ban on prostitution, and more.
Dubai, as such, is a fun city for families with married parents. But if you’re looking for a place to get drunk, smoke weed, have sex with strangers or professionals, and gamble your salary away, it’s definitely NOT the place to go.
Unfortunately, when we talk about having fun, most people think of doing that which is forbidden in Dubai.
Amusement parks can only take you so far.
There is another problem.
While it may be the best city in the world to attract foreigners, it is also probably the worst one to keep them.
When foreigners move to Dubai to work for an Emirati company, they have their passports confiscated which prevents them from fleeing if they want to.
That is not very comforting.
Furthermore, it is nearly impossible to obtain an Emirati citizenship, and the government does not provide any type of supports to foreigners.
When the pandemic hit, many expatriates lost their jobs. They had but no choice to leave Dubai since the cost of living was too high to stay and the government did not provide them with any types of benefits.
By losing its international community, the economy took a hit (fewer people created less wealth and consumed less as well). The real estate market plunged (yet again) which decreased the relevance of further real estate projects.
Could Dubai have seen too big?
I think so.
The early success of the Burj Al-Arb incentivized Dubai to keep its building mania going. I believe they did so thinking “build it and they’ll come”.
Unfortunately, Dubai may have overestimated the propensity of foreigners to join the city for the reasons explained above. It may have all of the amusement parks in the world…the prohibition on drugs, alcohol, and sex doesn’t make it a nice place to live in. The non-existence of support for foreigners either.
The future will tell whether Dubai can achieve its vision to be the luxurious city it wants to be.
However, if they don’t ease a bit the many prohibitions installed, I’m afraid Dubai eventually becomes an empty nightmare in place of the prosperous dream its founders had originally envisioned.
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