Thursday, 10 December 2009

Dubai – is it flu or a cardiac arrest?

Everyone needs a rest from time to time. Even cities need a break.
Dubai was a city on steroids during the last decade. On doctor's orders, it is in the midst of a breather. Without this lull, the city may have suffered a serious cardiac arrest and be out of business for some time.

I just paid a short visit to Dubai. It was my first trip to Dubai since returning to Singapore in June 2009.
My flight bookings were confirmed one and a half days prior to my departure. In the past, flights to and from Singapore required reservations weeks in advance. There were empty seats on my flights, another unusual sight.
The airport formalities were a breeze. No long queues at the immigration counter. No need to rush to the counters and try and sneak into a 'fast track' immigration lane. Dubai airport seemed almost as efficient as Singapore!
But the real shocker came on Dubai's roads. It was like being in a Dubai of yesteryear. One could travel from Sheikh Zayed Road, the city's main drag, to the airport in under twenty minutes (during peak evening hours), a journey which normally required over one hour in the good old days.
Dubai is not a ghost town. It is a success story.
Luxury hotels have an 80% or more occupancy rate, albeit at much lower average room rates. The cars on the road are fancy. Passenger planes representing many airlines were parked at Dubai airport. All nature of languages can be heard while walking around the city.
It was the Dubai spirit which was a bit distraught. The city has lost its footing and its residents are disoriented.  Dubai's residents are suffering from trauma brought about by the shellshock of financial meltdown.
It does not help that the local media is mum about Dubai World's financial crisis. The UAE press is owned by the private sector, but that does not mean domestic reporting is aggressive. (Singapore government please take note and allow meaningful private sector participation in the media.)

Few news reports pointed out that Dubai World has lost the prestigious W Hotel in New York. A property which the firm's private equity arm purchased in 2006 for USD 282 million was sold for USD two million at a foreclosure auction on December 8.
The go-go years are over. Many now see the hitherto successful Dubai model as a textbook example of 'how not to develop.' Economists and political scientists will dissect Dubai's rise and fall for many years to come.  
Yes, it borrowed too much money. Foreign banks were major creditors and forgot to read the fine print when lending the money.  These foreign banks are too used to being bailed out by government funds. Unfortunately for the banks, Abu Dhabi did not establish a TARP fund to make good their bad loans.
Yes, Dubai represents some of the greatest excesses of the last decade. It has a ski slope inside a mall; a swimming aquarium in another mall. You can watch in amazement as a mechanism costing a few hundred million dollars shoots water to the sky – a mechanism normally called a water fountain!
However, will tennis stars stay away from the annual Dubai Open? Tiger Woods (for personal reasons) may not grace the 2010 Dubai Golf World Championship but most other golfers will be there. Tourists, especially from South Asia and the Arab world, will continue to flock to Dubai's five star hotels and shopping malls – the temples of the modern world.
I could go on with reasons why Dubai is a modern day success story.

I once heard someone in Abu Dhabi say, "My grandfather rode a camel to move around in the desert. So what's wrong if my grandson has to ride a camel too?!"
I suspect Dubai's world class infrastructure is not going anywhere any time soon. For many years to come, the best place in Dubai to see a camel will remain Dubai's specialized camel race course.

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