Posted October. 19, 2010 10:32,
A year ago, Dubais Palm Deira development project captured the worlds imagination because it was believed nothing like it could be done elsewhere in the world.
Now, only dust covers the construction site.
The largest of Dubai`s inspiring palm-shaped islands, Palm Deira was initially slated to be developed as the worlds largest tourist and residential facility through reclamation of 46.36 million square meters of sea. An air of silence now covers the area, however.
Construction has been suspended except for a bit of reclamation work. Building devices are covered with dust and materials are strewn, with only the sound of the wind from the sea and desert audible.
Just a 40-minute drive from Palm Deira is the Dubai Land construction site. The plan was to build the worlds largest theme park eight times bigger in area than Disneyland in the U.S. Work has ground to a halt, however, and no amusement park, zoo, shopping center or hotel is in sight. Only the entrance with the sign Dubai Land shows that the site is not abandoned.
Mohammed bin Rashid Al Maktoum, prime minister and vice president of the United Arab Emirates and ruler of Dubai, said last month that the emirate is recovering after the state-controlled holding company Dubai World and subsidiary Nakheel reached a debt-restructuring settlement with creditors. We (Dubai) are back, he said.
Dubai, however, has yet to escape from the effects of its shock given the faltering performance of its development projects.
○ Ignoring economic principles
Samir Pradhan, senior researcher at the Dubai-based Gulf Research Center, said, Dubai failed to abide by the basic rule of economics that supply depends on demand. The emirate chose to devise innovative development strategies and visions first and then create infrastructure by attracting foreign investment. It apparently believed that this would lead to an increase in supply.
Though Dubais performance so far cannot be ignored, the crisis hasnt ended yet meaning Dubai needs to change its unconventional development strategies.
Construction sites over the window of his office lie dormant.
Business Bay, a commercial and business center in Dubai, also exemplifies that Dubai has yet to overcome its crisis. Most of the construction sites have had work suspended. A survey conducted by a Korean builder shows that among 115 building projects that have had construction launched, 57 (49.6 percent) have been suspended.
One hundred buildings await construction. The Dubai government planned to complete most of the construction by 2012 and 2013, but predicting when construction will be completed is tough, a company source said.
○ Rules and lack of transparency
Administration procedures and transparency are also crucial to the debate over Dubais crisis. Though such problems were not raised when Dubai was booming, the crisis has prompted criticism that Dubai lacks global standards to grow into an international hub.
Most Middle Eastern countries do not regularly announce even basic economic data including GDP growth, real estate prices and debt ratios, and Dubai is no exception. The emirate does not track other key economic data either, not to mention the state and plans for its development projects.
Matthew Green, head of research and consulting at CB Richard Ellis, said, Its very difficult to obtain credible economic data from Dubai. Lack of transparency is something Dubai must solve to regain investor trust.
A source at the Dubai branch of the Korea Trade-Investment Promotion Agency said, Dubais administrative procedures and work processes are rational and prompt compared to other Middle Eastern countries, but still lag far behind global standards.
Dubais government agencies agree on the lack of transparency. Paul Koster, chief executive of Dubai Financial Services Authority, said, The Dubai governments transparency is behind global standards, though it has improved from the past. In the wake of the crisis, Dubai has grown aware of the importance of economic data and policy transparency. We are trying to find ways to improve this.
Saifur Rahman, business editor at Dubai`s leading English-language daily Gulf News, said, Dubai lacks talent especially in key social sectors such as administration and media. The government is aware of this and is trying to devise measures to nurture elites in key social areas.