Land of superlatives suffers a (very big) shock. The rumour-mongers are sowing the seeds of confusion and distress as companies begin to downsize their enormous ambitions

Perhaps the defining characteristic of Dubai is its love of superlatives: the biggest, largest, highest and longest structures of all kinds – including the world’s tallest building (the iconic 800-metre Burj Dubai, still under construction).


Now that the global financial tsunami has finally washed up on our palm-lined and dreamy shores, we are shocked to find that Dubai has been built on sand all along. With some of the foundations being swept away in the tide of worldwide economic woe, the place is beginning to crumble around our ears. In true Dubai fashion, its fall is going to be one of the hardest and it could even be ‘the most spectacular’.


Dubai Holdings, one of the largest business conglomerates in the emirate, owned and operated by the wonderfully-entrepreneurial ruler, Sheikh Mohammed bin Rashid al Maktoum, says it is “consolidating the back-office operations of its property companies and two of its financial arms in the latest move by the government to adjust as the global economic crisis hits the Gulf”. Translated, this means a lot of poor sods are being fired, and none of them are in management.


Under pressure


Nakheel, one of the largest construction companies in Dubai, has either postponed or scrapped various ambitious projects. Property developers are also under huge pressure, with Emaar – developer of the Burj Dubai – reporting a 54% decline in net profits. Elsewhere, the five-star Dhow Palace Hotel down the road from me has sent a lot of staff home to India on unpaid leave as occupancy rates plunge. 


The road network is busy, but it is a shadow of its former chaotic self, as expatriates have apparently been leaving in droves, like rats from a sinking ship. Or, as in this case, a leaking emirate. It is surprising there were no injuries at the Dubai Shopping Festival this year as cat-fighting bargain hunters moved in.


There is a rumour that fleeing expatriates have been ditching their cars at the airport just before they jet out, and that these owner-less vehicles now number in the hundreds. The police department has been so ticked off by talk like this that its chief stated dourly in Gulf News that it was only “a handful” to date. Oh, that’s reassuring. We have a problem, but it’s only a small one.


Quite apart from the swanky hotels – like the Atlantis, newly-opened by South African entrepreneur Sol Kerzner – which are being abandoned by the tourists (at home counting their pennies before stuffing them into their mattresses), many of the new residential projects are also in trouble.


The banks are reluctant to grant loans since they are strapped for cash, which seems a truly bizarre situation. A year ago it was common practice to demand a single cheque for a year’s rent, but now this has eased to three or even four cheques over the year (which is still a lot of money, especially if you don’t have it).


Rental prices have fallen, with studio apartments now ranging from 45,000 UAE dirhams ($12,250) a year in The Crescent to 60,000 dirhams in Discovery Gardens and International Gardens. This is a major drop from 80,000-100,000 dirhams only a year ago.


Many people are uncertain and confused at the moment, from the construction workers to the top management. No one really knows what’s going on. The company I work for has already started retrenching – surreptitiously, it seems – with no communication as to its overall strategy for the short- and long-term future.


This seems to be the main problem: with no one talking, the rumour-mongers and doom-and-gloomers have rushed to fill in the gap, spreading talk of the end of capitalism as we know it.