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Is the Dubai Bubble Starting to Burst?

November 20, 2008

By C. J. Hughes

Dubai has attempted to set itself apart with the world’s tallest building (Burj Dubai) and largest urban development (Dubai Waterfront). But in terms of fallout from the current economic crisis, the Middle Eastern city may not be so different from the rest of the world after all.

Dubai
Photo ©†Mark Horn
The global credit crunch is affecting projects in Dubai.
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In recent weeks, delays have beset several massive projects there, according to several architects working in the area, and articles in The National, a United Arab Emirates newspaper. Dubai Waterfront, often referred to as Waterfront City, the 1.5-billion-square-foot development master planned by Rem Koolhaas/OMA, is moving much slower than anticipated. Completion of a detailed master plan for Palm Deira—a man-made, palm tree-shaped island—has been pushed back from this fall to late spring. And Palm Jebel Ali, another palm tree-shaped island, is being scaled back. Moreover, real estates prices are starting to drop.

“We are witnessing a global negative economic movement,” a spokesman for Nakheel, one of the country’s largest developers, told The National in mid-November. “The next few months will see a scaling back of activity around some of our projects.” Other developers are reporting layoffs. Damac Properties recently cut 200 jobs, sources say, while Omniyat Properties, a three-year-old company, let go of 60 employees.

Projects already under way should be protected against the downturn, say some U.S. architects working in the UAE. Still on-track is the 5-million-square-foot community of apartments, stores, and hotels that HOK designed for the Australia and New Zealand portions of Nakheel’s World project, which comprises 300 islands shaped like various countries. That’s according to Bill Stinger, a partner in HOK’s Washington office, who has been working in Dubai for 25 years. “Frankly, we have not seen the slowdown yet,” Stinger says. “The jury is still out on what will happen going forward” with other projects, he adds.  

Also on schedule is FXFowle’s Sheikh Rashid bin Saeed Bridge, which will be the world’s largest spanning arch bridge, says Steven Miller, FAIA, managing director of the firm’s Dubai office. The bridge, which will cross Dubai Creek, is set to break ground in April. Miller also is unfazed by any delays that may plague a 65-million-square-foot area that his firm is master planning for Dubai Waterfront. “As architects we can turn out a better quality building with more time,” he says. “I can catch my breath.”

Similarly upbeat is Chuck Wood, managing director of Rockwell Group’s Middle East office in Dubai, which opened in October. For his firm, which specializes in the hospitality industry, there are enough existing buildings in Dubai to fuel demand, he says. Its 8,000-square-foot Nobu Dubai sushi restaurant, with bamboo-and-terrazzo wall panels, opened in September inside the Atlantis Resort. Presently, the firm is consulting on the design of a convention center at Dubailand, a mixed-use complex planned for a site near a new international airport. “The projects that have strong financials are going to move forward, and the more independent developers with less secure financings may have trouble,” Wood says. “But it will shake out the speculation that’s been in the market that’s fueling unrealistic growth.”

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