Weak economy may affect ambitious project
If ever a project symbolized the maxim of “build it and they will come,” it’s Dubailand.But in the global economic downturn, it turns out that even wealthy sheiks aren’t immune to the fallout: Dubailand is being built, but its grand-scale ambitions are facing the stark new realities of a worldwide credit crunch. Developed by Dubai-based real estate company Tatweer as the centerpiece of Dubai’s grand effort to become a global tourism and entertainment destination, the sheer scale of Dubailand at times defies the imagination. Deals have been inked with everyone from Universal to Marvel and Paramount. While the majority of those pacts relate to theme parks, Tatweer has also taken a substantial amount of equity in DreamWorks Animation. When completed in 2015, the project is set to be as big as Singapore. Its sales office even has a live tiger in the reception area to greet visitors, as well as models of planned replicas of the Eiffel Tower and London Tower — only bigger. Those fantasy blueprints, however, were drawn up before the words “credit crunch” and “leveraged debt” became common parlance. Reports out of Dubai in recent weeks have been rife with tales of mass layoffs, a plummeting real estate market and, most intriguingly, rumors of prime Dubai assets being nationalized by Abu Dhabi’s oil-rich government. While execs in Dubai (and Abu Dhabi) deny the claims, a cloud is gathering over the emirate’s once clear-blue skies. “Dubailand is Dubai to a certain extent,” says one local TV exec. “If it fails, then so will the whole place. That’s why it’s so important for people here that it’s a success.” But in a place famous for its impatient ambition, Dubai execs are finally learning to embrace the long view. “Nobody is immune to the current economic situation, but we are committed to the long-term success of these projects in line with our long-term strategy,” says Tatweer chief exec Khalid Al-Malik. “Even though the figures for this year might not show the same growth, we believe Dubai is still a popular and growing destination and will continue to grow to meet the strategic vision of 2015.” Dubai is far from the only Mideast territory that’s no longer immune to the global economics. Neighboring Abu Dhabi is also feeling the pinch from the staggering drop in oil prices from the record-high of $150 a barrel last year to its current level of $40. Even Prince Waleed Bin Talal, dubbed by Time magazine the Arabian Warren Buffet for his string of canny investments, could be forgiven for downsizing his fleet of luxury private jets. The Saudi media maven, who is Rupert Murdoch‘s strategic partner in the region, announced Jan. 20 that his Kingdom Holding conglom had posted a 2008 fourth quarterly loss of some $8 billion.