# Will Dubai crumble as quickly as it rises?



## Kramer (Sep 11, 2002)

After learning recently of Dubai World asking to postpone its debt payments, I've been reading up on some issues with Dubai as an urban development and wanted to generate discussion on the subject.

There are 2 topics I wish to discuss:

1. The city existing in a harsh desert where energy needed to sustain the city is enormous. Water must be desalinated from the sea which costs more than oil, where if a depression were to happen the city could not afford to produce water for its citizens.

2. Hundreds of thousands of workers from many developing nations building the city - lured by staffing agencies claiming they can make a large amount of money in a 9 to 5 construction job in Dubai, they just have to pay a 1 time upfront fee, which could be paid off in a short time from working in Dubai. In reality when these workers arrive they end up paid 1/10th their wage and live/work in dangerous conditions under sweltering heat up to 14 hours a day. Their passports are taken away from them when they arrive and they cannot make the money to repay their initial debt in time. Instead it could take years instead of months to repay their debt. If they cannot repay their debt, they are not allowed to leave.

The information from these 2 subjects is derived from this not so rosy article about Dubai:
http://www.pubtheo.com/page.asp?pid=1023

Is Dubai a city that can sustain itself in an economic downturn, or could its failure drag the world into another recession?

I am not interested in starting a battle on the forum, I want to see some fair and frank discussion on these issues regarding one of the most ambitious urban projects ever undertaken.


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## shovel_ready (Nov 1, 2006)

Great article. Dubai is essentially a grand monument to every globalized capitalist excess imaginable. This magnum opus of orgiastic waste is just starting to completely collapse from its own weight.


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## city_thing (May 25, 2006)

Can't wait to see the giant ponzi scheme that is Dubai crumble.

I hear work on the World has stopped, and now it's being eaten up by the ocean again.


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## Troopchina (Oct 7, 2005)

Anyone sane has seen this coming long ago.


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## steppenwolf (Oct 18, 2002)

Property booms built on borrowed money = property collapses and unpaid debt. The biggest ever property boom built on the most borrowed money = the biggest property collapse and largest unpaid debt...

Lets hope, by the end of it, Dubai will still be able to afford to desalinate water so its population have something to drink!


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## steppenwolf (Oct 18, 2002)

Kramer said:


> After learning recently of Dubai World asking to postpone its debt payments, I've been reading up on some issues with Dubai as an urban development and wanted to generate discussion on the subject.
> 
> There are 2 topics I wish to discuss:
> 
> ...


This article starts to stink of propaganda towards the end!
I was very receptive to the first half - the stories of slaves and debt, but as soon as I read the exaggerated stereotypes towards the end it made me doubt everything I'd read up until that point. I'm certain there's a lot of truth here, but the bias and exaggeration undermines it and makes you doubt the authenticity of any of the 'interviews'.


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## steppenwolf (Oct 18, 2002)

I left this comment on the article:

This article was tailor made for me. I think I was looking for an article that would provide all the evidence I needed to support my belief that Dubai will soon collapse and take down the bloated super rich with it. 

However, after getting through it I began to seriously doubt the value of the interviews and reports. the absurd stereotypes and exaggerations in the latter half seriously undermined the stories at the beginning. I actually think I could have written this article based on the scrapes of information, general knowledge and stereotypes of Dubai that exist in the west. 

It reads like a piece of anti-Dubai propaganda rather than a serious piece of journalism - an article designed to instil fear and damage the city. 

I actually believe Dubai is an unsustainable disaster waiting to happen, but this article has actually made me feel more supportive of the city and its creators. After all they looked to the west and learned from us, so criticising them we're only criticising ourselves. The USA certainly, cannot laugh at Dubai for this reason. But I suspect that the author wants Dubai to share the same fate of his native Credit crunched country!


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## steppenwolf (Oct 18, 2002)

Dreadfully written comment by the way, and written in a few minutes so I apologise for how badly it reads!


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## Nolin (Jun 24, 2009)

Dubai cannot go on like theyve got money growing on trees. NO COUNTRY can sustain itself without its people paying tax. Every city in the world started off small an then grew dubai didnt. Dubai is a little child driving a car before it can walk watch it crash


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## desertpunk (Oct 12, 2009)

The big problem shaping up is the Emirates' desire to protect their own banks and maintain liquidity in the UAE while leaving individual companies and foreign investors to the whims of the debt markets. I don't think Dubai will be seriously injured in this process, but the pool of eager investors and banks willing to sink money into the sands for the sake of vanity projects that don't earn their keep will certainly shrink. But even without the major european banks, Dubai might still gain access to capital from other emerging markets and China. Anything is possible, but in the near term, there should be a limit to how many new projects get started while Dubai works off the slack and reorganizes its finances.


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## FM 2258 (Jan 24, 2004)

As for the energy concerns I wonder why they did not invest heavily in renewable energy. They should place a shitload of windmills out in the desert to run the city and the desalination plants.


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## Mr. Uncut (Jan 13, 2008)

Building a city is like building a cardhouse! If u build it to fast, it will collapse without reaching the completion!


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## hkskyline (Sep 13, 2002)

Well, if the Americans can emerge from sub-prime then Dubai will probably make it, albeit swallowed by Abu Dhabi in the end?


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## AltinD (Jul 15, 2004)

FM 2258 said:


> As for the energy concerns I wonder why they did not invest heavily in renewable energy. They should place a shitload of windmills out in the desert to run the city and the desalination plants.


Why should they build wind mills if there isn't much wind to move their rotors?


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## FM 2258 (Jan 24, 2004)

AltinD said:


> Why should they build wind mills if there isn't much wind to move their rotors?


I had the impression it was always windy in the desert interior.


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## Tom_Green (Sep 4, 2004)

FM 2258 said:


> I had the impression it was always windy in the desert interior.


That`s the main problem. Many people have wrong impressions of Dubai.

Most of the skyscraper construction continues. Even the 400m + skyscrapers are still u/c.

At least the Dubai basher stoped to say that Dubai is build by oil money. Times are changing. Wonder what they will say when Dubai will growth again.


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## mhays (Sep 12, 2002)

The real question isn't whether construction continues on projects already underway...it usually does since the money is already in place typically (loans that cover the full cost of construction). The question is whether anything NEW breaks ground.


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## Uaarkson (Feb 11, 2009)

Wow. Dubai is royally fucked. Such a shame. hno:


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## Marathaman (Jul 24, 2007)

Dubai will be fine.


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## desertpunk (Oct 12, 2009)

Uaarkson said:


> Wow. Dubai is royally fucked. Such a shame. hno:



It's not.


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## Squiggles (Aug 21, 2007)

Dubai isn't screwed if their economy diversifies, which it is doing. But whether this diversification can keep up with the development remains to be seen. If anything is going to bring down Dubai, it's going to be the water problem.


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## Ni3lS (Jun 29, 2007)

Anyone see the Colbert report of Tuesday night? (Americans?) It was partly about Dubai. It actually might have been the Daily Show. Can't remember, it was funny though.


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## OtAkAw (Aug 5, 2004)

People just have to accept the truth. Although it's still too early to tell really. It's Goodbye, Dubai. (Look it even rhymes!)


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## city_thing (May 25, 2006)

Squiggles said:


> Dubai isn't screwed if their economy diversifies, which it is doing. But whether this diversification can keep up with the development remains to be seen. If anything is going to bring down Dubai, it's going to be the water problem.


They need to do more than just diversify. Billions of dollars worth of debt isn't exactly helping, and a crumbling property sector will really kick Dubai where it hurts. Much of Dubai's economy was really based on easy borrowing, and now that that's gone, all these projects that were designed to host hordes of expat workers, attract tourists and make the city a transport and logistics hub will all have to stop. There goes the city's attempt at making itself into something great.

The city's business plan was full of pot holes, and the Sheik that runs the joint (I forget his name) is obviously a nutter.


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## DFDalton (Jul 16, 2009)

One question:

If Dubai defaults on its debt, does Sheik Mohammed go to debtor's prison?


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## Fizmo1337 (Mar 26, 2009)

There is just too much at stake (for companies in the West + the economy in the region) to Dubai just let crumble. If there is no other choice the West will certainly rather help then let Dubai fall apart, 100% sure but it won't come to that normally.

It will probably take a number of years till Dubai will be on the right path again (confidence in Dubai will stay low for a number of years) but 1 thing is sure, Dubai will be back (allthough in a more reasanble shape). Investors won't be so naïve next time, same for the banks, same for the buyers and same for the sjeikh.


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## aseania (Oct 13, 2009)

the crisis happen when there are no balance of demand and supply. the fact that over supply made by virtual demand is what make Dubai into crisis, but it wont be too long than the crisis happen in the states. it's only Dubai World making an announcement about their debt. but if the banks and government (in this case Abu Dhabi) can fix those things, it wont be a worldwide catastrophe.....


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## Ervin2 (Nov 7, 2009)

Let's see, a soulless city built on slavery, greed, and debt, and a completely messed up and in humane legal system to top it all off. What sane person would pity such a place?

A while back I read an article a while ago about a British woman who was married to an Egyptian man and had two kids with him. At one point she had the audacity to have another man over at her home to drink tea with. See, Dubai has Shariah Law in place, where women are not allowed to be in the presence of other men without their husband. She was divorced, had her children placed in the custody of the scumbag father who ratted her out, and is now going to jail. Her best hope is that the authorities will deport her back to the UK. 

The woman is stupid and Dubai is a messed up place.

Also, I don't pity the people who went there and lost everything at all. We live in a day and age where we have the Internet - a limitless source of mass information. They could have learned of Dubai's lawn in minutes, even seconds, but they were too stupid to do that. Natural selection takes it's toll. 



Squiggles said:


> Dubai isn't screwed if their economy diversifies, which it is doing. But whether this diversification can keep up with the development remains to be seen. If anything is going to bring down Dubai, it's going to be the water problem.


It's way too late for diversification now hno:


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## Xusein (Sep 27, 2005)

No, it's not dead, but it will have to deal with the hangover after the party is over.

I heard that the vacancy rate for office space in Dubai is 40%. Forget about the debts for a second, that figure alone will keep construction stunted for the next few years. I believe that the vacancy rate for residential property is lower, but prices have plummeted regardless, which shows a market will massive oversupply.


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## nomarandlee (Sep 24, 2005)

^^What numbers are to be trusted coming out of Dubai though? Who determained that it is 40%?



Ervin2 said:


> Also, I don't pity the people who went there and lost everything at all. We live in a day and age where we have the Internet - a limitless source of mass information. They could have learned of Dubai's lawn in minutes, even seconds, but they were too stupid to do that. Natural selection takes it's toll.


 I agree, it also hard to feel any pity for the individual investors or the banks in the West (especially the UK) who bought the speculative units and lent the Dubai Sheiks untold billions in a system that is so utterly cryptic, closed, nontransparent, and unaccountable (making "illegal" to publish economic news that may embarrass the kingdom/sheiks). I may in fact feel the least pity for Westerners as they should know better to throw their money in such a system.

There is a historical reason why developed nations have the relative transparency, regulations, and agencies they do and I still even worry that our own regulations and corporate transperency are not enough to secure our capital assets.


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## Xusein (Sep 27, 2005)

nomarandlee said:


> ^^What numbers are to be trusted coming out of Dubai though? Who determained that it is 40%?


I got it from here:
http://www.bloomberg.com/apps/news?pid=20601104&sid=aJtANykOiiHI


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## desertpunk (Oct 12, 2009)

Dubai has the 4th busiest container port in the world and the busiest airport in the region. It has a financial center that is vying to become the most important between Europe and Asia ( in spite of the debt issues ) and it has numerous other economic sectors that are competitive and vital. Dubai is more than tall buildings and is actually quite diversified. Dubai may be overextended but it isn't in any danger of collapse.


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## Sid_toronto (Oct 21, 2008)

desertpunk said:


> Dubai has the 4th busiest container port in the world and the busiest airport in the region. It has a financial center that is vying to become the most important between Europe and Asia ( in spite of the debt issues ) and it has numerous other economic sectors that are competitive and vital. Dubai is more than tall buildings and is actually quite diversified. Dubai may be overextended but it isn't in any danger of collapse.


Oh my, a logical post, watch out people may ignore you lol.


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## AltinD (Jul 15, 2004)

nomarandlee said:


> There is a historical reason why developed nations have the relative transparency, regulations, and agencies they do and I still even worry that our own regulations and corporate transperency are not enough to secure our capital assets.


All those "transparencies, regulations and agencies" didn't help the American home owners/buyers from geting screwed and nor did it help the Brits.

Oh, and have you heard of Spain ...


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## city_thing (May 25, 2006)

AltinD said:


> All those "transparencies, regulations and agencies" didn't help the American home owners/buyers from geting screwed and nor did it help the Brits.
> 
> Oh, and have you heard of Spain ...


LOL. Since when has the US of A had a transparent and regulated banking system? The British system wasn't that good either. Hence why there are calls for more transparency and regulation.

Seriously, is that the only point in this entire thread that you could criticise?


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## nomarandlee (Sep 24, 2005)

^^ So what do you propose Altin, that less regulation, less media surveillance, less transparency, and less corporate accountability is the way to help protect investors? Please make your case. 

Anyway, I stated I have serious reservations even with developed world standards in regard to transparency and regulations and think more reform and transparency would be beneficial but I sure as heck wouldn't jump to put my investments in markets where the financial dealings and public information is much more cryptic by comparison.


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## Tom_Green (Sep 4, 2004)

Despite the crisis the economy of the UAE outside the oil sector will growth. How about your country?

The UAE as a country has overall no debt. How many generations will it take until your country can pay up their debt? Now tell me who is in a bigger mess? 

Actually it`s stupid to argue with people who have no idea about Dubai. Where do they have all the useless informations from? Do they make it up by themselfs? It`s beyond belief what some people here say. It`s like a child describes how an economy works.

As a skyscraper fan i am happy that most of the skyscrapers are still u/c. I should enjoy seeing them growth and let the facts silence the critics.


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## friedemann (Jun 29, 2006)

I don't want to know in which situation Dubai's budget would be today if not Abu Dhabi helped financially with its petrodollars.
Thanks God they still have oil to finance Dubai's dreams of Arabian Nights.


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## Xusein (Sep 27, 2005)

^^ But will they? I think that they will have to bailout them, but I don't think that they're going to willing to let Dubai continue all these massive white elephants and pretend nothing happened.


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## dachacon (Jun 17, 2008)

isaidso said:


> It's not like we in Canada don't do the same thing as Americans. In some respects we're even worse. We produce more garbage per capita, and consume more energy per capita than Americans.


i dont know about the garbage figure but the energy figure makes sense since canada has some pretty low temperatures so alot of energy is used to heat homes. but americans use alot of energy because we are just not energy efficient.


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## dachacon (Jun 17, 2008)

to get back on topic:
dubai will eventually come back. its only a matter of time.
as it was pointed out earlier dubai is now on the map. personally i did not know about this city until i read about the burj dubai in the la times. so once you get peoples attention then you spark that curiosity everyone has, which people start by researching and reading, and hopefully a visit, and word of mouth among friends continues that trend.


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## bayviews (Mar 3, 2006)

Clearly, Dubai’s short act as a seemingly invincible mecca of global finance has ended. Indeed, a few of us on these very threads saw the inevitable coming many months ago. 

Dubai’s joined Wall Street & London City in the ever-growing lists of places whose financial centers have gone bust. Unlike these rather more venerable bastions of sophisticated money changing schemes, Dubai can’t fall back on much in the way of being a permanent city. 

That being the case, maybe Dubai has the potential of reinvention into a better place than it was. Lets not doubt the reinventive penchants of what was not that many decades ago a tiny speck along the Gulf. Dubai’s biggest assets is that it has a huge surplus of what other cities would love: ready infrastructure & ready immigrants. 

Rather than just expelling all the expat workers who built this stuff, Dubai might be better served by trying to retain them & inviting their families to join them. Not as indentured labor but rather as new citizens with some basic human rights. 

Perhaps many of the millions who’ve made their way from Saana, Mombasa, Cairo, Kolkata, Lahore, Dhaka, Manila & many other smaller & dustier places to build Dubai would jump at the chance to fill that role? Perhaps they might pay their way by reconverting many of the now empty banking, office & hotel towers they’ve built into residential condos. Think Vancouver! And in the process, become rent-paying tenants & owners in space that isn’t now generating revenues, nor has much prospects of doing so any time soon. And become the agents of building a more varied & sustainable economy for Dubai. 

Who knows, with such a more permanent population of several million real citizens, Dubai could comeback. Not just as a mere financial hub. But also as a real city, rather than just as a fleeting mirage in the desert.


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## Scba (Nov 20, 2004)

I'm not the kind of guy who gleefully awaits every non-western city to fall and roots for failure, but you could really see this coming a mile away. 

I guess they idea is that when/if their oil dries up, they'll have this huge tourism faction to fall back on. It's just poor management right now.


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## hkskyline (Sep 13, 2002)

Dubai has never been a major international financial centre to begin with. There was a lot of talk about developing the infrastructure in place, but realistically, it is still decades behind the major players such as London and New York.

What Dubai has successfully achieved is to be the major force within the Middle East region. After the fallout from the current turmoil, I don't think Dubai will suddenly be shunned. In the long-run, Dubai would hold a lead, although there are other competitors such as Qatar and Bahrain on the horizon. So at least people in that part of the world don't need to look to London every time anymore.


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## desertpunk (Oct 12, 2009)

hkskyline said:


> Dubai has never been a major international financial centre to begin with. There was a lot of talk about developing the infrastructure in place, but realistically, it is still decades behind the major players such as London and New York.
> 
> What Dubai has successfully achieved is to be the major force within the Middle East region. After the fallout from the current turmoil, I don't think Dubai will suddenly be shunned. In the long-run, Dubai would hold a lead, although there are other competitors such as Qatar and Bahrain on the horizon. So at least people in that part of the world don't need to look to London every time anymore.


I agree. The 'financial capital' competition is getting crowded with so many recent entrants. Dubai did much to foster its importance but even they know that such a role takes time. A lot of people will now look to Abu Dhabi to seize this moment to realize its own ambitions. Whatever the case, a city as loaded with assets as Dubai will find much to fall back on and even more to pursue in the future.


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## Dubaiiscool:) (Mar 15, 2009)

*UAE agrees $10bn deal to help pay off Dubai World debt*

The government of Abu Dhabi and the Central Bank of the UAE has announced that it has agreed to provide $10 billion to the Dubai Financial Support Fund, allowing Dubai World to repay $4.1 billion of Islamic sukuk bonds that are due to be paid on Monday.

The announcement was made by the government of Dubai in an e-mailed statement.

Sheikh Ahmad Bin Saeed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee confirmed the move by the UAE government to provide the financial support.

He said: "Like other global financial centers, Dubai has faced recent market challenges driven by the global economic slowdown and a severe real estate market correction.

"Recently, Dubai World announced that it might not be able to commercially support its obligations. Since that time, the Government of Dubai has worked closely with the Abu Dhabi Government and the UAE Central Bank in addressing and assessing the impact of Dubai World on the UAE economy, banking system and investor confidence."

He added: "Specifically, the Government of Abu Dhabi has agreed to fund $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World.

"As a first action for the new fund, the Government of Dubai has authorised $4.1 billion to be used to pay the sukuk obligations that are due today.

"The remaining funds would also provide for interest expenses and company working capital through April 30, 2010 - conditioned on the company being successful in negotiating a standstill as previously announced. 

http://www.arabianbusiness.com/57606...off-dubai-debt


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## Fern~Fern* (Nov 27, 2005)

...hello Dubai, good bye Dubai! :wave:


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## Jay (Oct 7, 2004)

Anyone with half a brain saw this coming a while ago... This city of less than 1 million builds enough skyscrapers and tourists attractions for Hong Kong, New York, Chicago, Shanghai, London etc. combined... No shit all the buildings are going to be empty.



I don't really have enough information to say Dubai is truly fucked but they where really really stupid about the way they went about expanding urban growth.


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## Dubaiiscool:) (Mar 15, 2009)

Fern~Fern* said:


> ...hello Dubai, good bye Dubai! :wave:


Dubai stock markets is busy to surge and Dubai will be a stronger city after this is over.Dubai still has a lot of people and everything will pick up again now that this is gone. So stop using evidence just because it Rhymes.:bash:


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## Dubaiiscool:) (Mar 15, 2009)

Jay said:


> Anyone with half a brain saw this coming a while ago... This city of less than 1 million builds enough skyscrapers and tourists attractions for Hong Kong, New York, Chicago, Shanghai, London etc. combined... No shit all the buildings are going to be empty.
> 
> 
> 
> I don't really have enough information to say Dubai is truly fucked but they where really really stupid about the way they went about expanding urban growth.


Dubai will also now do better because prices holiday prices are cheaper and the vision will finally become a realization as Dubai wants to become the worlds top tourist detination.Online searches for hotels in Dubai have risen by 570 percent since Dubai World's announcement on its plans to restructure $26bn worth of debt, industry website Hotel News Now reported.

Dubai's population also grew during this year to 1.7 million people so Dubai is not F****D and there will eventually be enough people living in Dubai as it's econompy is predicted to grow 3% next year and more people would be based in Dubai as more Companies come to Dubai and as they expand.


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## Fern~Fern* (Nov 27, 2005)

Dubaiiscool:) said:


> Dubai stock markets is busy to surge and Dubai will be a stronger city after this is over.Dubai still has a lot of people and everything will pick up again now that this is gone. So stop using evidence just because it Rhymes.:bash:


^^ Well let's hope I and the majority who feel like the end of Dubai is near are entirely wrong on this matter...


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## desertpunk (Oct 12, 2009)

Really good news for Dubai today. The deadlines have reset for Nakheel and Dubai World as they work with creditors and hopefully restructure before April. We'll see how any projects are affected. The markets are rebounding with a huge sigh of relief. One other worry though is the situation in Greece. That's one to watch...but not in this thread.


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## japanese001 (Mar 17, 2007)

Dubai is a city of the dreams.I support Dubai.:cheer:


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## nomarandlee (Sep 24, 2005)

> *http://news.bbc.co.uk/2/hi/business/8411215.stm*
> 
> *Abu Dhabi gives Dubai $10bn to help pay debts *
> 
> ...



..


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## AltinD (Jul 15, 2004)

Fern~Fern* said:


> ...hello Dubai, good bye Dubai! :wave:


AltinD

1999: Hello Dubai 
20*??*: Good Bye Dubai


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## Woozle (Mar 30, 2008)

Dubai's future as a global financial/trade hub hardly depended on the sustainability of the giant real estate bubble it was in. The fundamentals are still there: it is still a zero-tax haven with relatively little government middling, an excellent strategic location and other advantages. It was on its way of becoming another Singapore/Hong Kong and it will get there. I do question the viability of London as the capital of finance: any wealthy corporation/individual who moves from London to Dubai will save close to half of their income in taxes.


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## desertpunk (Oct 12, 2009)

Woozle said:


> Dubai's future as a global financial/trade hub hardly depended on the sustainability of the giant real estate bubble it was in. The fundamentals are still there: it is still a zero-tax haven with relatively little government middling, an excellent strategic location and other advantages. It was on its way of becoming another Singapore/Hong Kong and it will get there. I do question the viability of London as the capital of finance: any wealthy corporation/individual who moves from London to Dubai will save close to half of their income in taxes.


There are questions about any new entrants to the "Global Finacial Capital" club. Dubai may well be a regional hub but there are other cities in the region such as Doha that will vie for that distinction. The reality is that financial hubs are no longer a physical necessity. Wall Street could easily exist in a server farm in the salt vaults under Kansas City. As a matter of fact, it already does. They just keep the physical trading floor as a nod to history and for the tourists...just don't tell them this.


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## luv2bebrown (Nov 4, 2004)

what is everyone in this thread going to say in 50 years when Dubai HASN'T crumbled to form a skyscraper ruin ghost town half buried in sand dunes?

will they say "I was wrong?"
or will they say "Of course they could do it. they had oil!"

where are all the people who used to claim everything in Dubai was oil-funded now?


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## Xusein (Sep 27, 2005)

The erasing of debt isn't going to make the vacancy rates go down though...


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## c6josh (Jul 15, 2009)

I hope Dubai will survive the crisis, I'm really excited to see the projects finish...I agree with @Xusein it is not easy to totally erase the debt but I guest the Prince will not allow Dubai to go down the toilet.


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