25 January 2009

* An eye opener- Dubai neck deep!


Dubai still trying to show that every thing is normal which is otherwise, ground reality Dubai has been now sold to Abu Dhabi & neck deep in debt.
 
Wisdom says When you rise too fast & too high the fall will be fatal.
 
Is Dubai's Party Over? The glitzy façade shows some cracks.

In her classic account of World War I, Barbara Tuchman sets the scene for the passing of the prewar era with a vision of epochal pomp, the funeral of Britain 's King Edward VII. Nine monarchs rode in the procession and the pageantry evoked "gasps of admiration," wrote Tuchman. But when it was over, one British peer reflected that "all the old buoys which have marked the channel of our lives seem to have been swept away."

In Dubai last month, a very different kind of pageant was held, but if Tuchman were still around she'd have been taking notes. This triumph was billed as a world-beating blowout, a $20 million star-smacked extravaganza with the likes of Charlize Theron, Lindsay Lohan, Michael Jordan, and Robert De Niro in attendance.
The fireworks display was so enormous it could only truly be appreciated from the heavens (literally—it was visible from space). The occasion was the opening of the $1.5 billion Atlantis resort complex on an enormous artificial archipelago shaped like a palm tree. The point of the party, its promoters explained, was to show the world that Dubai is a land of fantasies come true, an over-the-top destination for good times. But among many of the guests, the mood was funereal. As the fireworks exploded, the global economy was imploding. Many of Dubai's overleveraged fortunes were  crumbling, and no one was sure where to turn. The old buoys seemed to have been swept away.

"It's a tragedy in the making,"said a senior executive with one of the city's biggest real-estate-development companies as he peered into his champagne. "A lot of people are going to get hurt. A lot of dreams are going to be shattered," he said, referring not only to the erstwhile rich and the speculators. Imported workers are already being exported, jobless, back to their homes. Skyscrapers are standing unfinished, baking in the sun. "Have you seen all those ships lined up on the horizon?" he said, gesturing toward the open gulf. "They're stuck out there full of steel and concrete nobody wants anymore."

While it may be an exaggeration to say that as goes Dubai, so goes globalization, it has become hard to imagine one without the other. More than any other place on earth, this city-state in the United Arab Emirates is the creation of worldwide commerce, a specialty-built magnet for the kind of hot money that seeks the quickest, highest profits and then moves on when they disappear. A lot of that cash comes from nearby Arab oil powers, most notably the adjacent emirate of Abu Dhabi, which has 90 percent of the UAE's crude. But many billions more have flowed in from Iran, India, China, Russia, Europe, the United States, and indeed just about every other corner of the world.

For the past decade at least, real-estate speculation has been the national sport.. The price of houses and apartments, many not yet built, rose by 43 percent in the first quarter of this year alone. Mortgage money was easy to get and speculators commonly flipped properties for substantial profits in a matter of weeks, sometimes even days, before the first monthly payments came due. Everybody wanted in on the game. "Employees didn't focus on their work anymore," complains the chairman of a regional transport company. "They all wanted to go buying property for 10 percent down, if that." As of June, Dubai had 42 million square feet of office space under construction, more than any other city in the world, even Shanghai. What was a flat desert 20 years ago  is today an urban canyon.  Such is the frenzy that the Hard Rock Café, built among vacant lots in 1997, is now surrounded by skyscrapers— and plans to tear it down for another high-rise are being debated as if the Hard Rock were a heritage site.

But Dubai wasn't just a receiver of world capital. It was also an important global investor. In 2006, its DP World acquired the management of six major U.S.container ports—until an explosion of xenophobic protest in Congress made the deal politically untenable. Today, among many other holdings, Dubai owns a 43 percent share in NASDAQ OMX and a 20.6 percent share in the London Stock Exchange. Its wholly owned subsidiaries include Travelodge in Britain, Mauser in Germany, and Barney's and Loehmann's in New York. By early 2005 the "liquidity gift," or windfall profit, created by rapidly rising oil prices started to look like it would last, and Dubai's boom really picked up steam. Some of the city's top financial officials started warning privately that a bubble was forming and so sought to keep diversifying their holdings as widely as possible. But as oil prices continued to climb, more and more fresh cash poured into Dubai's freewheeling economy and the public started to feel protected from global shocks. Nobody was ready for the plunge in prices over the past four months, which has taken oil down to less than a third of its price last summer. Dubai turned out to be "insulated but not isolated," says Mary Nicola, an economist with Standard Chartered Bank.

As with so much in the interconnected world economy, the ripple effects of the current crisis keep spreading, exposing some of the more unpleasant facets of the Dubai dream. Layoffs, which have already begun, will have an impact not  just in Dubai but also in the working-class neighborhoods of Manila and Mombasa and  Thiruvananthapuram that sent their workers to the gulf. Thousands are  expected to leave when the holiday season is over, with little fanfare. The guest  workers' invitations can be revoked any time, so few complain—but  bitterness is widespread. Meanwhile, prices for houses and apartments still on the drawing board have dropped almost 50 percent in some areas, mortgage money is  simply frozen, and major projects are stalled or being scaled back. Rumors abound  that Dubai may have to sell a substantial stake in Emirates Airlines, the  national carrier that's vital to keeping it connected to the outside world. And in a
 business culture built on inside dealing, the official denials of such a  sale have had little credibility out on the street.

The sense of uncertainty and fear has grown so much that even in Dubai's  famous gold souk, which was a center of trade long before the word "globalization" was invented, there's now a pall of confusion. "Not only are gold prices  dropping," says Firoz Merchant, the owner of one of the shops. "Everything is uncertain and moving in different directions." As if to underscore the gloomy mood,  last month the Dubai Marina suddenly started filling up with excrement.
Apparently many buildings in the city can only dispose of their wastewater by having  it trucked to a treatment plant. But the drivers got impatient with long lines  and started pumping it into storm drains that led straight to the sea.

In an effort to restore confidence just days after the Atlantis resort  blowout, Dubai announced the creation of an "advisory council" headed by Mohamed Alabbar, the chairman of Emaar Properties, which is building, among many other  projects, the tallest skyscraper in the world in the heart of the city. Emaar's stock  price, it is worth noting, has plummeted more than 80 percent this year,  and the sale price of luxury apartments in the hyper-high-rise has dropped by
 40 percent.

"Here in Dubai we are realists, and we are also optimists," Alabbar told a  forum at the Dubai International Financial Centeron Nov. 24. To reassure his audience and the world he promised transparency, a rare concept in Dubai, and  addressed the question of the emirate's debt, long rumored to be astronomical.
Alabbar said the government and its many affiliated companies had obligations of  $80 billion, but assets of $350 billion. "Let me therefore state categorically: the government can and will meet all its obligations going forward."

Such semi-official figures have never been made public before and their  details have still not been divulged. So neither the liquidity of the assets nor the basis for their valuation is clear, and it's hard for analysts to judge  just how realistic Alabbar's optimism is. "The important thing is not to focus on Dubai's assets and liabilities, it is about moving forward to rectify the  situation," says Mushtaq Khan, an economist at Citigroup who authored a recent report on the Gulf.

If there is good news, it's that Dubai's leaders were quick to take some  corrective measures in the earlier stages of the crisis. In September and October, the Central Bank implemented a $32.7 billion plan to support the  country's financial institutions. Alabbar announced last month that the two main home-mortgage lenders, which had run out of money, would in effect be  nationalized. And he promised that the three largest developers in Dubai, which control about 70 percent of the supply on the real-estate market, would  work together to keep it under control. The crash of the moment is really "a healthy correction," he said.

Perhaps. Certainly many Dubai residents say they'd like a chance to catch  their breath, and there are ample signs the city needs to catch up with itself.
Just 50 years ago, the place was a dusty outpost of a few thousand people on a  forgotten corner of the Arabian Peninsula. Forty years ago, one of its biggest businesses was smuggling gold to India. After British forces withdrew in  the early 1970s from what were called the Trucial States, the seven local sheikhdoms became the United Arab Emirates. Abu Dhabi had the greatest share  of wealth because it had by far the greatest share of oil. But Dubai had entrepreneurial spirit.

In the 1980s, under Sheik Rashid bin Saeed Al Maktoum and then his son  Sheik Mohammed bin Rashid Al Maktoum, Dubai developed its enormous free port—even  as Iran and Iraq fought a war on the horizon. Golf courses that were kept green  with millions of gallons of desalinated water started changing the landscape,  and by the 1990s, Dubai was building landmark resorts like the sail-shaped Burj Al  Arab Hotel. It also started cashing in on new technologies with special Internet  and media "cities" built to make it as important a hub for communications as it  was for shipping and air traffic. In just five years, from 1995 to 2000, Dubai's population grew 25 percent, and now stands at about 1.6 million people. The  vast majority are expatriates coming to work at every level of society, from menial labor to senior management. In 2007, the Emirates as a whole counted  only 864,000 citizens, compared with 3.6 million foreign workers. "While infrastructure development was rapid, the number of expats flocking to the  city overwhelmed it," says Citigroup's Khan.

But even if Dubai needs an enforced breather, it's not likely to get through the downturn unscathed. Abu Dhabi, after many years of quietly helping to fund Dubai's growth and watching Dubai develop a reputation for innovation and excitement, is now looking to take a bigger share of the action. "A formal statement is unlikely," says Khan, "but strategic assistance from Abu Dhabi is likely." And so is increasing control. Abu Dhabi dominates the UAE's federal government and last week the federal constitution was pointedly amended to bar the prime minister ( Dubai's Sheik Mohammed), his deputies and federal ministers from "any professional or commercial job" and to prohibit them from any business transactions with the federal or local governments. How this can be enforced is an open question—to a large extent, Dubai is Mohammed Al Maktoum— but the message was clear enough: Abu Dhabi is now in charge.

Meanwhile, the Emirates are literally taking some time off, first for Muslim holidays and then for Christmas. Few big new initiatives are likely to be announced before the beginning of the year, if then. But the cracks continue to show. Take the new Atlantis resort, for example. It is a joint project between South African developer Sol Kerzner's group and Nakheel, the Dubai development company that built the Palm Jumeirah island and other even more extravagant real-estate follies up and down the coast. Days after the grand opening, Nakheel announced it was laying off 500 people, or roughly 15 percent of its global workforce."The people with Nakheel spend $20 million on fireworks  and don't have money to pay their own people," says a Lebanese businessman with extensive interests in Dubai."It's a disaster.."

Meanwhile, even the rich are feeling the pinch. Last week the owner of a  Mediterranean-style villa on one of the Palm Jumeirah's beachy fronds facing the Atlantis dropped his asking price from $4.9 million to $3.6 million and  then $3.13 million, and offered to throw in his Bentley as well. "Our client has his money stuck in the markets and he desperately needed it to run his  business," says real estate agent Anthony Jerish. "Still, nobody bought it. Maybe we will sell the Bentley separately. I don't know." No, this isn't  the old Dubai at all.


(VS Dubai/NS NewYork)



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Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.