'Dubai won’t be allowed to collapse'

Two weeks before the world took fright at debt-laden Dubai’s growing financial problems, it was
clear the UAE’s flashiest, most populous emirate was depressed. The Gulf state was dotted with vacant or half-empty apartments. Imploring signs ran down the front of some of the smartest, tallest new residential buildings: “To Let. Ring xxxx”.

At least 20% of the available office space was reportedly vacant. Many restaurants were deserted. Shop attendants at the year-old Dubai Mall, a giant temple of commerce in the prestigious new $20 billion downtown Burj Dubai project, agreed in whispers that “there are fewer shoppers than 2008, much fewer”.

Whispers because the local press and public are forced to play down the crisis.

A publicist with one of Dubai’s largest companies added sotto voce that malls across the emirate were “markedly more empty”. The Dubai Mall was a case in point. People with big shopping bags were thin across its 1,000 shops.

Not so in one of this mall’s most famous and rivetting features, the Aquarium & Underwater Zoo. Visitors continue to throng this at 50 dirhams per head, gawping at its “more than 33,000 aquatic creatures” through “the world’s largest aquarium window”.

To an economist, the aquarium’s proud boast of high visitor numbers might say more about the state of Dubai than Dubai’s state. Aquarium staffers say the numbers are proof that “people still want to have fun, particularly for 50 dirhams, though they may not feel like big-time shopping.”

So is Dubai going bust or simply changing its USP? Far from bust, insist long-time immigrant residents. Rohit Gupta, who owns and runs a shipping company, says his new neighbours — “Muslims from the UK” — may symbolize the basic reason Dubai will not be allowed to collapse under a mountain of debt some say is more than 100% of its GDP. “Dubai offers Muslims a place to do business, be themselves and relative freedom. This is not about to become another Iceland.”

Those who cannily bought homes in the 818-metre Burj, the world’s tallest tower, say Dubai’s premium real estate remains “blue-chip and gilt-edged”. Emaar, in which the Dubai government has a 32% stake, is the emirate’s largest developer, is poised to float its stocks in India and claims it has a healthy balance sheet. That’s unlike Nakheel, which is building the Palm resorts on land reclaimed from sea and has set off the financial panic.

Emaar claims it is still on target to launch the Burj in January and there are no money worries to sidetrack this confidence-building boost to Dubai’s image worldwide.

An Indian who bought an apartment in the Burj at 2200 dirhams per square foot soon after it was launched in 2004 says “I can still get more than 3,500 dirhams per square foot if I want to sell. But I don’t and I won’t.”

Gupta, who has worked out of Dubai for eight years, says this was “my second-best year, business-wise. It’s only the gamblers who have suffered”.

Rightly so, perhaps, for a Muslim state that frowns on games of chance.