Dubai Starts Another Building Boom

Dubai, the poster child for excessive building is at it again. Despite a gut of millions of square feet of space and empty condos and apartments, they are priming the pump for more.

Today’s Wall Street Journal says the ruler has ordered a new city development to be built, named after himself.  To cost about $10 billion, envisions 100 hotels, the world’s largest shopping mall, parks, art galleries, and exhibition centers.  Soon after he announced plans for a $2.7 billion leisure complex of five (5) theme parks.

They have a vision as only a dictator can execute, and that is to be a world hub of air transportation, shopping and tourism. So they are pushing to host the World Expo (is that the old World’s Fair?) in 2020.  The first time a city in the Middle East would host this event. Naturally that would mean ---- more building !!

Surprisingly, Dubai is experiencing an economic recovery in trade, tourism and transport. It still has $100 billion in debt from past “deficit” spending in the boom that ended – like ours in 2008.  Reminding me that our 2008 mess was world wide and we probably can’t lay the blame on politics, although lose lending (poor regulation of lending?) led to faking the quality of much of the US mortgage debts.  However, we are fly spec on the world economy, aren’t we? 

Dubai was built with unbridled vision such as we haven’t seen in the USA in many years (if ever).  But, in the 2008 bust in Dubai, prices of real estate dropped 60% so vision won’t save poor economic decisions. But now their GDP growth is up to 5.1% from 1.9%. 

Like Singapore, Dubai has a population more like “one State” here, but China is also on a roll with a population about 3 to 5 times ours.  So size isn’t the only factor in finding a way to an economy (as in construction) boom. There are a few hints that construction in the US might be returning, but our needs for new homes (due to population growth) are not what they used to be.