I can’t be the only person seriously doubting that this flagrant show of prosperity is sustainable:
I have this gut feeling that the completion of the Burj Dubai skyscraper (amazing pictures here) will mark a moment of incredible economic collapse, and it will stand for decades as a 707 metre monument to boom psychology run ridiculously amok.
Just speculating… I wish Dubai nothing but the best, but what’s happening there seems to be an absurd contrast with everything else that’s happening in the world… And the price of oil isn’t giving me much faith right now either.
Updated 22.nov.08: Oh hey, what d’ya know –
Reality however, has finally come to town: the Dubai Financial Market – the general stock index – has fallen from a high of 6,315 earlier this year to just 2,012 yesterday. Emaar’s share price has plummeted 79% in less than a year; according to some estimates, property prices have fallen by as much as 49% in parts of the Dubai market. The overall figure is much lower, in the region of 4%, but this is a place that’s become accustomed to its figures only going in one direction and a lot of people are being caught out by the turnaround. [Guardian, via Archinect]
I’m really trying to restrain myself from making extraordinary ‘doomsday’ predictions. I can’t shake the feeling that we’ve just witnessed something that will be used, if not to explain, then at least to symbolize (for a very, very long time) the decadence of our era — the pulsing-headed stupidity that has tried to build wealth on a foundation of mere expectations. ”Build it and they will come,” and then they came… but to do what, exactly?
Somebody please tell me that the economy in Dubai isn’t mostly composed of the kind of Monopoly money enterprises that are collapsing in the US.
I know that oil isn’t (directly) a major factor of Dubai’s economy. I’ve been doing a little Googling around to get more information (and hopefully some evidence that my suspicions are wrong). Here’s an excerpt from recent article that supposedly argues against the kind of scenario I’m afraid of:
“For several analysts, the Dubai Inc. story is tied in to its real estate sector. They miss the mountain for the hill. True, the real estate and construction sectors are key growth drivers. But let us not forget the big picture. The economy is driven by traditional sectors such as re-exports and trading; tourism and retail; transportation and logistics; manufacturing; the free zones and the business hubs for IT, media, financial services, education and healthcare. These are the sectors that drive real demand.” [Khaleej Times]
Was I wrong? Here I was worried that Dubai’s economy didn’t have a firm footing, and meanwhile it’s built on such rock-solid industries as “re-exports and trading; tourism and retail; transportation and logistics… media, financial services…”
Which is to say, no foundation at all — just a list of the world’s sickest industries, most of which are of an intermediating type, dependent on the prosperity of others to keep the traffic and transactions flowing, with no capacity to self-generate or self-sustain value.
Even if I’m completely off-base, the fact that I have these concerns makes me pretty sure that many other people have them too, and soon enough these fears will run through the media and people will get their money out of Dubai with as much exuberant haste as they’ve been pouring it in.
We’ll have to wait and see.
