It seems Dubai, in the United Arab Emirates, may have the dubious distinction of the biggest construction boom to bust. Just a year ago, Dubai was growing and building at a rate that was probably beyond any in history (I’m guessing on that). The world’s tallest building, and not just by a little, was going up along with hundreds of other buildings and a few man-made islands.
The global financial crisis hit Dubai hard. Most of the construction stopped and the property values are half what they were at this time last year. The Economist has an article The Perils of Autocracy that provides some great insights into the status. They state that the outstanding debt level isn’t clear. The ruler of Dubai, pictured below, doesn’t have to be forthcoming with the numbers because, well, he’s the Sheikh.
Guesses on the debt run from $80 billion to $120 billion. Lots of construction companies haven’t been paid.
The completion date on the Burj Dubai (world’s tallest building) remains fluid, though a news release today claimed a December 2009 opening. Most construction activity in Dubai has ceased, though, and no one knows what the next steps will be. The Economist article quotes a Western banker who blames the Dubai leaders for taking far too long to recognize the coming crisis. I love his quote, “They were splashing about in the water when they should have been swimming across the channel.”