Dubai
reality kicks in!
“There are still some nice ideas in the offing but the
challenge will be to get any kind of return on investment as the development budgets are huge. “However, they need to do something to get their
reputation back. A major issue is the limited transparency and lack of information in the region. This relates to the financial situation, status of development plans, population numbers and a range of other information and this creates a lack of confidence in the market. Everything in the regional press is positive and bad news isn’t reported or is glossed over. The bank default is a good example. There was no warning about what was coming and now people don’t trust what is coming out of Dubai. This has been reflected in Moody’s Investors Services, the credit ratings agency, downgrading all six government-related issuers. And it has a significant negative impact on potential inward investment. The government’s refusal to bail out what are effectively government sponsored companies is also an issue that has further harmed the global view of Dubai. “There has been a decline in population in Dubai due to
the recession. Residency is tied to employment so people that have been made redundant have had to leave the UAE. As a result the supply and demand balance for property has shifted from undersupply a few years ago to oversupply now. The real estate market has fallen through the floor and it will need significant investment to stabilise it. So what effect is this all having on developments in
neighbouring countries? “A lot of the big development projects in other Middle
Eastern countries were being driven by UAE companies so yes, there are some knock on effects,” Camp points out, “and not just in leisure but in a range of different sectors. But it’s not necessarily a bad thing that development has
slowed as some companies were looking to create mini Dubai’s across the region. “These plans still exist, as do the dreams for Dubai. They
are still keen to go ahead with projects but they just haven’t got the money at the moment.”
Phil Taylor, Managing Director, Team Leisure LLC, Dubai
“2009 was a good year for indoor leisure attractions in Dubai, with the completion and opening of Sega Republic, Kidzania and the Burj Khalifa Observation Deck, all at Dubai Mall, and Stargate in Za’abeel Park. Spring 2010 will see the opening of Mirdif City Centre shopping mall and Playnation, a 20,000 sq m cluster of leisure offers that includes two sky diving tunnels, an interactive football experience, a children’s edutainment centre and other indoor family attractions. These additions significantly increase the number of indoor attractions on offer in Dubai and complement existing attractions such as Ski Dubai and the Dubai Aquarium. “By contrast, it is clear that progress on Dubailand, with
its proposed portfolio of world-class theme parks and attractions, has been materially impacted by the global economic situation. Work on all leisure projects is on hold or is progressing only very slowly. Completing the Formula One Theme Park, which came to a standstill last year when the developer ran out of funds, and starting construction of the Universal Studios Theme Park are clearly projects that Dubailand will be prioritising. Other Dubailand leisure projects, however, are really only likely to progress as funding and economic recovery permit. “The overall goal for Dubai has to be to continue to
complete projects that add critical mass to the available leisure offer. This will drive increased tourism and further advance Dubai’s goal of becoming the “Florida of the Middle East.” The hotel and shopping offers now available in Dubai are second to none and leisure attractions are a key tool to drive occupancy and retail spending respectively.” So has the economic crisis in Dubai killed off many
projects permanently? “The phrase ‘postponed’ rather than cancelled tends to
be used but undoubtedly a number of projects that have yet to commence on site will be cancelled or modified if they are no longer considered viable in the present economic climate. The ambition to make Dubai a major leisure destination, however, appears to be undiminished and in the majority of cases it is only the timing of the project that is being reviewed.
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