Steve Rose on how Dubai’s bubble burst:
It has finally happened: the Dubai bubble has burst. Architecture-spotters like myself have looked on in amazement, or rather incredulity, at the way the tiny emirate has continued to unveil ever grander construction projects — taller skyscrapers, huger hotels, vaster artificial islands — in apparent defiance of the global credit crunch.Now, that crunch has hit home. This week’s Architect’s Journal reports that “architects and developers in Dubai are freezing recruitment and making redundancies as the emirate’s real-estate market begins to crumble.” Large developers in Dubai are laying off staff, including Emaar the company behind the Burj Dubai, the world’s tallest structure, the magazine reports. Other headline-grabbing projects like the Palm Deira, the next artificial island planned off the coast, are on hold indefinitely, and foreign architects and construction specialists out there, such as RMJM and Ramboll Whitbyird, are making staff cuts or freezing recruitment as a result, says the AJ.
According to one British architect I spoke to, who was in Dubai just 10 days ago, the situation is even worse than that. “Projects are being pulled left right and centre,” he said. “Unless they’ve been funded by a sovereign wealth fund, they’re being pulled. A lot of things have to be redesigned more cheaply, to sell at lower prices. Where people have made first down payments on projects, they’re not making the second one. And a lot of what has been completed will be standing empty.”
Not that anyone in Dubai will officially admit any of the above.
Dubai’s “build it and they will come” philosophy had worked spectacularly:
Remember when David Beckham was buying a house on the Palm? How many people have seen him there since? Still, the publicity worked: properties on the Palm changed hands for huge sums before they were even built, peaking at a preposterous £5m. Today those houses are apparently closer to £1.8m, down from £2.7m just two months ago.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.
So now, it’s more a case of “don’t build it, because nobody can afford to come.”