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Dubai: Wonder of the World in Crisis

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The turbo pace of urban design in Dubai has slackened since autumn 2008. Real estate business is grinding to a halt. Foreign construction workers and experts are losing their jobs. The flaws of the social and economic Über-Orient are being exposed through the crisis.

Authors 
Harald Bodenschatz

Along the main street of the new Dubai, an elevated track of the Metro is being constructed. In the background, the tallest building in the world reaches for the most often hazy skies: Burj Dubai.

After years of continuing reports from Dubai on architectural records being broken and new wonders of the world being built, the Western news media now rushes to announce the failure of a hypertrophic urban vision. The New York Times sees Dubai’s economy “in free fall” (02.12.2009), the Guardian speaks of a crisis of the “shrine to unbridled capitalism” (02.13.2009) and the Independent looks behind “the dark side of Dubai” (04.02.2009). The German-speaking press also was quick to proclaim Dubai’s imminent demise, for example, the Berliner Tagesspiegel, on the occasion of an exhibition of the Neue Gesellschaft für Bildende Künste [New Society for Fine Arts] on social exclusion, called Dubai an “image without content” (03.22.2009), the Frankfurter Allgemeine Zeitung proclaimed a “flight from paradise” (05.02.2009), and the Stern commented, “Dubai tightens its belt” (05.13.2009). Haven’t we always suspected this would happen? The model of Dubai is yesterday’s news, the bubble Dubai has burst. The moment of the crash can be determined precisely: September 2008. After this moment the constant increase in real estate prices collapsed. Whoever reads sources about Dubai from before and after September 2008 feels he has to rub his eyes in disbelief: Are we really talking about the same city? The bright language about a permanently accelerating record and project spiral abruptly fell silent. Is the mocking discourse of failure now, however, not as premature as the blind exultation of the fairy tale city before?

Real Estate Crisis

Unlike Abu Dhabi, Dubai no longer has an oil-based economy. Free trade zones, financial entities, tourism and above all the real estate sector were the matrix of yesteryear’s turbo-paced urban design – the oil trade contributed only four percent of the gross domestic product. The real estate business was the first to be seized by the crisis. From September 2008 to April 2009, so it is said, real estate prices dropped an average of 30 percent. The bottom has surely not been reached. That is not per se dramatic, if the rocket-like increase of prices before is taken into consideration. The problem lies elsewhere: Who were the owners of the new apartments in Dubai in September 2008? The real estate rush was as unsound there as it was elsewhere: above all apartments were sold multiple times before they were even built; they were bought for purposes of speculation, not for habitation. The days of that kind of wheeling and dealing are over now. Still, no one knows exactly who the owners of these now difficult to re-sell properties were at that moment in September 2008 when the market crashed, how large a percent were speculators and how large a percent were end users. This is decisive if Dubai is not seen as a fictitious image to be speculated upon, but as an actually existing city. The now idle erection cranes are not Dubai’s true problem, but rather the question of who will even make use of the real estate in the long term.

Without a doubt, marketing Dubai as a “Wonder of the World,” a “luxury destination,” a “city of superlatives,” and “one of the fastest growing cities on earth” was an immense achievement. Founded in 1997, the “Department of Tourism and Commerce Marketing,” a governmental organization headed by the ruler of Dubai, is responsible for city marketing. Unknown even just a few years ago, Dubai was successfully branded into minds all over the world – with images provided by this gigantic marketing machine: Burj al Arab, Jumeirah Palm, Burj Dubai, The World, Hotel Atlantis. Spectacular events like the Dubai World Cup, Dubai Open and the Shopping Festival augmented the wow-effect. The Western architectural media also provided its contribution to this propaganda. Behind the intoxicating wave of images that through color and form skillfully served the myth of the orient, the real city disappeared. Certainly new and thoroughly artificial, Dubai was, however, far more complex than the images suggested. This extremely successful marketing represents more than just the city itself in crisis: there are no formulas for marketing Dubai beyond the bewitching images. The images have grown pale. In Dubai, complaints can be heard about malicious articles in the foreign press and there is evidence of a kind of defiance that stretches from denial of the crisis to the assertion that it was only imported from the outside world and to attempts at faith-healing that see the crisis as a necessary purge. Transparency and openness are neither popular nor promoted, which helps to keep the rumor mill running.

The crisis qualified and, in respect to marketing, devalued the superlatives. But even before the crisis, the ebullient and effervescent marketing had proved somewhat counterproductive: hardly had one design superlative been announced when another had already surpassed it. The Jumeirah Palm was followed by plans for two even larger Palms, the tallest building in the world by an even taller building, the fanciest hotel in the world by an even more spectacular one. Reminiscent of the myth of Saturn, the ideology of superlativism began to devour his own children. Even this was not a problem for a fictitious Dubai – it could stage itself well within these fantastic loop-de-loops – but it was a problem for the actually existing Dubai. Where should the billionaire Russian businessman stay when in Dubai – at the Burj al Arab, which after just ten years already appears antiquated, or at the Atlantis, the new star, or would Madinat Jumeirah, the sumptuous resort city with “Arabian panache,” be the better choice, which – in contrast to the other superlatives – at least offers a decent sandy beach?

Social Crisis

The political system of Dubai is special: since 1833, a single family has governed the city – since independence in 1971 with the aim of tuning the city to a world class level in as many sectors as possible. The current leader of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, simply calls himself “Ruler.” It could perhaps be possible to call the regionally widespread system a form of postindustrial oriental absolutism with extreme modernization ambitions. Development agencies such as Nakheel and Emaar function as the key institution of urban design. They are personally tied to the ruling class but are formally organized as private enterprises that compete with each other. These development agencies are apparently not subject to any agency with control over the city as a whole, a fact that promotes the tendency towards a type of archipelago urban design. In contrast, it is definitely wise that the two most ecologically sensitive sectors, water and energy are under the control of a single authority, the Dubai Electric and Water Authority (DEWA).

Foreign workers waiting for transportation.While the political system as a whole appears stabile, the social bases are beginning to slide. Dubai is and was a city that lived with and from immigrants. Of the 1.6 million inhabitants in Dubai, 85 to 91 percent are foreigners, so-called “expatriates.” De facto, this system is a three-caste society on an ejector seat. The – very few – indigenous inhabitants, the Emiratis, are well cared for and privileged. The foreigners are divided into “experts” that have essential know-how for Dubai and unskilled workers from India, Pakistan, Sri Lanka, Bangladesh, Indonesia and the Philippines who were at least as indispensable to Dubai during the construction boom. In addition, there is an army of domestic laborers, largely women from the Philippines and Indonesia. Because of the real estate crisis, many construction workers have already had to leave Dubai. And experts have also had to leave. Dubai is not a land of immigration and even less a melting pot: any foreigners who lose their job have one month to find a new one. If they don’t succeed they have to leave the city. Unemployment simultaneously means emigration, exodus, reduced consumption and less demand for residential properties. This arrangement worked more or less during the boom times, but is now proving disastrous. The automatic kick-out-the-door for the creative class will likely have more lasting negative effects for Dubai than the crisis itself.

Urban Design Problems

What completely disappeared behind the fictitious images of the city marketing agency was the real Dubai. In opposition to the glossy brochures, the contradictions of the city are reflected there and have been intensified through the crisis. Dubai is – from a historical and urban design perspective – a doubled city: the old Dubai around the creek, an estuary approximately 14 kilometers long, and the new Dubai along the coast in the direction of Abu Dhabi. Both cities are very different, both in terms of urban design and social structure, and have very little to do with each other. They are also impacted by the crisis in different ways.

Dubai is not only a city of tomorrow, but also has an old town with diverse districts: On the south side of the creek, Bur Dubai with Shindagha and Bastakiya, and Deira on the north side of the creek, the existence of which allowed Dubai to establish itself as a trading center in the early nineteenth century in the first place. The old Dubai was always a colorful mixture of peoples, with a high proportion of Indians and Persians. Today, the old town is still an extremely urbane, pedestrian- oriented urban space, organized through narrow, uneven alleyways that were retrofitted in the 1960s through a few street openings at regular intervals. The newly designed Souks, inevitably mentioned in every travel guide, are also located there. The modernization of the creek itself into a canal had already taken place in the 1960s and the land that was reclaimed as a result offered new space for developments. In the 1980s, old stone houses were still being demolished. Today they are, not in the least through the commitment of Prince Charles, being reconstructed using historical methods and historical materials to provide a touristic old town scenery, for example with a camel and a horse museum. Along the creek on the side of Deira following the old town segment, the first high rises of the new Dubai were erected. On the whole the old town – above all measured in terms of investment in new Dubai – has been somewhat neglected. Even in times of crisis, however, the old “organic” Dubai remains a real city. The riverbank zone of the creek on the side of Deira also serves a very special and flourishing regional economy that is serviced by picturesque boats, the Dhows.Burj Dubai, the superlative skyscraper, rises from the new city district with the somewhat misleading designation of “Downtown.” In the background, the Arabian Gulf can be seen; in the foreground, an algae-ridden water tank for the world’s highest fountains.

 The new Dubai along the coast has abandoned the old town. It forms a kind of linear city that is accessible above all through a mega-expressway, the Sheikh Zayed Road, which is continually being widened. Marking the end is the “world’s largest non-natural harbor,” the Jebel Ali Port, which also functions as the driving force of the linear city. A further development mark was set only in the 1990s: The spectacular Hotel Burj al Arab that was soon supplemented by the Jumeirah Beach Hotel and the resort city Madinat Jumeirah. This core area of urban tourism was then expanded through the Jumeirah Palm (since 2001) with its new Grand Hotel Atlantis (opened 2008). Burj al Arab and the Jumeirah Palms mark the approximate center of the linear city between the Dubai Creek and the Jebel Ali Port and they represent the beginning of upscale mass tourism and help raise the average local ground value of this zone. With the announcement of two more Palms, the island worlds of the World, the Universe and the Waterfront, areas with coastal and waterfront access are to be enlarged from their original 67 km to 1,500 km. The new projects, so it is said, will provide residences for almost two million people. A prerequisite of marketing them is the possibility for foreigners to purchase residential property since 2002, when special zones were created for this purpose. This new provision was the basis for the real estate market boom, which no longer applied only to grand hotels, but now also to residential areas with different forms and densities. Examples of these are the Emirates Hill, a suburban gated community with high standards, and the high-rise agglomeration Dubai Marina that winds around an artificial arm of water.Dubai also has an old town center. On the left, the historic, urban and colorful district of Deira can be recognized; in front is Dubai Creek with its traditional boats. Next on the right, also on Dubai Creek, lies the old town district Shindagha that has recently been revived as a museum quarter – through reconstructing buildings that had been knocked down at the end of the twentieth century. The two images on the right show the old town district of Bastakiya, that was – at least to a large extent – saved from demolition at the end of the twentieth century – not least of all through the commitment of Prince Charles. Today it is an old town museum and tourist market.

Up to now, the new Dubai is exclusively a car-oriented, pedestrian-unfriendly city. Its linear city form has the consequence of daily traffic jams. Isolated districts that are connected through other expressways are positioned on the left and the right of the Sheikh Zayed Road. Here are not only tourist zones, residential areas for the middle and upper classes in the form of suburbs and apartment high-rises, marinas, golf courses, dozens of lavish shopping malls, the financial center and the media center, etc., but also the world’s tallest building, a thoroughly elegant tower, whose opening has been delayed from September 2009 to the end of 2009. In front of this tower a large area of water has been constructed to provide space for the highest fountains in the world, but which initially suffered from an algae problem. Around the tower an entirely new city district will be constructed. In this area there is also a new development area with the strange name “Old Town”, whose buildings and public spaces are designed in a traditional manner. Such a name already signifies a devaluing of Dubai’s real old town.

In the last few years the linear city has been expanding and encroaching – with the assistance of a highway that runs parallel to the Sheikh Zayed Road, the up to 16-lane Emirates Road – ever further into the desert. There, in the interior country, rise the outposts of planned, but now deferred megaprojects, for example the first fragments of Dubailand, the “biggest” amusement park in the world. Further on the outskirts of the linear city, a massive, but still very sandy expanse extends in the direction of the Emirate, Abu Dhabi. Although hardly acknowledged by tourists and residents alike, it nonetheless represents the most important economic factor: the free trade zone JAFZA with the Jebel Ali Port, which at some point in time will also include the new airport, the Dubai World Central International Airport – naturally the world’s largest. Free trade provided the stimulus for further economically important developments like Dubai Internet City and Media City in the year 2000.

To a large degree, new Dubai appears very artificial. Before the crisis it resembled a gigantic, permanently expanding hotel, a resort in the form of a city claiming a particular design- quality, whose guests were temporarily seduced by the beguiling images of fictitious Dubai. In this mega-resort, in contrast to the real old town, the signs of the crisis are clearly visible: the countless erection cranes often at a standstill, the radically reduced number of unskilled construction workers, even the traffic jams on Sheikh Zayed Road have abated. The first constructed Palm, the Jumeirah Palm, a symbol of Dubai’s dynamism – turns out to be far less attractive than the worldwide reproduced aerial photo of this new island terrain. Along the “trunk” of the Palm, high-rise residential buildings are positioned in unbelievable, oppressive concentration on opposite sides of a wide expressway. From a pedestrian’s perspective, the view of these Palms is rather boring, and the problem of water exchange does not appear to have been fully alleviated. In addition, real estate prices have dropped 50 percent since September 2008. If and when the problems concerning traffic and waste disposal can be solved, once the island will be fully occupied, is not foreseeable. What is only now slowly emerging are the long-term, and still difficult to calculate, operating costs, in particular for energy, water and sewage that residents will have to cover. This is not only the case for the Jumeirah Palm, however it is particularly true there. Up until now, the question of a “Service Charge” for owners and residents has not been regulated across-the-board and therefore is still applied erratically.

Every project in the new city appears introverted, coiled around expressways, lacking a unified vision of urban design. City marketing has replicated this problem: single island sites are anchored into peoples’ minds without any internal connections to each other. For example, the important question for the identity of a real city, asking where the city center might be, cannot be easily answered: the city hall rises in Deira, clusters of high-rises can be found dispersed around the city, the tallest building marks a so-called “downtown,” a new, 200 hectare district, not, however, the center of the city. The Central Business District, the economic heart of Dubai, is located at the northern end of the central expressway, in between the meanwhile totally unimposing, ancient (meaning it was opened in 1979) World Trade Centre, and the Financial Center, launched in 2002. The new Dubai as mega-resort in the form of isolated subareas is, in the face of the crisis and its likely consequences, an unsustainable perspective.

First Responses to the Crisis

Collapsing stock markets, declining real estate prices, idle erection cranes, unemployment, abandoned cars, crippled enterprises, hotels and restaurants with less business – the news coming out of Dubai is not good. No one today can reliably predict what is still to come. Similar to the situation in other countries, those projects in less attractive locations, or those that have a lesser urban design quality or have only just been started will certainly face the biggest difficulties.

Many projects have already been delayed – both in terms of construction starts and completed projects. This is true for the huge new airport, the mega-Mall of Arabia and the Deira and Jebel Ali Palms. According to the most recent estimations, 20 percent of apartments planned for 2009 and 40 percent of those planned for 2010 will not be constructed. According to other estimations, already 50 percent of projects in planning stages have been abandoned or put off indefinitely. Nakheel alone has put projects to the tune of “hundred of billions” on ice, including Nakheel Harbor and Nahkeel Tower, the new highest tower in the world, and has been forced to lay off 500 employees. In the place of luxury, “affordability” is becoming the new buzzword. The predictions of 15 million tourists in 2010 (in comparison to approximately 7 million in 2007) and 5 million residents in 2020 (in contrast to 1.6 million today), as well as the increase of urban area from today’s 500 square kilometers to 2,200 square kilometers in 2020 sound rather cocky today. The number of inhabitants in Dubai, according to estimates from April 2009, will shrink by 10 percent over the next two years. On the ground, this points to an almost invisible problem: those most impacted by the crisis are the masses of unskilled migrant workers. The fact that prices for apartments are declining and are therefore more affordable is hardly a consolation.

The state has provided a partial response to these developments: it has increased its expenditures by 42 percent and, for the first time ever, it submitted a deficit spending budget proposal. These expenditures are above all earmarked for transportation infrastructure, but also for social services, security and economic stimulus. The budget is, however – in contrast for example to Germany – not very transparent in its details. Furthermore, the “Strategic Plan 2015,” submitted only in 2007, has to be revised. In addition, initial, hesitant steps in the direction of more control over the neo-liberal economic model are becoming apparent. For example, the real estate market now is subject to better regulation. Already on July 31, 2007, the Real Estate Regulatory Agency (RERA) was established. On their initiative, for the first time, both agents and developers are now registered and controlled, trading not yet constructed properties was made more difficult and the relationship between owners and renters was regulated. In addition, a property owners’ law is now being discussed that would also regulate the service charge. If a property owner failed to pay the charge for more than three consecutive months, the property owners association would be able to sue for expropriation in a court of law.

A Future Beyond the Crisis?

Despite the manifold difficulties, Dubai is not so poorly positioned to emerge from the crisis with renewed strength. In the Middle East – this globally so vital and strategic area – no other alternative trans-shipment center and no other financial center can be identified. According to Rainer Hermann in his article “Halfway to Everywhere:” “Without its central location, Dubai would be nothing” [“Auf halbem Weg nach überall” FAZ 05.16.2009]. And Dubai did not only invest in “wow” architecture, but also in infrastructure – in free trade zones, harbors, airports, streets and metropolitan transportation lines. Even during times of crisis, in the bustling logistic centers of the free trade zone, Dubai’s centrality as a global trans-shipment enter between Asia and Europe continues to be obvious, as a “gateway between East and West,” but also as the “Gateway to the Middle East.” Even in the old town, more investments are being made, not lastly in the infrastructure of the creek. Still, on a whole, the future of Dubai will depend on how successfully it is able to implement a fundamental correction of course during and in response to the crisis.

In terms of urban design, a stronger emphasis on the old town, a better integration between the old town and the new city and a renunciation of the island strategy appears desirable. Development giants such as Nakheel and Emaar would need to take on a subordinate role in a comprehensive vision for Dubai. A stronger consciousness of local cultural traditions without compromising the openness to influences from the outside is already becoming visible. This also means the strengthening of the regional economy on the creek and not its elimination in favor of a museum-like waterscape. In the long run, the internal competition between the individual Emirates is not constructive – a stronger coordination is needed, particularly in terms of the development of a mega linear city from Abu Dhabi to Ras Al Kaimah along the Gulf of Arabia. Such a coordinated planning will be facilitated through Abu Dhabi’s increasing importance, which has emerged since the onset of the crisis within the United Arab Emirates.

Phasing Out the Wasting of Resources

A long-term weakness of Dubai is its intense dependency on water and energy and the attendant extreme environment stress. Beyond symbolic ecological actions, a serious austerity policy must be introduced that would limit private motorized traffic and reduce water and electricity usage. New Dubai’s pervasive air conditioning systems would only need to be turned down a few degrees in order to achieve the first perceptible energy savings. Because, however, Emiratis do not pay commensurate fees for electricity and water, this decisive social group lacks a monetary incentive to reduce their use of these essential resources. In terms of limiting private motorized traffic, a first step at least has been taken with the construction of a new, according to the plans, 70 km long metropolitan transportation network, which will supplement the only existing transportation network, the network of roads for motorized traffic. The metro with its three-class-system, so it is hoped, will serve in the future 1.2 million passengers daily. In 2006, the first air-conditioned bus stops were installed, by the end of 2008, 350 such air-conditioned bus stops had been constructed. Simultaneously, the system-wide number of busses was doubled. The goal is to increase the percentage of public transportation to 30 percent by the year 2020. In order to achieve this, alongside the registration fees for cars and parking fees, road-use fees that were introduced in 2007, are to be raised significantly. The energy efficiency of buildings must also be drastically increased. In the meantime, a few LEED certified buildings have been erected and new “green” requirements for residential and business premises were mandated in January 2008. In 2006, the Emirates Green Building Council (EGBC) was established. In Dubai, however, an orientation towards individual buildings will not suffice. Therefore, the speedy introduction of LEED-ND, a certification system for urban design projects, would make the most sense.

Concept for the society after tomorrow

The biggest weakness of “Wow-Dubai,” however, is and will remain the missing concept of a new society for the future. Dubai is proud of its gated communities. This pride, however, is misplaced: security is not a problem – the entry barriers only provide evidence of insular urban design and social isolation of the real city. A glaring symbol of this development is the presently stagnant megaproject the World – a conglomeration of islands that would only be accessible via boat or helicopter. Further island-projects are being planned. But who in the long term will live in all the new settlements and countless high-rise apartment buildings? In April, in order to “stimulate the economy,” the possibility for property owners and their families to acquire a renewable visa valid for up to six months was made easier. This, however, only applies to apartments, not landed property. The apartment must also possess a certain value and it is only valid for owner-occupiers meeting a minimum income requirement. It is further intended to increase the legal residency status after the loss of employment from one to six months. Still, this is no grand socio-political sensation. And for the political system a perspective for the future is not foreseeable. In March 2009, a new code of conduct, the “Dubai code of conduct” was issued, which heads in a problematic direction. It demands – and this is an understandable reaction in the face of the perceived “foreign infiltration” and the insecurity in times of crisis – respect for local traditions, however, it also criminalizes “spreading false news, statements or rumors and malicious propaganda that disturb public security and harm public interest.”

Waiting for better times ... The advance of the fairy-tale city in the desert has been slowed down for now.

Dubai – City of Dreams?

Dubai is considered the most liberal place in the Middle East. Its rulers see the city as a beacon of the Islamic-Arabic world, which, grounded in its own traditions, is not only open to the global economy, but also to global culture. Such an openness, however, and not lastly as a response to the crisis, needs a forward-looking social project, one that is predictable, socially inclusive, transparent and politically participatory. How will tourists, seasonal laborers and speculators become city-citizens? Dubai was a fictive boom-world evoked through seductive imagery and now it is a mega-resort temporarily in crisis. Tomorrow could bring an open, actually existing, ecologically sustainable city. Possibly an oriental dream?

Photos: Harald Bodenschatz
Translation: Sasha Disko
 
The article has been first published in Bauwelt 23.09, 12.06.2009
The full article can be downloaded as PDF in the original layout from the Bauwelt.

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The author thanks his acquaintances and friends in Dubai for information, ideas and critique.