The Costa del Chaos: Dubai’s growing pains

I foresee a glitch. Impressive as Dubai’s growth is, there may be a moment when it is time to rein it in. The kind of meteoric growth we have witnessed in recent years is impressive, and rightly places Dubai in the global limelight.

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By  Stephen Corley Published  June 11, 2006

|~||~||~|I foresee a glitch. Impressive as Dubai’s growth is, there may be a moment when it is time to rein it in. The kind of meteoric growth we have witnessed in recent years is impressive, and rightly places Dubai in the global limelight. Clearly punching above its own weight, for an emerging nation to appear so dramatically on the world stage in so short a time should guarantee its position as a case study for generations of MBA students to come. From rags to riches, a modern Xanadu. I applaud the gains made and the status that both the city and region have achieved, but it is time to question whether the cost of achieving this may be a little too much to bear. The cracks are appearing. Some are trivial in isolation but when considered in unison a worrying theme is developing which the international press will find hard to resist. At a glance, all is rosy. Dubai’s ranking in the recent IMD survey on competitiveness is excellent. Competitive environments are important because not only do they help enterprises create added value, they attract investments, skills and talents, as well as producing revenues for the government. And Dubai today has its strengths. Zero unemployment, a flexible labour force, a tax-free environment for investors and workers. These are economic fundamentals that can be built on. Unfortunately we are literally building on everything, and I question the planning that has allowed so many aspects of the city’s operation to descend into near chaos, when the vision of decades ago should have prevented the pains that so many are suffering from now. Racing for a potentially short lived position as record holder for the world’s tallest building seems routed in adolescent cravings, as opposed to responding to the needs of the community. Those needs are going to involve adequate housing, ample and efficiently produced power and water supplies, integrated transport planning, healthcare and education. These are the standard bearers for the future and the markers by which Dubai and the Emirates will be judged. It’s unlikely future commentators will find much to be amazed at by duplicate Eiffel Towers and Pyramids. Unfortunately the passion for development at any cost, with its attendant delays, environmental issues and social dislocation may provoke a backlash that even the mighty PR machine will not be able to match. The standard bearer for development, Nakheel, presumably believes if you shout loudly enough about something for long enough, then myth becomes reality. The fact remains that for a world class property group (its words not mine) to find itself in a position where it has yet to deliver on any of its projects is something of an anomaly; a fine lesson in pubic relations but a poor example of corporate governance and business planning. The understandable barrage of complaints surrounding the poor quality of developments from Damac Properties and the appalling delivery delays is reaching a crescendo. The international media is beginning to resemble a group of baying hounds. Throw in the odd scandal such as the Lighthouse Tower and I foresee a backlash. The local economic framework is, though, it seems, strangely still attractive to increasing numbers of multinational groups and their workforces. A survey on employees threw up some concerns. Over 60% of respondents said they would leave the region if offered the same deal back home. That they can still achieve higher incomes here augurs well. But there are certainly signs that some companies are cutting back and my own experiences reveal many groups who are unable to attract staff because of the attendant pressures and strains of living in the city. As pressures and prices rise, people move out. This is not without its casualties. In London, for example, there are significant problems, as the lack of affordable housing creates problems with council services. At least in an established metropolis, there is flexibility because the infrastructure can deal with it. It’s not possible here due to the lack of strategic foresight. The railway line that was discussed 20 years ago is still on the drawing board. I have serious doubts regarding the delivery schedule of the Metro project, given that a relatively straightforward road project through Jumeriah has turned into an unmitigated disaster. That leaves the garroting mechanism of every emerging market economy that failed to learn from its predecessors, the car. The Xanadu analogy is apt but worrying; the founder did after all fall prey to greed and died of excess. Stephen Corley is a business consultant with experience in fund and asset management. He can be contacted at||**||

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