An article in the August/September issue of Haute Living gushed about Dubai and its government-funded, debt-financed development arm, Nakheel: “With nearly every international real estate, hospitality, and entertainment name, from Island Global Yachting to Kerzner International and the Trump Organization, on its dream team, Nakheel is sure to succeed in its every project.”
Nakheel, perhaps the most ostentatious of Dubai World’s more than 90 subsidiaries, is the outfit behind the Palm Islands development, where Donald Trump is building a 62-story, rocket-shaped condo and hotel. It’s where Island Global Yachting, run by New Yorker Andrew Farkas, plans to build 20 marinas.
What will become of their investments? Indeed what will become of Dubai, that big mall of an emirate, now that the United Arab Emirates Stock Exchange is down 42 percent from the beginning of the year? Now that Dubai’s debt load is getting heavier by the day, what will become of its Wild West of the global luxury market attitude?
“The rhythm of sales will suffer, clearly,” said Borja Sierra, executive managing director of the American branch of London-based brokerage Savills. “But, I think there is enough wealth to sustain these projects. This is a very big bet for the powerful governments of these regions to convert petrol dollars to bricks and real wealth.”