London: Burdened by debt and a devastating real estate crash, Dubai is doing what it does best: doubling down.
Just one month after a close brush with bankruptcy, Dubai celebrated the opening of the world's tallest building on Monday - a rocket-shaped edifice that soars 2,717 feet and has views that reach 60 miles.
The glittering celebration may have been an attempt by Dubai's ruler, Sheik Mohammed bin Rashid al-Maktoum, to shift the focus from Dubai's current economic troubles to a future filled with more promise.
All the same, the tower's success by no means signals a recovery in Dubai's beaten-down real estate market, where prices have collapsed by as much as 50 percent and many developers are having trouble finding occupants for their buildings.
With its mix of nightclubs, mosques, luxury suites and boardrooms, the Burj is an almost perfect representation of Dubai's own complexities and contradictions. It will have the world's first Armani hotel; the world's highest swimming pool, on the 76th floor; the highest observation deck, on the 124th floor; and the highest mosque, on the 158th floor.
But in deciding to change the tower's name from Burj Dubai to Burj Khalifa, in honor of the president of Abu Dhabi, Sheik Khalifa bin Zayed al-Nahyan, Dubai revealed a rare streak of humility consistent with its diminished economic condition.
Once the most proudly autonomous of the United Arab Emirates, Dubai has found that its financial troubles have made it more dependent on Abu Dhabi and more likely to be drawn closer into the federation.
"Dubai not only has the world's tallest building, but has also made what looks like the most expensive naming rights deal in history," said Jim Krane, the author of "City of Gold: Dubai and the Dream of Capitalism." "Renaming the Burj Dubai after Sheik Khalifa of Abu Dhabi - if not an explicit quid pro quo - is a down payment on Dubai's gratitude for its neighbor's $10 billion bailout last month."
The opening festivities had the feel of a national holiday, with fireworks, parachute jumps and shooting streams of water from the world's tallest fountain.
At a cost estimated at $1.5 billion, the Burj took five years to build, is more than 160 floors high and has comfortably surpassed the previous record holder in Taiwan, the Taipei 101.
More than 12,000 people will occupy its 6 million square feet, zooming up and down in 54 elevators that can reach speeds of 40 miles an hour. It was designed by Skidmore, Owings & Merrill in Chicago.
At a time when several of Dubai's newly built office towers stand empty, it is 90 percent sold, according to the building's developer, Emaar Properties.
To be sure, some have questioned the utility of such a towering project. At least three foreign workers died during the construction. And at a time of increasing concerns over global terrorism, such a building could pose an inviting target.
But to Dubai, which from its very beginning has taken pleasure in proving its doubters wrong, the Burj is evidence that if you build it big and brash enough the people will come, from near and far.
With its strong government backing and unquestioned prestige, the Burj was a project that was destined to succeed and its developer, Emaar, had little difficulty in attracting residents - particularly since much of the space was sold several years ago in the middle of Dubai's real estate frenzy.
Other projects, however, have not been so lucky. One is the Omniyat Bayswater, a 24-story office building that stands less than half a mile from the Burj. It opened six months ago and remains more than 50 percent vacant.
Aimed to be the flagship structure of an ambitious development project in an area by the sea called Business Bay, Omniyat Bayswater has been unable to attract tenants as a consequence of the current real estate crisis.
But its struggle speaks to a larger truth behind the Dubai real estate bubble which, despite the excitement over the Burj, could well forestall a meaningful recovery.
Like many office projects developed four or five years ago, the peak years of Dubai's expansion, the Omniyat Bayswater is plagued by splintered ownership. It is estimated to have more than 50 landlords - more than two per floor - with some trying to lease office suites as small as 1,000 square feet.
A spokesman for Omniyat said that the developer has recognized the problem of multiple owners and has taken steps to address it and expects to see whole floors leased by the second quarter of this year.
At a time when selling real estate was like handing out candy to children, the development model of selling to many owners, known as strata title, became a quick and easy way to finance building projects. Speculators from around the world were clamoring for the smallest slice of Dubai property.
But with the crash, the building's ownership structure has made it extremely difficult to sell or lease a floor or two to foreign companies seeking to expand their presence here.
"There has been a difficulty in creating a collective of owners," said Nick Maclean of the real estate firm CB Richard Ellis in Dubai. "The majority of the building is empty."
Few offers have been made for space in buildings under strata title, which is estimated to cover about two-thirds of the new buildings opening this year and 70 percent of those opening in 2011. Without government action, office vacancy rates could rise as high as 40 percent.
As for the effect the Burj will have on the overall market, Maclean said that its opening, while heartening, was unlikely to prompt an immediate turn around in the market.
"It is a unique building and symbolically important but it is not going to stimulate demand," he said.
Story First Published: January 05, 2010 12:07 IST