These days are witnessing a massive market shakes due to the Dubai Government announcement to restructure its main conglomerate Dubai World, which owns 70% of Dubai $ 80 billion debt (some estimates put it at $90-120 billion..). Such action had recalled chaotic times of Lehman Brothers and Universal Credit Crunch; which threaten the fragile results of collective efforts to bring stability and sustainability to world financial order.. Critically to agree on a basic approach that true civilization or economic breakthrough will not be achieved through massive real estate developments, whatsoever. Real Estate as an economic cycle is closed and not sustainable, it is supportive to industrial or productive sectors, it serves and generates temporary payback not sustainable revenues.. It cannot be a horse, a wagon, a wheel or a coachman.. but a necessary Bonnet..!! Placing the role of Real Estate in Dubai economic model was the gates of hell, that yet to be closed..!!
I’m not a financial expert, nor a well-versed in investments..Yet, my core expertise in Technical Development is very close to these areas, which had forced me to look into the tie-in linkage between what I’m doing, and what those numerical-wizards used to do.. When I go through the archives and records of my chronicles on Dubai, I’m personally amazed.. Something in early 2000, told me that I should keep records; and I did.. At that time, I was working on my PhD thesis, but my archive went widely behind my research platform.. Not the thesis was completed, nor the thirst for knowledge faded out.. In 2002, I felt the happenings were too much and too many; and inevitably have to expand my work; against all roles of academic research.. Then, the degree lost its value, as mount of knowledge has more temptations.. I do recall my clam supervisor, Dr Soumyen Bandyophaya; of Liverpool citing: No one had the privilege to witness a community transforming from tribes into a nation; from nomad into a metropolis; yet you had that unique chance..!!
Dubai-2000 was a magnificent story, that surprisingly shocked the world, and changed the perspectives of how to do business.. Everybody was taken by the amazing reporting on how to create millions by simple change of your mind set.. The media had appreciated the same, with massive campaigns meant to deep-rooting the success story, and accordingly, fund-raising more investments to flow in.. Senior Managers were extremely “high” in their victorious announcements, enabling them to say anything, whatsoever.. No wonder that the cycle of monetary was great enough to confuse bankers, rating agencies, decision makers and also rotating back to finance managers themselves..!! In this massive colorful black hole, spinning around a great real estate bubble, retail, services, aviation, luxuries, etc., were spiraling up in greater speed that caught all by surprise and confused the systematic patterns of valuation and monitoring..!!
Dubai success story had been launched by Engineers, who were both realistic on what to do, and also eager to mark the history with technical achievements.. Therefore and critical to note, that none of the projects carried out during 1996-2003 had failed..!!
In 2004, Finance managers wanted to get their name in bold on the newspapers, therefore, they managed to take the lead, turning all blue prints into spreadsheets, with maze of numbers. Associated by Lawyers, who advocated the need to run due diligence and compliance exercises to assure setting liabilities and obligations. 2004-onwards problems showed that all spreadsheets and legal documents were faulty and wrongly-tailored made to deliver a twisted massage that has no roots, yet allowed for massive (but truly temporary) profits to fire-work..!!
Now, you may understand, why as an Engineer, I have little faith in professionals working on Finance, Investment, Law, and Media..!! This four fields had created the chaos in Dubai Model, which had symbolized the hope for economic reforms throughout the Middle East and third world; confronting radicalism and futuristic threats.. I do acknowledge some fetal and mistaken issues that created the hidden roots of chaos in Dubai-2009, therefore, I share my views for possible benefit or record.. Many of these symptoms were related to Dubai itself, making its model not replicable in any other country. Qatar was the first to understand and withdrew all high hopes to compete with Dubai in 2005, then replaced with traditional growth formulas. Bahrain, Kuwait and Abu Dhabi as well had taken very conservative steps and measures to draw their own developments and achievements.
The relatively shallow bureaucratic history of Dubai did not support administration stability through the change. Despite Dubai management was always based on innovations; to confront siege of environment, surroundings and ambition on all socio economic and geopolitical fronts; the happenings were behind capacity to master. The hard-to-understand democratic system that was based on tribal ethics and mindset, had narrowed the chance for expatriate experts to dig deep and provide sustainable culturally adopted solutions for both problems and ambitions. This is in my view, is the most critical drawback in Dubai Model. Yes, there are many truly successful projects and initiatives that took place. However, the following Four elements would summarize the story, and give reasonable justification for why things went wrong:
Exaggerative Competitions: The slogans were excessively circulated, arguing all staff to break all codes and come up with extraordinary ideas and concepts. A senior manager once said: “If a tire busted, we do not stop the vehicle, but we repair it while driving..!!” You may imagine the resulted chaos in name of innovation.. In the process, many expatriates were imported on basis of personal likelihood not the professional capacity.. Many UAE nationals were pushed away from the lights of fame; while many festive were created..
Irrational Decentralization: In the vivid search for delivery, all text books were shelved and great sense of decentralization took the helm as sole route to innovate and bring the extraordinary alive.. Suddenly Dubai was ruled by more than 15 urban authorities, who do not communicate and acted being in a war zone.. Implications on services, utilities and infrastructure were time bombs, while plans for better living were often confronted with simple equations of resources and operations management..
Culture of Greed: The quick loud gains of 2000-2003 had inspired the newly appointed senior executives to shoot up their corporate revenues and profits. No demise was identified between the Managers personal interests and the Corporates’. Simply, boards were almost idle.. as no one dares to bridle, restrain or control the energetic horse.. No one examined the critical success factors of real estate boost: the facts of demographics, legal system, or micro economics.
Socio-Demographics Challenges: National resources are not more than 4-6% of human resources required to gear up Dubai-2008. Yes, some managers had successfully built up teams and created unique models of multiculturalism, but most were great failure as narrow minded selections to their natives. Certainly, the fruits of such boom did not add value to the national population, not as Kuwaiti example of richness, nor as Omani one of preparedness.. As no authority manages the social platform, the incapable media took it over in full blindness.
If the above are acceptable as root causes for Dubai Crisis, The solutions for both long and short terms plans can be extracted in a reflective exercise.. In addition, there is an imminent need to find a role for the produced and delivered real estate assets during 2007-2010, in order to draw a reasonable economic consensus and financial cycle.
Innovative Modeling of Surplus: It is a mission-critical, to utilize more than 100,000,000 square footage of built up areas; in appropriate, profitable or revenue generating usages. Laws of bankruptcy are close for issuing, which will knock down the prices further down within first half of 2010, leading to more bitter loses for existing developers and micro investors. Creating a business model which enables these assets to contribute to an economic cycle is an imminent necessity and critical demand. Replicas of Monte Carlo, Las Vegas or Singapore is not out of reach, considering the massively-built infrastructure, subject to restructuring of administration, strategic objectives and realistic resourcing.
Quality as a Driving Culture: This is a global call, which is inevitably addressed if any nation wants to participate in the economic universal drive. Dubai does not need more energetic cow-boys, but gray-hair administrators who are well versed in setting up agencies, policies and operations, apart from quick catches and wow-syndromes. Quality is not certifications or celebrations, but simply cutting short the potential shortfalls and ill-handling of procedures. It enables to build upon what received, without wasting time to check suitability and corrective-ness of inputs.
Social Cultural Planning: A social mandate is critically required for Dubai. This element was neglected for long, despite the influx of expatriates, representing more than 120 nationalities. The paradox had been created when the national identity was near crashing by multiple magnitudes while not ready for the challenge. Dubai is not exception in the third world, yet the imbalanced demographics had squeezed and cornered many individuals to situation of defense rather than competency. NGOs and Governmental efforts were not in focus enough to create a momentum, yet many praised attempts were launched, but need stronger and meaningful support.
Transparency for Good Governance: Strong and effective governing is usually not transparent.. This is a fact. To rule, a blank blind space is required between the boss and his subordinates. Building up an organizational structure means the up you go, the more critically you know. Transparency was never meant to construct relationships within the corporate itself, but in its interactivity with the government. Transparency is required for rating agencies, regulatory authorities and academic institutions to study, assess and establish general consensus on how things are going, or how to make them performing in a better way, to serve agreed targets and objectives.
More readings and tracking on recent financial stand:
http://www.arabianbusiness.com/574684-dubai-debt-news-latest%20http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091127/NATIONAL/711279794/1005
www.globalresearch.ca/index.php?context=va&aid=16310
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091127/NATIONAL/711279786/1133
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091118/BUSINESS/711189902
http://www.thefirstpost.co.uk/56620,business,is-dubai-about-to-default-on-its-50bn-debt?DCMP=NLC-daily
http://www.arabnews.com/?page=6§ion=0&article=128906&d=28&m=11&y=2009
http://www.guardian.co.uk/business/2009/nov/27/british-banks-exposed-dubai-crisis
http://www.time.com/time/business/article/0,8599,1943212,00.html
http://www.arabianbusiness.com/574653-dubai-debts-crisis-latest-news
http://www.arabianbusiness.com/574548-uae-real-estate-market-has-hit-bottom---analysts
http://gulfnews.com/business/markets/investors-show-trust-in-dubai-1.532880?localLinksEnabled=false&utm_source=Newsletter&utm_medium=email&utm_campaign=20091127_GN_Morning_Newsletter_27_November&utm_content=&utm_term=Article%20click%20-%20Business+133342
http://www.arabianbusiness.com/574645-moodys-cuts-dubai-gri-ratings-amid-debts-delay
http://www.arabianbusiness.com/574645-moodys-cuts-dubai-gri-ratings-amid-debts-delay
http://www.thefirstpost.co.uk/56620,business,is-dubai-about-to-default-on-its-50bn-debt?DCMP=NLC-daily
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091128/BUSINESS/711289904/1183/enewsletter
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