The man-made islands in Dubai are fighting to stay afloat.
Online PR News – 26-March-2010 – – Dubai, United Arab Emirates – The 8th wonder of the world is sinking under massive debt. Reuters reported the outstanding debt of Dubai World creditors stood at €10.9 billion. If you include the government bailout of €7.3 billion, this puts the total debt at a staggering €18.2 billion.
Dubai World proposed Thursday to repay its creditors in full with new debt maturing in five to eight years. The proposal which still needs approval from creditors is key for rescuing the most ambitious construction project in the world and recapturing the Emirates’ image as a business friendly oasis in the oil-rich gulf.
“It’s a confidence booster,” said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi. He added however, that the announcement was just a “first step in Dubai’s regrouping process” aimed at restoring its reputation.
The proposal was heavily focused on Nakheel, the Dubai World unit that was the force behind “The Palm” man-made islands that put Emirate on the map. Sheik Ahmed bin Saeed Al Maktoum, the chairman of Dubai’s supreme fiscal committee, said “Dubai World and Nakheel is significant because ‘The Palm’ development was a major growth engine to Dubai.” This project attracted many high profile figures who bought homes on the man-made islands such as Brad Pitt, David Beckham, and footballer Michael Owen from Manchester United.
According to Peter Tasca, chief executive of BVI-based Laureate Trust, “Dubai World is vital to the region because in 1975, oil accounted for 60 per cent of Dubai’s revenue – now, it is just 5 per cent. Tourism is the new oil, accounting for 30 per cent of Dubai’s GDP. And with these projects completed, revenues could more than double in the next 10-years.”
When construction is finally completed, Palm Island will boast 24 five star hotels, a 1,550-room Atlantis and exclusive boutiques like Marc Jacobs, Armani, Hermes, Gucci and Prada. It will also boast a state of the art monorail system to ease traffic congestion and join the 800 meter skyscraper Burj Dubai which was completed in January and declared the world’s tallest building.