Some time back, we wrote about a string of high profile planned mega resorts in the middle-east, including the Nakheel Tower project and Atlantis the Palm and it’s $20 million launch party. At that time, oil was at an all time high, and the sheiks were probably going giddy with all the petro dollars flowing into their grubby paws.

Well, that was then. Reality has now stuck home, and with the price of oil in the dumpster, the reverse flow of dollars to the middle-east is getting squeezed, and the sheiks are beginning to realize that the recession has landed home in Dubai. Which has led to some high profile decisions like stopping construction work at the Nakheel Tower project for one year.

Reuters report has a quote from a Nakheel spokesman who says that “Further work on the foundations of Nakheel Harbour & Tower will commence in 12 months. The foundation works are likely to take approximately three years to complete.”

And the article also notes that Nakheel stopped work in December on Trump Tower, a $789.5 million project on one of the emirate’s palm-shaped islands.

And this article had some explosive revelations inside about Dubai’s soft financial underbelly, the impact of the recession on migrant workers from South-West Asia and a dark side to Dubai’s hotel industry which have been exposed as a result of the cash crunch.

“Dubai is more precarious than it has ever been,” said Christopher Davidson, professor of Middle Eastern Affairs at Durham University in the UK and author of Dubai: The Vulnerability of Success (2008, Columbia University Press). “If the property industry collapses in Dubai, it will be finished. Dubai’s relative autonomy will come to an abrupt end.” Dubai’s push into luxury property developments and tourist attractions was diversification on “paper sand,” said Davidson. Dubai has borrowed $80 billion to finance its transformation and make up for lack of natural resources like its richer cousin Abu Dhabi.

And this about what goes on inside Dubai’s big hotels. Most large hotels are little more than dens of prostitution. Hotels are permitted to issue guest permits to bring people from outside. In order to attract customers, many hotels bring girls from Central Asia, Russia, Romania and Western Europe. These girls are provided free accommodation in the hotel for three months while they are expected to service hotel guests.

Posted on January 15th, 2009 by Thomas
Filed under: Hotels, World