Remember when Dubai was the newest, richest, most fabulous city in the world? Indoor skiing mountains, rotating skyscrapers, etc? That’s so last year.
(OK, the Burj Dubai, the word’s tallest building, is still there. Plenty of cheap office space for rent inside if you want some.)
Chip Cummins, WSJ: This city-state said the federal government of the United Arab Emirates would provide $10 billion in funding, allowing Dubai to service its heavy debt load as it copes with a tanking real-estate market and tepid appetite among international lenders to extend further credit.
The effective bailout will be structured as a long-term bond, the governments of Dubai and the UAE said in separate statements late Sunday. Dubai is one of seven, semi-autonomous emirates that make up the UAE.
Unlike its neighbour and UAE capital Abu Dhabi, Dubai doesn’t have much oil. It financed much of its recent, explosive growth with international borrowing. State owned and controlled companies tapped local and overseas markets to help finance some of the emirate’s most ambitious property, tourism and infrastructure projects.
In less than a decade, Dubai transformed itself from a sleepy backwater to a booming regional business, tourism and transportation hub. As it blossomed, civic leaders grew more ambitious. In 2001, a government-owned developer launched a palm-tree-shaped island development of luxury villas and hotels.
Two years later, another government-controlled developer started selling floor space in the then-unbuilt Burj Dubai tower. Both projects are now mostly finished, and the Burj Dubai stands as the world’s tallest skyscraper.
But as the U.S. housing market soured and the first hints of the extent of today’s global financial crisis started to emerge in late 2007, analysts and investors began raising concerns about the lack of transparency surrounding all the borrowing…