A vast fun-park dream stalls in Dubai's downturn

Dubailand has hit the harsh economic realities of the global downturn, much like the rest of Dubai.

Dubailand 88 248 (photo credit: )
Dubailand 88 248
(photo credit: )
Walk through the grand arched entrance of Universal Studios' Dubai theme park, and you step into... wind-swept desert. No Hollywood thrill rides, no ticket kiosks, no studio back lots. Even the guard house and the construction office sat empty during a recent visit. The planned park is part of a vision by Dubai officials to turn a patch of sand on the edge of the Mideast city-state into Dubailand - a vast amusement complex twice the size of Walt Disney World studded with theme parks including Universal Studios, Six Flags and Legoland, along with resorts, the world's biggest shopping mall and the first golf course designed by Tiger Woods. It is now unclear when or if much of it will ever get built. Dubailand has hit the harsh economic realities of the global downturn, much like the rest of Dubai, which once seemed unstoppable in its drive to build the biggest, the tallest, the most extravagant. "At this point, it's kind of hard to sell," Bobby Sarkar, a real-estate analyst at Al Mal Capital in Dubai, said of the Dubailand project. "Obviously it's not feasible currently." Dubailand was conceived at a time when cash was readily available and the pint-sized emirate was expanding rapidly, building man-made islands, ever-taller skyscrapers and gleaming luxury housing. Now in the world economic crisis, easy credit has disappeared, and Dubai faces crippling debt and a glut of brand-new real estate. Thousands of foreign workers who flocked here seeking higher-paying jobs are pouring out of the city as layoffs mount. "Was Dubailand a sound idea? In part yes," said David Camp, director at ERA Aecom, whose consulting firm was involved in early plans for the site. "But it got carried away, like most of Dubai." Dubailand was launched six years ago as part of the emirate's push to more than double its tourism numbers to 15 million visitors by 2015. The hope was that their dollars, euros and riyals would keep the economy chugging ahead despite the emirate's dearth of oil reserves. The project sprawls over more than 259 square kilometers of desert - bigger than Orlando, Florida, home of some of America's most famous amusement parks. A few parts have been built, including a humble outlet mall and a fairground open only during the cool winter months. A sales center on the outskirts of the site touts what Dubailand is supposed to become, promising dinosaurs and spaceships, Spiderman and Shrek. Two live tigers prowl a glass enclosure next to the reception desk. But much of what is promised appears to be stalled and running well behind schedule. One of the more extravagant ideas - an artificial snow park housed under a glass dome - has quietly disappeared from the project's Web site. Dubailand senior vice president Muhammad al-Habbai said in a brief written statement to The Associated Press that "there is no change to the vision of Dubailand, and we can reaffirm that all our projects will be developed and delivered to completion." He gave no time frame, saying only that the project "was designed as a phased development to be built over a number of years." Neither Dubailand nor its overall developer Tatweer made officials available for interviews. The idle appearance of the Universal Studios site suggests it will not open next year as advertised at the sales center. Universal Studios' parent, NBC Universal, a unit of General Electric Co., referred questions to Tatweer, which said only that work was progressing. Ssix Flags, the New York-based amusement park chain, said plans for its first Mideast park were "moving forward" but provided no additional information. The company filed for bankruptcy protection in June. The Tiger Woods-designed golf course will not open as planned this year. Woods recently told The AP the project was delayed and is "out of my hands." Dubailand said "consistent progress continues" at the course. Three of the 18 holes are completed, which it said confirms its commitment to the project. Union Properties, a local company building the world's first Formula One theme park at Dubailand, said in March the racing-themed project would be pushed back a year to 2010 because of a lack of funding. Analysts at Mideast bank EFG-Hermes have speculated the project could be dumped altogether. The opening of the Legoland park is expected to be pushed back two years from its original 2011 target, said Sally Ann Wilkinson, a spokeswoman for Merlin Entertainments Group, a British amusement-park operator that contracted with Tatweer to build the park. For the international brands, Dubailand must have looked like a great opportunity. "Around Dubai, and I'm talking about a radius of more than 3,000 miles, there are no major theme parks. Given that, it is a good idea to have a world-class theme park in the Middle East," said former Dubai resident and amusement-park enthusiast Stefan Zwanzger, who blogs about the industry at Thethemeparkguy.com. "I'm not sure it makes sense to build 10 or 11 theme parks at about the same time." The deals were typically structured as licensing agreements that left the international companies with little financial risk, according to regulatory filings and analysts. Partnering companies in effect got paid while gaining a toehold in a part of the world with a booming population and little competition. But they also left at least part of their reputations in the hands of Tatweer, a company linked to the emirate's ruler that is now struggling. Complicating problems for Tatweer is its planned merger with another Dubai developer, Emaar Properties, which declined to comment on Dubailand. The plan calls for publicly traded Emaar to swallow up Tatweer and two sister companies in a deal widely seen as stemming from Dubai's real-estate bust. But industry observers say the slump could also be a blessing, giving Dubai a chance to rethink its priorities. "What Dubai thought they'd done was create this everlasting growth market.... The world was booming. Whatever crazy idea you came up with, people said, 'Yeah I'll buy it,'" said Camp, the consultant. "The fundamental issue is Dubai had far too grandiose ideas for far too short a time," he said. "It was a bit like a toddler trying to do a 100-meter sprint rather than trying to just walk around the furniture a bit."