By John Irish
Bigger and better, that’s how Dubailand was billed. The project’s CEO, Salem bin Dasmal, outlines the major challenges and ideas
|~||~||~|The recently appointed head of the brand new Dubai Tourism and Development Company (DTDC), Salem bin Dasmal, has a job on his hands. The mission he chose to accept is to spend the next few years of his life bringing to fruition Dubailand. Perhaps the most ambitious project to date, it aims to turn the Gulf emirate of Dubai into one of the most sought after global holiday destinations.
Salem bin Dasmal reflects what Dubai is all about. At just 34, the charismatic California-educated engineering graduate turned accountant/banker was handpicked for the 15 year task. “If I were to argue it wasn’t ambitious and maybe even some part of it impossible, I would be fooling myself, but you know what they say, shoot for the stars and you might land on the moon,” he says.
Ambitious would be an understatement. The promotional material at the project’s inaugural launch said it all. Dubailand will be a way of life for all strands of society, except, it must be bigger and better than anything else. The statistics hint at why a man with an acute financial brain will be needed to lead the charge.
The total project cost has been put at the US $5 billion mark although the figure already looks conservative seven months after being unveiled. 2 billion square feet of desert will rise from the dirt to become 45 thriving hubs of entertainment focused around six clusters: Attractions and Experience World, Sports and Outdoor World, Eco Tourism World, Themed Leisure and Vacation World, Retail and Entertainment World and Downtown. Within those, the 200,000 estimated daily visitors will see a further 200 sub-projects.
The time frame for completion is around 2015. The nature of the plans suggest it may fall behind schedule, but chances are that by 2010, when Dubai hopes to attract 15 million tourists, things will be up and running to a certain degree. In 2002 the number of tourists was a healthy 4.7 million.
The tourists entering the emirate from every corner of the world will complete the most significant figure. Tourism currently contributes 12% to Dubai’s GDP. On completion of Dubailand the number will increase to 20%. As for accommodating the visitors, the project, which is double the size of Disneyworld in Florida and a 100 times the size of Monaco will provide 285 new hotels, 150 serviced apartments, offering 50,000 rooms.
The statistics are impressive, but questions must be asked. Does Dubai really need to undertake such a huge development?
In recent years, Crown Prince Sheikh Mohammed bin Rashid Al Maktoum’s vision for the emirate has already encompassed man made islands created in the shape of palm trees, an atlas on the ocean and most recently a skyscraper that reports suggest may top the 700 metre mark. Most countries would need to give themselves a pinch, just to make sure it wasn’t all a dream.
Since the plans were drawn up, sceptics quite rightly have questioned whether this is merely an ambition too far. While the emirate is often praised for its innovation, on the flip side of the coin critics say the emirate is destroying its culture and heritage and has lost its soul. Is a cross between Disneyland and Las Vegas filled with millions of tourists from all corners of the globe really what Dubai needs?
Bin Dasmal is careful when answering. “I think we should still be cautious about where we position ourselves, because the last thing I would like Dubailand to become is a place where extremely economical tourists come. Essentially, we want it to be a family destination,” he says.
Compared to its neighbours, Dubai has become the most liberal and cosmopolitan place in the GCC, if not the Middle East. As long as that approach persists, the more likely tourists from all stratas of society will flock to the Arabian Gulf.
The law of averages merely illustrates that the larger the number of tourists, the harder it is to maintain your traditions. Bin Dasmal acknowledges that challenges lay ahead, but points to Dubailand’s unique positioning as not only a place to visit, but also a lifestyle, where people will work, reside and naturally play.
“Look, when we communicate Dubai today, it’s not a place where you come and rave. At the moment, it’s about resorts, sun, beach and shopping, but tomorrow the focus will be on families and kids. We won’t forget the others, but as long as we keep true to our focus, we’ll be OK,” he says.
However, the greatest challenge will not be attracting the tourists. The transport infrastructure is expanding rapidly. Emirates Airline is poised to begin direct flights to New York and Shanghai this summer, as well as servicing further destinations in North America, South America and Asia in the future.
Likewise, regional airlines are forging ahead rapidly, as is airport development in both Dubai and neighbouring Qatar. Add to those two new airlines in the shape of Abu Dhabi-based Etihad Airways and low cost carrier Air Arabia and the 15 million seems achievable.
“We’re going to increase the number of people coming from international cities, whether European, Chinese or in the Americas, but we’re also going to increase the number of people coming from the region, be it Egypt, Saudi Arabia, Iran or India,” says the former Emirates Bank International employee.
“That can only happen with strong airline activity regionally, so the low cost guys will be vital to increase traffic.”Nevertheless, the key question is who is paying for this development? From day one the government committed US $700 million in basic infrastructure, while the rest of the investment will come from the regional and international private sector.
However, in a region that has a poor track record when it comes to attracting foreign direct investment, why should investors look to Dubailand as a prime piece of real estate? Early signs suggest the DTDC, created to facilitate investment, registration and develop the infrastructure for Dubailand, may be succeeding. Several lucrative deals have already been signed off.
The Aqua Park, stretching over 2.7 million square feet, received US $750 million from the Dubai-based Al Sharq group as well as Saudi investment. Dubai Sunny Mountain Skidome, a personal favourite of bin Dasmal’s, acquired $272 million from 32Group, a multinational holding company based in New York.
The Bahrain-based investment firm, Gulf Finance House also put pen to paper to provide US$1.5 billion to create a 25 million square feet Arabian legends Theme Park. An Olympic bid from Dubai is in the offing with the $2billion Sports City. Backed by three local UAE businessmen, including the father of UAE-cricket, Abdul Rahman Bukhatir, the project will comprise four major stadiums of 35,000 capacity each as well as an indoor stadium, Olympic size swimming pool, and major equestrian facilities. Complementing the Sports City will be the recently announced $100 million investment from two local businessmen in Al Emarat Sports World.
Elsewhere, the first completed project is the $82 million Dubai Autodrome. Backed by local property developer Union Properties, the racing track and business park will host its first event in October.
According to bin Dasmal, it’s well on its way to becoming the second Formula 1 motor racing circuit in the Middle East. “Why not two tracks in the Middle East,” he says eagerly. “We have many in Europe, only three in Asia and it makes sense from a business perspective to have more.”Within seven months of the Dubailand concept’s introduction, the signs are positive. Already, the above projects are worth more than $5 billion with many more still to be signed. However, the investment is primarily from the UAE and GCC. One scenario put forward is that the regulatory environment in the United Arab Emirates is scaring investors away. Under current ownership laws, a local partner must own 51% minimum.
In addition, foreign investors are not able to buy, meaning the land must be registered entirely under a local or GCC national. While foreign companies can leasehold, ultimately the operating and owning restrictions may well put off investors.
One option would be to turn Dubailand into a free zone.“Look at the track record in Dubai,” says bin Dasmal. “We have gone about creating free zones for different developments. I am sure the government will do what is in the best interests of Dubailand and to attract foreign investment, and if that is in the best interest and they come to that conclusion, then they’ll do it.”
However, for bin Dasmal, the early stages are all about attracting investment from around the Gulf. While Dubai’s challenge is to appeal to foreign investors from Europe, the Americas and Far East in the long term, in the early stages it’s vital to channel stagnant funds from across the region.
“There’s over $300 billion sitting about in this region, waiting for investment and that money is looking for a place close to home,” explains bin Dasmal. “In the past we haven’t provided a safe haven for that money to co-exist or to invest in this region, but now Dubai is starting to change that perception.”
In the meantime, however, the investment process is underway. The rules of the game are simple. The bigger the project you wish to undertake, the easier it is to win the contract.
Investors and developers can take on a specific project, but must commit to an average of 10 million square feet and within it must promise to develop complete infrastructure for that development.
On the one hand there are themed attractions, but investors must agree to create anything from hotels, and real estate to business offices. In return, investors are promised substantial support from the government when the projects are up and running.
“Naturally, there are risks with the investment on whether their target audience will be sustainable in the long term,” explains bin Dasmal. “The way we can help them achieve it is to support them from a cost perspective. We’ll try to reduce the costs for them as much as practical. I run a business and I run a development and I do it not to make a loss, but to sustain itself. So land, leases and sales will be done at a rate we feel will be very supportive of the development.”
Depending on investment, bin Dasmal anticipates profitability for investors after three years of operation. However, the road to success is still a long way off. While investors may have put pen to paper and committed to strict timelines with the committed projects expected to begin operating within the next three years, seeing the project materialise as planned is another question.
Experience proves just how difficult it is to keep to those tight deadlines. Dubai’s gigantic Burjaman Shopping centre expansion for one is well behind schedule. By that rationale, what will prevent Dubailand projects also going the samw way, with costs equally spiralling out of control?
Bin Dasmal points to people honouring commitments to Dubai’s leadership, but at the same time companies must adhere to certain contractual penalties should the development fall by the wayside or not deliver on time. “In the worst case scenario, if they are unable to deliver despite penalties, then we [the government] would intervene to get the projects back on track,” says bin Dasmal. “We need the project to succeed at the end of the day.”
However, ambitious projects will always have their critics. Certain factors immediately spring to mind. Much like environmental concerns surrounding the building of the Palm Islands, the same goes for building mega developments in the heart of the desert and particularly water and snow parks, when water is such a precious commodity in the region. Little is ever mentioned of the environmental impact these projects will have on the landscape and how much the Dubai government has looked into it. Bin Dasmal remains pragmatic and assured in his answers.
“I think today we’re not waiting for when these issues crop up later. We are formalising ways to counteract what we expect to happen and what will happen.” On what those measures are, however, bin Dasmal remains vague, suggesting developers will need to incorporate certain guidelines, while environmental consultants are looking into the issues at the moment. However, when it comes to the use of water, the former Ernst and Young employee acknowledges that while it will cost billions of dollars to provide water for Dubailand, it will all be done within the overall plan for Dubai.
“Everything we are doing for Dubai is done with a business outlook. We look at how projects will at some point in their life generate cash, specifically with regard sewage, electricity and telecoms,” says bin Dasmal.
He allays fears over the lack of water with his own assessment of Dubai’s use of its resources. “We co-generate electricity and desalinisation of water and actually produce electricity at extremely economical costs compared to world standards and the by-product is potable water. So for Dubailand’s water needs we are comfortable DEWA (Dubai Department of Electricity and Water) will meet our needs.” The key, it appears, will be a separate sewage plant built specifically for Dubailand where waste water will be recycled. For bin Dasmal, Dubailand is more than just a mega Disney-esque development.
This is the future of Dubai. Be it the lost heritage reappearing in the form of Arabian resorts and theme parks or Dubai engraving itself in the minds of people across the world, it will set the tone for years to come. Bin Dasmal himself will eat, sleep and drink Dubailand for the foreseeable future. Yes, it may well cost more than initially estimated, but then how many times does a country attempt to radically alter its GDP? There is little room for failure, but whether it will succeed is unknown.
“If I were to measure its success against what I have announced and what I have commitments for, I have gone far beyond my expectations for the success of this project. To me that means Dubai has something so special that I don’t think anybody can put words to it,” concludes bin Dasmal. ||**||