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Stupid Business Decisions: Dubai Builds World's Tallest Building


The tower's grand opening followed a debt crisis that rocked world markets.

For almost a decade, the construction boom in Dubai was so extreme that it made Florida's recent excesses look rational. The last salvo in the city-state's boom was like one final binge before entering rehab. The Burj Khalifa -- the new holder of World's Tallest Building -- opened in January, which, in a bitter twist, almost coincided with Dubai's near-total economic meltdown. The symbolism was impossible to ignore.

Dubai wanted to stamp its mark on the global consciousness, and the avenue for that over the last hundred years has been the skyscraper. More than a half century ago New York led the way, then Chicago, and in the recent past the architectural arms race moved to Asia and now the Middle East (examples are: Kuala Lumpur's Petronas Towers, 1998; Taipei 101, 2004; Shanghai World Financial Center, 2008; Nanjing Greenland Financial Center, 2010). In a place where glitzy towers rose from the desert like an out-of-nowhere glass-and-steel oasis, the Burj Khalifa was designed to be Dubai's shining achievement.

Designed by architect Adrian Smith and engineer William Baker, both of Skidmore, Owings & Merrill, and conceived at the height of local optimism about Dubai's place in the Middle East and the world, the Burj Khalifa dwarfs even its closest competition. Here was a statement. The Burj Khalifa is 160 stories high, and at 2,716 feet, it's taller than New York's Chrysler Building and Empire State Building stacked together.

As for other high-rise buildings, the Burj Khalifa is more than 1,000 feet taller than the Taipei 101, its closest rival. As for all freestanding buildings, the Guangzhou TV & Sightseeing Tower is still more than 700 feet shorter.

There's no doubt that the Burj Khalifa is a stunning architectural achievement. "The tower is a shimmering silver needle, its delicacy as startling as its height," architectural critic Paul Goldberger wrote in the New Yorker in February. "You would think that anything this huge would dominate the sky, but the Burj Khalifa punctuates it instead."

But, as with so much else in Dubai, function was not the idea of the Burj Khalifa. In fact, most of the building holds not office space but condominium apartments; with its sleek, narrow design, it actually has less interior square footage than its peers, which makes it more appropriate for residential housing.

And yet, as a statement to the world, it's impossible to ignore the hubris. Most of the growth in Dubai was a mirage. As Goldberger put it, Dubai is "a cross between Hong Kong and Las Vegas that tries to operate as if it were Switzerland," where glitzy glass towers are basically places for foreigners to park their money away from their own governments."

Writing from Dubai for The Guardian newspaper just as the crisis came to light, reporter Jack Hughes said:

The financial experts will pick over the bones of the Dubai model for years to explain what has happened, but the basics are simple: With minimal natural resources in an energy-rich region, Dubai decided to go for broke with an ambitious strategy of economic growth designed to turn the Arab fishing village into a global trading metropolis.

It did it with borrowed money, vast quantities of it. The palm-shaped islands, the glamorous beach resorts, the seven-star hotels, a state-of-the-art metro system -- all were built on borrowed money.

While the building was going up, new real estate sat unoccupied and unsold. Dubai ran out of money in November and its debt-laden state corporation was unable to meet its interest bill on $80 billion in debt. It had to be rescued by a $10 billion bailout from Abu Dhabi, its conservative, oil-rich neighbor. At the opening, Dubai announced that the skyscraper would bear the name of Abu Dhabi's ruler, Sheikh Khalifa bin Zayed al-Nahyan. As Goldberger wrote, "It's as if Goldman Sachs were to rename its new headquarters the Warren Buffett Tower."

To be fair, one UBS analyst told the Wall Street Journal that the new tower will help the city "stay in the limelight as home to a global landmark." But he also added that he predicted Dubai real-estate prices could drop another 30% this year. That would be on top of the 50% drop in 2009.

The irony of this goes without saying. The Burj Khalifa heralds Dubai's excess rather than its global coming-out party. "You don't build this kind of skyscraper to house people, or to give tourists a view, or even, necessarily, to make a profit," Goldberger wrote. "You do it to make sure the world knows who you are."

As a marker of its time, then, it seems Dubai achieved exactly that.
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