Yet Dubai’s leaders have also sent signals that all is not business-as-usual. The famously astute architects of the city’s success are aware of the congruence between their model of economic growth—borrowing money to build property that others will invest in on the assumption that the values will rise eternally—and the model of economic growth that has led to a historic collapse on Wall Street. They are further aware that many in the financial world question the sustainability of Dubai Inc. Moody’s, the financial-research firm, has warned investors that although Dubai’s economy has been growing at a staggering rate, its debt has been growing even faster; it now owes approximately $48 billion, 103 percent of its GDP. In response to such concerns, Dubai instituted a number of reforms geared toward “maturing the market”—a real-estate regulatory authority, rules forcing speculators to wait several weeks before flipping a property, the limiting of sales within the precincts of Cityscape itself.
The intention, and very often the result, has been to reassure people that a steady hand is on the wheel. “Sheikh Mohammed runs the country like an executive,” says K.S., the Iranian-American businessman. Even the newspapers, he explains, send a soothing, official message. “When the Gulf News”—a Dubai-based paper—“says that there’s going to be a 10 percent correction in the real-estate market, and that story appears several times in a matter of months, what is that about? That’s Sheikh Mohammed telling people like me, ‘Don’t worry. I’m going to scoop the froth away. I see speculators frothing the fuck out of the market, now I’m going to de-froth that motherfucker. It’s only going to go down a little.’ ”
Indeed, few people at Cityscape seemed terribly concerned about Dubai’s prospects. At the end of the bar in the W Hotel booth, Tariq Bsharat, whose wife had taken a job at SHVO’s Dubai office, was huddled over a stack of his old business cards, scribbling his new cell-phone number across the top. Before arriving in Dubai in late August, Bsharat, who holds an M.B.A. from New York University, owned a mortgage-lending business in Westchester. When the real-estate market began to implode, he and his wife decided they needed a change. It took just a few weeks of networking here before Bsharat landed a successful interview with Sorouh, a real-estate developer with a property portfolio worth more than $13 billion. “Three months ago, I was originating residential and commercial loans,” he said last week. “Now I’m handling business for a multi-billion-dollar megaproject.” Nor is Bsharat overly worried about what might happen if the local economy does deflate. Simply by getting off the plane, he has propelled his career into the executive realm; when he returns home he will be able to command an income far in excess of what he could have before.
It is telling, however, that Bsharat’s employer, Sorouh, is based not in Dubai but in Abu Dhabi. The conventional wisdom now is that what ultimately safeguards Dubai’s future is not its near-mythical energy and savvy but its oil-drenched sister up the coast. When credit began to tighten around the world, and skeptical stories about Dubai began to appear in the financial press with headlines such as a long way down, Abu Dhabi helped stave off panic by injecting $6.8 billion into local banks. This surprised some; there’s a long-standing rivalry between Dubai and Abu Dhabi, which considers its neighbor, in the words of one American, “like the obnoxious, overspending brother-in-law.” Yet it has become abundantly clear that Abu Dhabi still considers Dubai family and that no matter what crises occur, it will come to the rescue.
Whether a significant bailout from Abu Dhabi would force Dubai to change its profligate ways is a question observers have been asking lately. “Abu Dhabi could rescue Dubai,” says Christopher Davidson. “But what would be the cost? It would say to the world, ‘Dubai Inc. has failed.’ ” It isn’t certain anyone—even Abu Dhabi, for all the inter-emirate rivalry—wants this to occur. Dubai serves a purpose in the region. “Everyone is always complaining that Dubai is too expensive,” K.S. told me “But that’s the intention! They’re trying to make this into the Manhattan of the gulf. And Abu Dhabi? Abu Dhabi is going to be Brooklyn.” Indeed, Dubai serves a purpose in the world—particularly now. Americans are coming here because they want to make money, yes, but they are also coming because confidence is the lifeblood of economics, and nowhere else on earth so loudly proclaims: Everything is going to be okay.
Both of these purposes became clear on my third night in Dubai, when I was invited to the home of Saif Abdul Rahim al Zarouni, a 26-year-old Emirati-American and the CEO of a company that rents, manufactures, and sells construction equipment. Al Zarouni grew up in Florida, and now lives in a 7,000-square-foot villa on the Palm Jumeirah. It’s something of a center of social activity for expats in Dubai. I heard about it from Brooke Butler, who told me that she and her friend, Laura, had won a heated beer-pong tournament there over the summer.