IN NOVEMBER 2008, Dubai’s first Atlantis hotel opened to much fanfare — a $5-million firework display, A-list guests from around the world and a performance by pop star Kylie Minogue. Twelve months later, the emirate declared it was on the brink of default after accumulating a mountain of debt to transform the city into a business and trading hub.
Fourteen years on, Atlantis The Royal — just a short stroll away from the original resort — opened over the weekend along with much of the same extravagance. Beyoncé performed before a VIP audience for a reported $24 million and fireworks lit up the sky above the city’s famous artificial tree-shaped island of Palm Jumeirah.
Dubai and Kerzner International will be hoping that the landmark opening of the ultra-luxurious hotel, which cost about $1.5 billion to build, doesn’t signal the top for the emirate that’s been booming since it emerged as a safe haven during the pandemic, escaping much of the geopolitical and economic uncertainty elsewhere in the world.
“Dubai is in a significantly stronger position now than in 2009,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “There is fundamental tightness in the real-estate market, the UAE has introduced regulations to reduce systemic risks and the tourism sector is broader, with more people globally discovering Dubai after its strong handling of the pandemic.”
If there were any concerns over the timing of the opening, the resort’s opulence doesn’t show them. The hotel, made up of what appear to be interlocking Lego blocks, includes 44 suites with their own infinity pools, as well as one on the 22nd floor, a fire-breathing fountain show, celebrity chef restaurants and the world’s largest jellyfish aquarium. The 231 ultra-luxury residences in the building have already been sold.
Guests will have to pay an average of $1,000 a night to stay in one of its rooms. The hotel also has more than 100 exclusive suites, with the top suite going for $100,000 a night.
“We are very optimistic on travel and extremely bullish on luxury,” Kerzner Chief Executive Officer Philippe Zuber said in an interview from the hotel lobby that’s dominated by a huge silver sculpture and lined with floor to ceiling fish tanks. “We believe in those areas; people will not compromise. We understand that the market may face some recessions and might have some challenges, but the appetite to travel, the appetite to be together and to have qualitative vacations — that will not stop.”
Atlantis The Royal is opening as Dubai cashes in on an influx of newcomers to the city including Russians looking to protect their wealth, Israeli investors, crypto millionaires, and hedge fund executives after the city eased social restrictions and liberalized laws to consolidate its position as the region’s pre-eminent business center. The result is one of the world’s biggest luxury housing booms and a record year for residential prices and number of deals.
“None of us got a crystal ball, but seeing how the market has changed since 2008, Dubai is a totally different place now. It’s not so transient,” said Helen Tatham, head of prime residential sales and leasing at property broker Savills Plc. “I don’t think we are totally resilient to recession. It could cause a few ripples in our market but there’s no way Dubai is as sensitive as it was in 2008.”
The turnaround has been spectacular. Just over a decade ago, the city’s property market collapsed after an era of outlandish construction and soaring prices abruptly ended, leaving many individuals and money managers unable to recoup their money. The emirate went on to stave off bankruptcy largely due to a $20-billion bailout from oil-rich neighbor Abu Dhabi.
Since then, Dubai has introduced a raft of measures to ensure that there isn’t a repeat. Many government entities have restructured billions of dollars of debt with lenders — some a number of times. The emirate has also sold shares in state-owned firms to raise funds and is preparing to post its first budget surplus since 2019 when planned spending will increase less than projected revenue.
Authorities have sought to control the property market to limit speculative buyers and introduced measures to entice expatriates to set up home for longer. They’ve also eased many social restrictions such as allowing unmarried couples to live together and switching to a Monday to Friday working week.
And while Dubai isn’t immune to higher interest rates and the prospects of a global recession, “drivers of growth are fairly broad-based,” according to Scott Livermore, chief economist at Oxford Economics Middle East.
“While there are questions over its debt levels, these are easier to manage against the backdrop of solid growth,” he said. — Bloomberg