FOCUS:Burj Dubai Opens As City's Reputation Hangs In Balance - WSJ.com

FOCUS:Burj Dubai Opens As City's Reputation Hangs In Balance - WSJ.com

The opening of the Burj Dubai, the world's tallest skyscraper, Monday could mark a turning point in the sheikdom's fortunes and those of its ruler after a year that saw both come under intense scrutiny.

Sheik Mohammed bin Rashid Al Maktoum, the city-state's 60-year-old hereditary leader, hopes the building and its surrounding $20 billion development will help enhance his reputation among international investors and restore the allure of Dubai as a business hub.

Dubai's shock confession in November that one of its largest government-owned conglomerates couldn't pay its debts triggered a slide in world markets and prompted many analysts to question the city's economic model of borrow and build. Burj Dubai, it's hoped will redress the growing international perception of the emirate as an economic delinquent instead of a role model for the Arab world.

Saud Masud, head of research at UBS AG in Dubai and a regular commentator on the emirate's real-estate industry, says Burj Dubai will help the city to "stay in the limelight as home to a global landmark." Still, Masud forecasts that Dubai real estate prices could drop a further 30% this year after falling 50% in 2009.

After struggling with an $80 billion mountain of debt, no expense will be spared in Dubai for the opening, which takes place under a shroud of tight security. The carefully choreographed ceremony, which includes 10,000 fireworks, coincides with Sheik Mohammed's four-year anniversary as ruler.

The sheik, a passionate racehorse owner and published poet, was forced last year to turn to his oil-rich cousins in Abu Dhabi for financial assistance. The call for help prompted many analysts to question whether Dubai would be forced embarrassingly to sell prized assets to Abu Dhabi and surrender elements of its autonomy in order to pay its debts.

But with Abu Dhabi's support, Sheik Mohammed has managed to avoid financial disaster and keep his dream of making Dubai a modern, international metropolis on a par with New York, London and Hong Kong alive. The opening of the Burj Dubai is intended to symbolize that dream, according to Jim Krane, author of City of Gold: Dubai and the Dream of Capitalism.

BUILDING KING

Sheik Mohammed rejected initial plans for the Burj Dubai presented to him by the building's developer Emaar Properties PJSC (EMAAR.DFM) and demanded a taller, more impressive structure, said Krane, who is an expert on the emirate and a former resident.

"He sees himself as a great Arab building king," said Krane in a telephone interview. "Dubai represents Sheik Mohammed's bid to trigger an Arab renaissance and this is the thinking behind the Burj Dubai. Whether he can succeed is an open question."

According to Krane, the tower and its surrounding real-estate will never pay for itself.

The building currently stands at just over 2,625 feet. Emaar won't disclose the tower's final height ahead of the opening, although most estimates put it at 2,684 feet, far taller than Taiwan's Taipei 101, which had been the world's tallest skyscraper at 1,670 feet.

Investors gave the project an encouraging vote of confidence Sunday, with shares in its mostly government-owned developer Emaar surging ahead of the opening. Leading analysts expect the project will boost Emaar's revenue by almost $1 billion in the first quarter as homes and offices in the skyscraper are delivered.

At the height of Dubai's property boom, one-bedroom apartments were selling for up to $2,776 a square foot on the secondary market, according to Betterhomes, one of Dubai's largest real-estate brokers. One of the most expensive apartments at the time sold for just over $3.5 million.

In today's economic climate, it's uncertain whether the finished skyscraper will help Sheik Mohammed realize his dreams for Dubai or add to the emirate's sizable economic challenges.END