* Executives who managed Dubai’s boom knocked back by bust
* Dubai ruler turned to small group to lead recovery
* Economy now strong, property prices rebounding
* Chiefs of Emaar, Dubai Holding head huge new project
* But next boom likely to be managed more cautiously
By Mirna Sleiman
DUBAI, Nov 28 (Reuters) - When Dubai’s ruler unveiled plans last week to build a complex housing 100 hotels and the world’s biggest shopping mall, the scale of his ambitions recalled the emirate’s boom half a decade ago. So did his choice of executives to lead the project.
Mohammed Alabbar, builder of the world’s tallest tower, signed documents related to the project in his role as chairman of Emaar Properties, Dubai’s top real estate firm.
Sitting next to him was Mohammed al-Gergawi, chairman of Dubai Holding, a conglomerate owned by the ruler. Gergawi played a central role in setting up districts housing Dubai’s financial, media and information technology industries.
The businesses of both men suffered when Dubai’s corporate debt crisis erupted in 2009, and they adopted lower profiles over the next three years as the government relied on a different set of managers to handle the financial disaster.
But last week’s announcement of the multi-billion dollar mall project, which is to include a park larger than London’s Hyde Park and an entertainment centre developed with Hollywood’s Universal Studios, suggests Alabbar, Gergawi and other high-flying managers who built Dubai are again shaping the agenda.
“Emaar and Dubai Holding are leading the charge. That signals a rehabilitation of two of the Dubai ruler’s three former lieutenants who were discredited in the crash,” said Jim Krane, author of the book “City of Gold: Dubai and the Dream of Capitalism”.
“The return to the fold of these two men, who were iced out during the long recession, could portend a shift away from the conservative minds called in in 2009 to stabilise the city.”
Alabbar and Gergawi belong to a group of executives, roughly a dozen men, chosen by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum about a decade ago to develop the emirate.
Most were born in the United Arab Emirates; many were educated at top universities in the United States or Europe. Some are members of old merchant families which have traded around the Gulf for decades, but others are first-generation entrants to the world of big business.
Placed in charge of Dubai’s strategic state-linked companies in areas including real estate, ports and banking, they favoured projects which burnished Dubai’s reputation as an international business and travel hub: the world’s tallest skyscraper, an archipelago of man-made islands in the shape of a palm, an indoor ski slope at a shopping mall.
“I‘m frustrated with bureaucracy, I‘m frustrated with negative minds and negative thinking because I‘m a go-getter; I‘m going places all my life,” Abbar, in his mid-50s, told Arabian Business magazine in a rare interview last year.
He compared Emaar to a phoenix and said the company was on the brink of a resurgence from the crisis.
Gergawi, 49, got his big break when he launched an office district on the outskirts of Dubai, persuading a foreign bank to lend him $55 million, according to a person close to him. That project brought him closer to Sheikh Mohammed.
Until the global credit crisis burst Dubai’s property bubble in 2008, Alabbar, Gergawi and their fellow executives succeeded handsomely; the territory with a population of about 2 million built one of the world’s busiest airports, the biggest seaport in the Middle East, and the Gulf’s main financial centre.
But Dubai’s fall from grace was almost as spectacular as its rise. Real estate prices tumbled over 60 percent in the three years from 2008, obliging Dubai Holding, Dubai World and other state-linked firms to restructure billions of dollars of debt.
Dubai also got a last-minute $10 billion bailout from neighbouring Abu Dhabi to avoid a bond default by palm islands developer Nakheel, and the emirate still faces a wall of debt repayments with an estimated $50 billion in liabilities due between 2014 and 2016.
The crash clipped the wings of many top executives; Sultan Ahmed bin Sulayem, the third business lieutenant identified by Krane, was removed from the helm of Dubai World in 2010 and now chairs port operator DP World.
Sheikh Mohammed turned to two people in particular to repair the damage. One was his uncle, Sheikh Ahmed bin Saeed al-Maktoum, head of the committee overseeing Dubai’s financial support fund and chairman of Emirates airline and the Emirates NBD bank.
The other was Mohammed al-Shaibani, who is chief executive at Investment Corp of Dubai, which owns some of the emirate’s top corporate assets, and director-general of the Ruler’s Court, which supervises and coordinates government departments.
Shaibani helped to orchestrate debt refinancing negotiations with international creditors and also commanded a war on corruption in state-linked entities, which resulted in a wave of management reshuffles and mergers at state-linked firms.
Now Dubai seems to have repaired most of the damage. While state-linked firms still have plenty of debt, most have succeeded in pushing maturities into the future; property prices have begun recovering and the economy is again growing strongly.
That is an environment in which executives such as Alabbar and Gergawi can pursue their ambitions, as Sheikh Mohammed made clear in a speech announcing the mall project.
“The current facilities available in Dubai need to be scaled up in line with the future ambitions for the city,” he said.
There are signs, however, that Dubai’s next boom may be managed a little more cautiously than the last.
“The ambition is back but this time I‘m confident it’s going to be more pragmatic and better managed,” said a person familiar with Dubai’s inner circles, who declined to be identified due to the sensitivity of the issue. “Everyone’s learned the lessons.”
Projects announced by Sheikh Mohammed this month will rely on the retail and entertainment spending of tourists from around the Gulf, India and elsewhere, rather than Dubai’s fickle real estate market, which was the focus of the last boom.
Khalaf Ahmad al-Habtoor, founder and chairman of the Al Habtoor Group and one of the band of top Dubai executives, said the emirate had learned from its experience and was now able to handle its debt better than many Western countries.
“Nobody in the world succeeds or becomes a pioneer unless he makes mistakes. It’s a price that we sometimes have to pay,” Habtoor told Reuters. “Yes, Dubai has debt...but who doesn‘t?”