Dubai's Khalifa Tower, World's Tallest Building, Opens with Fanfare

 
 High life: The Burj Dubai stands at 160 storeys tall and is the tallest building in the world


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Dwarfed: Dubai's spectacular skyscrapers look tiny compared to the Burj Tower which is over half a mile high

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 Don't look down!: A Dubai man takes in the view from the 124th floor


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As the tallest building in the world opened to great fanfair in Dubai yesterday, the struggling emirate was well aware that it owed a big thank you to its oil rich neighbour.

The thanks came in the form of a naming ceremony, Dubai's ruler renamed the previously-known Burj Dubai the Burj Khalifa.

Just last month the tower's namesake and leader of Abu Dhabi, Sheikh Khalifa bin Zayed Al Nahayan, bailed out indebted Dubai to the tune of $10bn - £6.13bn.
Now the needle-shaped skyscraper which stands more than 800 metres tall and can be seen from 95 kilometres away and was to be the jewel in Dubai's crown, is a stark reminder of the debt the emirate owes its neighbour.

Construction of the tower began in 2004 at the height of Dubai's boom, but in the last month building has ground to halt across the emirate as funds dry up.

But, although much of the office space in the tower remains empty and many parts of the building are not yet finished, owners of the Burj Khalifa are determined it will stand for the luxury and excess Dubai has become known for.

The building boasts the world's first Armani hotel on the bottom floors, it also houses 900 Dubai residences, 37 floors of office space, a fine dining restaurant and an observation deck.

The structure, whose final height was revealed yesterday to be 828m, is far taller than the previous record holder, Taipei 101 and brings records galore to the UAE.

As well as being the tallest building in the world, it also has the most stories and highest occupied floor of any building in the world, and ranks as the world's tallest structure. Visitors can look out from the highest observation deck in the world on the 124th floor.

We weren't sure how high we could go,' said Bill Baker, the building's structural engineer. 'It was kind of an exploration...a learning experience.'

The tower itself is reported to have cost $1.5 billion - £925 million - and the celebration of a laser show and fireworks seemingly shooting out of the building itself, was a suitable grand way to welcome its opening.

Dubai ruler Sheikh Mohammed Bin Rashid al-Maktoum led the official opening which saw VIPs able to access the observation deck on the 124th floor.

To ignite oublic interest in the tower, its owner have released some facts and figures about the amount of work and materials that went into its construction.

The tower's glass and steel exterior would apparently cover 17 football fields if laid out flat and will take some poor workers between six and eight weeks to clean.

The concrete used in the core of the building could build a pavement 1,283 miles long and the cooling system produces enough condensation to fill 20 Olympic swimming pools a year. It's a good thing those eco-conscious developers will be using the waste to water the grounds.

Work on the Burj Dubai began in 2004 and continued rapidly. At times, new floors were being added almost every three days, reflecting Dubai's raging push to reshape itself over a few years from a small-time desert outpost into a cosmopolitan urban giant packed with skyscrapers.

By January 2007, thousands of laborers, many of them brought in on temporary contracts from India, had completed 100 stories.

To ensure the tower doesn't twist or break during bad weather, it is built in a Y-shape, with three 'wings' evenly distributing the building's weight.



Started at the height of the economic boom and built by some 12,000 laborers, the world's tallest building will open on Monday in Dubai as the glitzy emirate seeks to rekindle optimism after its financial crisis.

Burj Dubai, whose opening has been delayed twice since construction began in 2004, will mark another milestone for the deeply indebted emirate with a penchant for seeking new records.

Dubai, one of seven members of the United Arab Emirates, gained a reputation for excess with the creation of man-made islands shaped like palms and an indoor ski slope in the desert.

With investor confidence in Dubai badly bruised by the emirate's announcement in November that it would seek a debt standstill for one of its largest conglomerates, the Burj Dubai is seen as a positive start to the year after a bleak 2009.

The project has been scrutinized by human rights groups, who have objected to its treatment of laborers, as well as by environmentalists who said the tower would act as a power vacuum, increasing the city's already massive carbon footprint.

But despite the criticism, many say the edifice, believed to have cost $1.5 billion to build, is an architectural marvel.

The tower's height has been kept a closely guarded secret until now. Developer Emaar Properties PJSC will reveal the height -- known to exceed 800 meters (2,625 feet) -- on Tuesday and Dubai's ruler will inaugurate the opening.

Experts believe Dubai's recent financial troubles have not hurt sales of approximately 1,100 residential units in the Burj -- meaning tower in Arabic -- saying they were nearly all sold.

Dubai's real estate sector crashed at the end of 2008 when the global financial crisis hit the emirate after a six-year economic boom. Thousands of jobs were slashed and projects worth billions of dollars were canceled or delayed.

With analysts suggesting tax-free Dubai might sell some of its assets to boost revenues and slash $80 billion in debt, many wondered if the tower was on the list for grabs.

Dubai, with few natural resources of its own, expects a budget deficit of 2 percent of GDP this year.

In December, the emirate received a $10 billion lifeline from neighboring Abu Dhabi to repay a $4.1 billion bond for Nakheel, a property arm of indebted Dubai World, and other obligations.

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Dubai will soon have the world's tallest building



The Atlantis launched last year with a party rumoured to cost $20m


New York Stock Exchange traders- As market drop 5%.

The Dubai skyline


A money trader work at a dealing room the U.S. dollar rate against Japanese yen on the Foreign Exchange Market in Tokyo, Japan, Friday, Nov. 27, 2009. The U.S. dollar fell to the 84 yen level Friday Morning.


A man walks in front of the electronic stock board of a securities firm in Tokyo, Japan, Friday, Nov. 27, 2009. The benchmark Nikkei 225 stock average fell 301.72 points, or 3.2 percent, to 9,081.52.


A man who shines shoes works in front of screens showing the Korea Composite Stock Price Index (KOSPI) and foreign currency rate, right, at the Korea Exchange Bank headquarters in Seoul, South Korea, Friday, Nov. 27, 2009. The KOSPI fell 75.17 points, or 4.70 percent, to close at 1,524.35 Friday.



A woman using mobile phone walks by an electronic stock board of a securities firm in Tokyo, Japan, Friday, Nov. 27, 2009. The benchmark Nikkei 225 stock average lost -169.73 points, to end morning session at 9213.51.


A man communicates with a phone in front of the electronic stock board of a securities firm in Tokyo, Japan, Friday, Nov. 27, 2009. The benchmark Nikkei 225 stock average lost -169.73 points, to end morning session at 9213.51


A money trader walks past a screen indicating the U.S. dollar rate against Japanese yen at the Foreign Exchange brokerage in Tokyo, Japan, Friday, Nov. 27, 2009.


A man looks at the electronic foreign exchange board of a securities firm in Tokyo, Japan, Friday, Nov. 27, 2009. The U.S. dollar fell to the 84 yen level Friday Morning.


A South Korean currency trader reacts in front of a screen showing the Korea Composite Stock Price Index (KOSPI) at the Korea Exchange Bank headquarters in Seoul, South Korea, Friday, Nov. 27, 2009. The KOSPI fell 75.17 points, or 4.70 percent, to close at 1,524.35 Friday.



Banks outside the Gulf played down their exposure to Dubai debt on Friday after fears of default shook global markets, and European leaders said the world economy was now strong enough to cope with the setback.

Stocks from Tokyo to New York were haunted by concern that banks were exposed to state companies in Dubai, whose rise from a desert backwater into the business hub of the world's top oil exporting area lured expatriate cash and executives.

The crisis began on Wednesday when Dubai, part of the United Arab Emirates federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of three palm shaped islands that once attracted celebrities and the super-rich.

"While it is a setback, I think we will find it is not on the scale of previous problems we have dealt with," British Prime Minister Brown told reporters in Port of Spain.

"The world financial system is stronger now and able to deal with the problems that arise."

French Prime Minister Francois Fillon said the Gulf had the resources to ensure the world would not sink into a second round of turmoil, but Russian premier Vladimir Putin said the saga showed how hard it is to shake off a crisis that has lasted two years.

Dubai World had $59 billion of liabilities as of August, most of Dubai's total debt of $80 billion. International banks' exposure related to Dubai World could reach $12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters LPC.

But the numbers pale in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates U.S. and European lenders will have made between 2007 and 2010.

"The events in Dubai in recent days are one of the hiccups if you like, one of the difficulties, which affirms that we were right to highlight the uncertainty ahead of us and that the road ahead could be a bumpy one," European Central Bank Governing Council member Athanasios Orphanides said.

Analysts expect Dubai to receive financial support from Abu Dhabi, though it may have to abandon an economic model focused on developing swathes of desert with foreign money and labour.

But the prospect of a bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March.



Wall Street, which was closed on Thursday for the U.S. Thanksgiving holiday, opened sharply lower on Friday over fears of renewed financial turmoil. Banks with Gulf investors were badly hit, with Citigroup (C.N) down over 3 percent. [ID:nN27341479]

"Dubai is deeply connected with the global community and people are worried about a domino effect with other points of the financial system," said Kevin Caron, U.S.-based market strategist at Stifel, Nicolaus & Co.

BANK EXPOSURE

European and Asian banks scrambled to distance themselves from problems in the Gulf trade and tourism hub, helping European stocks reverse earlier losses and hit session highs as the market reassessed the significance of Dubai's problems.[.EU]

"We have seen a classic risk aversion reaction in the markets over the past 24 hours. The dollar has slumped, the yen is stronger," a Societe Generale note said. "At this stage, this setback looks to be one that is very much country specific."

Lenders in Abu Dhabi, a fellow member of the UAE and home to most of its oil, have lent heavily to Dubai and could suffer.

Abu Dhabi Commercial Bank ADCB.AD has at least 8-9 billion dirhams ($2.2-$2.5 billion) exposure to Dubai World and related entities, forcing the bank to book more provisions, a senior executive of the bank said. First Gulf Bank FGB.AD has at least 5 billion dirhams ($1.4 billion).

JP Morgan said it was less concerned about global banks' direct exposure to Dubai World and was not worried about Abu Dhabi, which is sitting on hundreds of billions of dollars.

"We are more concerned about the spillover effect within the UAE," it said in a note. "It remains unclear if the Dubai government will support the liabilities of government related entities."

The price of insuring Gulf debt surged again on Friday.

Credit default swaps (CDS) for Dubai rose more than 100 basis points but were well below previous peaks in the global crisis late last year and earlier this.


Nakheel's Islamic bond prices extended losses, falling 30 points to a record low of 40, according to Reuters data.

The debt crisis in Dubai also pushed up debt insurance costs for other sovereigns in the Gulf, a wealthy region Western firms had turned to for help at the height of the credit crunch, and at some major U.S. banks.

TRANSPARENCY, CREDIBILITY

International fund managers said they were considering rotating dedicated money out of Dubai and into Abu Dhabi, Qatar and Egypt after local markets begin to open on Monday after the Muslim Eid al-Adha holiday.

Analysts said the timing of the news on the eve of the holiday, the lack of prior communication with investors, and the scant details given on the plans dented Dubai's credibility.

"The way the announcement was made, including its timing has caused damage to Dubai's credibility," Ghanem Nuseibah, senior analyst at Political Capital Policy Research & Consulting Institute. "This will take a very long time to repair."

UAE media either ignored or put a positive spin on the news. Abu Dhabi-based financial daily Alrroya Aleqtissadiya carried the headline "European markets overreact to Dubai's bond news".

But HSBC (HSBA.L), Europe's biggest bank and the one with more loan exposure to the UAE than any other at around $15.9 billion, said it was not concerned.

"It's... a high potential part of HSBC's international business mix and a region we are completely committed to," Michael Geoghegan, HSBC CEO, said.

"I am confident that the leadership of Dubai and the UAE will overcome any short-term issues they face, which appear to have been somewhat sensationalised."


World Economy concerns about Dubai debts remains.

European stock markets regained their poise Friday after Wall Street didn't fall as much as feared on the news earlier this week that Dubai is having trouble handling its debt.

Because U.S. markets were closed for Thanksgiving Day on Thursday, they are only reacting now to the fears that Dubai's debt problems may affect the wider financial system.

In Europe, the FTSE 100 index of leading British shares was up 41.30 points, or 0.8 percent, at 5,235.43 while Germany's DAX rose 50 points, or 0.9 percent, at 5,669.84. The CAC-40 in France was 36.85 points, or 1 percent, higher at 3,716.08.

On Wall Street, the Dow Jones industrial average was down 162.71 points, or 1.6 percent, at 10,301.69 soon after the open while the broader Standard & Poor's 500 index fell 19.33 points, or 1.7 percent, at 1,091.30.

Though hefty, the losses in the U.S. paled in comparison to those posted earlier in Asia, when indexes in Hong Kong and South Korea tumbled 5 percent in response to the previous day's Dubai-related losses in Europe.

Confidence about the world economy has been hit hard by the news that Dubai World, a government investment company with around $60 billion worth of debt, has asked creditors if it can postpone forthcoming payments until May. Investors are wondering whether the current uncertainty surrounding the emirate has brought the eight-month equities bull run to an end.

Analysts said more clarity about the long-term impact of Dubai's troubles would likely emerge next week, when Wall Street is back to normal trading hours following the Thanksgiving Day holiday. U.S. markets are only open for half the day Friday.

"It is likely to take at least a few days before the implications of the impact of a possible default from Dubai are properly digested but for the present it seems that the market is seeing this negative news as a blow to the global recovery but not one that will push it off course," said Jane Foley, research director at Forex.com.

Investors were also keeping a close eye on associated developments in the currency markets after the dollar slid to a new 14-year low of 84.81 yen.

However, the dollar climbed back off its lows to 86.74 yen amid mounting expectations that the Bank of Japan may intervene in the markets by buying dollars or selling yen after Japan's finance minister Hirohisa Fujii said he was "extremely nervous" about the movements in the yen and that the "market had moved too far in one direction."

On Thursday, the Swiss National Bank reportedly intervened to buy dollars to prevent the export-sapping appreciation of the Swiss franc. That seems to have worked — for now, at least — as the dollar has moved back above parity, trading 0.9 percent higher at 1.0118 Swiss francs.

The British pound has also been battered amid fears about the exposure of Britain's banks to the region. The pound was down nearly one percent earlier but recovered some ground to be trading only 0.3 percent lower at $1.6475.

Another currency struggling somewhat in the current climate was the euro, which fell 0.5 percent to $1.4943 — in times of uncertainty the dollar is considered to be more of a safe haven currency. Investors are also concerned about the exposure of European banks to Dubai.

Earlier, Asian stocks were particularly badly hit as they played catch-up following the big losses in Europe in the previous session. Hong Kong's Hang Seng closed 1,075.91 points, or 4.8 percent, lower at 21,134.50, while South Korea's benchmark plummeted 4.7 percent to 1,524.50.

Elsewhere in Asia, Japan's Nikkei 225 stock average fell 3.2 percent to 9,081.52 while Australia's index dropped 2.9 percent. China's main Shanghai stock measure was off 2.4 percent.

Indexes in emerging markets have so far avoided a second day of heavy losses, with Russia and Brazil down about 1 percent.

Oil, meanwhile, tracked developments in stock markets and benchmark crude for January delivery fell $3.30 to $74.66 a barrel in electronic trading on the New York Mercantile Exchange.


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