A Visit To Dubai Inc.

Steve Kroft Reports On A Success Story In The Middle East

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Eight years ago, Sheikh Mohammed decided what Dubai needed was more waterfront property and beaches for all the tourists who are going to come. Dubai only had 60 miles of coastline, so ordered Sultan Bin Sulayem to create more.

"After two months, I came to him and I showed him this picture, of a perspective of a picture of an island. He said 'How much beach is this going to give us?' I said seven kilometer. He said 'Why not 70?' You know he always ask you the impossible. Not what you are able, but what you cannot do," Sultan Bin Sulayem remembers.

"So, Sheikh Mohammed gave you the land and told you to start building?" Kroft asks.

"He gave us the water," Sultan Bin Sulayem says. "We have to make the land."

Business consultants told him the project was unfeasible, but with no environmental regulations to stop him, Sultan began dredging a hundred million cubic yards of sand from the Persian Gulf, along with seven million tons of rock to form a man-made Island in the shape of a palm. It more the doubled the coastline of Dubai, and created waterfront condos and homes for 150,000 people, not including 35 hotels.

"Most people, if they brought in a business consultant, and they told them, 'This is a terrible idea. It's not gonna work.' They wouldn't do it," Kroft remarks.

"Most people, yes, but not us," Sheikh Mohammed says.

"I must tell you, your Highness, that there are some members on your team who, from time to time had doubts. I won't name them, but they looked and they said, after you told them what you wanted they said, 'This is impossible,'" Kroft remarks. "They thought that you were crazy."

"Yeah, if you don't want to name them, I can name them," the sheikh said, laughing.

It's easy to laugh about it now. The palm island project sold out in less than a week, and houses that initially went for $1 million are being resold by original investors and real estate speculators for five times that. But the day 60 Minutes went ashore, a month after the official opening, the island was a ghost town.

"People just started moving in," Sultan Bin Sulayem explains.

It's not clear when or if people will actually start moving in. Most of the properties were bought as second or third homes by wealthy Arabs, Russians, and Europeans to be used a few months a year, or as real estate investments, or a way to move money offshore to a safe haven. But it has not stopped the building.

Three more off-shore developments are underway, including a chain of 300 man-made islands, some of which will be private. They are shaped and situated to resemble a map of the world, which is what the project is called. Demand is said to be strong, but to many, Dubai has the feel of a speculative bubble, that could burst.

Man-made islands with multi-million dollar homes on them are only one component of Sheikh Mohammed's vision to make his kingdom a safe haven for capital and a model for social and political change in the region.

From financiers and entrepreneurs, to construction workers and maids, Dubai has become a kind of El Dorado, the setting for a modern day gold rush. Everything is in overdrive. And not surprisingly, the speed of it all has had unintended social and political consequences.

"A number of people have described you as the chief executive officer of a huge business enterprise. Is that an accurate way of describing what you do?" Kroft asks the sheikh.

"Actually, yes. I change the way of government to make it like a big company," Sheikh Mohammed says.

Some people call it Dubai Inc. and, besides investments at home, includes extensive holdings throughout the Middle East and around the world. In the U.S. its list of properties is way too long to go into but includes resorts, hotels and real estate holdings from Las Vegas to New York. The company is also negotiating to buy a significant interest in the NASDAQ stock exchange.