'Australia' and 'New Zealand' drowning in Dubai's debt

'Australia' and 'New Zealand' drowning in Dubai's debt

Oqyana sounds almost like a fantasy land. Check out the movie on its website and you’ll know what I mean. These are the islands of Australia, New Zealand and part of the Pacific in the “The World” development – perhaps the most ambitious of all Dubai’s grand plans.

The video says Oqyana (which is apparently an ancient Arabic word for Oceania or Oceanic) will include floating water homes, luxury hotels, spas and a scuba diving centre set on its own dedicated island. Being “down under” on this world also guarantees great views. I found it hard to even make out the shape of my homeland but the brochures say the villas on “South Victoria Island” will have the best views looking back at Dubai’s impressive skyline.

When Sheikh Mohammed Al-Maktoum, the ruler of Dubai, was briefed on the project back in 2005, he told the local press:

“This is really different. I am very impressed with its uniqueness; it is what we are looking for - totally outside the norm.”

But then a few other things outside the norm came along. First a global recession in 2008, knocking the wind out of Dubai’s speculation-mad real estate industry. A year later and the emirate’s main property developer Nakheel is in serious financial strife.

A $10 billion lifeline from their neighbours in Abu Dhabi may have saved Nakheel from going into default on Monday but it won’t be enough to save “The World.”

Nakheel’s official line is that work is continuing but that’s not quite the reality. Dubai’s real estate insiders tell me it’s a well-known secret that no work is underway on the man-made islands about 4km off the coast.

Boat operators refuse to take you anywhere near them but I took a low-altitude flight to see for myself. Pictures don’t lie and this one was taken just 3 weeks ago. I couldn’t see any workers, or even their equipment - just blobs of sand that appear to be slowly drifting back into the sea from where they came.

The lucky owners of Australia, New Zealand and the Pacific aren’t so pessimistic. I tracked them down in Kuwait, a group called Investment Dar currently holding assets of over $3billion which includes James Bond’s favourite carmaker Aston Martin.

A spokesperson told me they bought the islands outright when they were “just a patch of water”, but even though they’re now just a patch of sand he says their current value is much higher than what they paid (a figure he couldn't provide.)

Oqyana had a team of 40 people based in Dubai but that's been reduced to a skeleton staff with the development currently "suspended" until the global recession wears off. Oqyana's man in Dubai tells me their design plans are complete and they're ready to tender for construction but they'll need building permits from Nakheel to start building.

Given what Nakheel and parent company Dubai World have in front of them right now - trying to restructure $26billion in debt - you’d have to think pushing ahead on such a grandiose project is unlikely anywhere in the near future.

Anyone who’s followed my reporting of Dubai’s financial crisis would know that I’m not a doomsayer and I do believe the city-state will emerge leaner, meaner and more viable from this. But I am of the belief that The World was a bridge too far and its version of Australia, New Zealand and the Pacific will remain nothing more than a fantasy

If they ever prove me wrong, I promise to drop into "Sydney" for a nice warm slice of humble pie.