Economic crisis halts construction of world's tallest skyscraper

Published: Wednesday, January 14, 2009 at 9:57 a.m.
Last Modified: Wednesday, January 14, 2009 at 9:57 a.m.

DUBAI, United Arab Emirates The developer of a skyscraper set to soar two-thirds of a mile above Dubai said Wednesday it's halting work on the project for a year as the boomtown grapples with the financial crisis.

Burj Dubai
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Burj Dubai

Burj Dubai, the world's tallest under construction building, in Dubai, United Arab Emirates, Wednesday, Dec. 31, 2008. Skyscrapers here continue to rise and New Year's parties running to well over $2,000 a head are still on. Compared with war-ravaged Gaza and Baghdad, Dubai remains for many a shining Middle East success story. Yet the fallout from the economic crisis has forced this traditionally optimistic boomtown to eye 2009 with an uncertainty unknown for years, if ever. Property buyers are disappearing. Consumers are holding on to their wallets. Job cuts have begun.

Kamran Jebreili/The Associated Press

Nakheel's decision to shelve the landmark development which it unveiled only in October came as a leading credit rating firm warned that falling real estate prices leave the outlook for the country's banking sector looking negative.

The moves are the latest signs that tough economic realities are quickly catching up with this ambitious, fast-growing city.

A report a day earlier showed home values in the emirate tumbled 8 percent in the last three months from the previous quarter, marking what analysts say is the first such decline in years.

The skyscraper billed as at least two-thirds of a mile tall, or the height of more than three of New York's Chrysler Buildings stacked on top of one another was designed to top a rival's nearly complete tower that will be the world's highest.

In response to questions, state-owned Nakheel said in a brief statement that "further work" on the building's foundations "will commence in 12 months." The developer did not say how much work, if any, has already been completed.

"This is part of our readjustment of our immediate business plans to better reflect the current market trends and match supply with demand," the company said.

Meanwhile, credit rating firm Moody's Investors Service said about the outlook is negative for banks in Dubai and elsewhere in the United Arab Emirates.

The firm cited concern about loans given to "opportunistic" property developers in light of falling real estate prices. Other worrying signs include tighter liquidity, falling equity values, and the steep drop in oil prices, Moody's said.

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