I had the good fortune to visit Dubai a couple of years ago. If you look at it strictly as a tourist or perhaps from an academic standpoint, Dubai is unlike anything we’ve ever seen before. Its an Arab Vegas, sans the gambling. When I was there, you can’t fathom the sheer volume of cranes. Think of a downtown area like Houston, Atlanta or Miami. Dubai had 5 or 6 of those under construction simultaneously. Its like the Sheik called up all the big time architecture firms and said “let’s see all of your expensive overly ambitious mothballed building plans and decide which ones we can build in the dessert.” Visually, it is a stunning place. Yes there is an underbelly with the Sharia law, the migrant worker underclass and all the busted dreams. Again, strictly from a tourist standpoint its an eye popping sight

And I told everyone I knew when I came back that I’d be shocked if they filled a third of the office and residential space they were constructing back then. Dubai was very expensive when I was there. I knew a crash would come. I just didn’t know when. Looks like it might be upon us.

The other Palm projects and The World, despite the computer-generated images in the tourist brochures and websites showing green trees and completed houses, are a collection of imported rock and dredged sand on which building work has stopped.

Even more fanciful plans — for a massive seawater canal to be dug around the city to enable waterside properties in the desert hinterland, and another vast offshore island complex called The Universe, are no longer mentioned.

Work on dozens of new skyscrapers continues but building has slowed to a crawl on others. More than 40 per cent of newly built offices are already untenanted, and the available space is expected to double by 2011.

Thousands of the migrant labourers who were bussed in from their desert camps to build Dubai have left as the construction boom faltered. The investment bank UBS thinks that the population of Dubai is shrinking.

The borrowed money has not just gone on property. A state-of-the-art metro train system, operated by Serco, opened amid much fanfare in September at a cost of $7.6 billion. At 9.30am on a Thursday the station at Dubai airport’s cavernous Terminal 3 is empty. The train into the city, capable of carrying more than 640 people, has 21 on board.

Western expats who have been here for a decade or more are still well ahead on their investments even if, as some forecasts predict, house prices dip by 70 per cent from their peaks

This was as predictable as the sun coming up. This was a pure bubble, almost entirely artificially created. Financed with oil money that counted on oil prices going through the roof for the foreseeable future and a philosophy of “if you build it, they will come.” Many did come. Its the primary business hub in the Arab world. But, not enough came. And with a global recession, that’s not going to be corrected anytime soon. With any rapidly developing nation, once your bubble pops, its damn hard to get that investor confidence back, unless there is something fundamentally sound under it all. I’m not sure Dubai has those fundamentals. That amazing stretch of sand will be the topic of many a doctoral thesis over the next couple of decades.