Grand Ambition in Dubai

Leave it to glitzy Dubai to throw one of the most extravagant parties in living memory amid the worst global financial crisis since the Great Depression. And leave it to Sol Kerzner, hotelier extraordinaire, "the best saloonkeeper in the world," as his friend Frank Sinatra once dubbed him, to organize the bash.

On Nov. 20, the Dom Pérignon is set to flow as international revelers from Robert De Niro and Jean Paul Gaultier to Bollywood star Bipasha Basu gather to celebrate the grand opening of the Atlantis, a $1.5 billion, 1,500-room hotel resort that is over-the-top even by Dubai's standards. A branch of Kerzner's landmark resort in the Bahamas, the Atlantis features opulent rooms from $450 to $35,000 a night; restaurants by star chefs Nobu Matsuhisa, Giorgio Locatelli, Santi Santamaria and Michel Rostang; a giant aquarium containing 65,000 marine animals; and the Middle East's biggest theme park with a waterslide that plunges through a shark tank — an unintended metaphor for the current parlous state of the Dubai property market.

The hotel is the crown jewel of the Palm Jumeirah, a monumental feat of land reclamation. In the shape of an Arabian date palm, it is the first in a network of man-made islands that is altering Dubai's landscape, adding 1,200 miles (2,000 km) of additional beachfront property to a desert city-state whose natural coastline is a mere 37 miles (60 km). The $20 million extravaganza aims to nail down Dubai's reputation for luxurious excess — an ambition that seems almost anachronistic now that ill winds from Wall Street and the collapse in oil prices are buffeting the entire region.

The decision to go ahead with the high-gloss opening, even as hotel bookings evaporate across the world, is yet another brash statement of Dubai's ambition and confidence. "In Dubai, if you have a fantasy, you don't just fantasize about it, you build it," says Sultan bin Sulayem, Kerzner's partner in the Atlantis, whose firm, Nakheel, constructed the Palm. "It's astounding," agrees Kerzner, sipping Perrier with Sultan recently in the Atlantis' lobby bar. "When I first came here, we were in the middle of the desert. You wonder how you can continue at this pace, at what point this irons out. But Dubai is still going strong, as you can see."

That outlook looks less rosy, of course, since the global economic crash and collapse of the region's oil revenues. Although tourism and property developers are still planning massive new projects, there are signs of a shakeout in Dubai's boomtown housing values, with some analysts expecting up to a 20% decline in the next three years. The combined debt of Dubai's government and public-sector companies has escalated to the point where some analysts say the city-state Dubai might one day need a bailout from its super-rich sister emirate Abu Dhabi, which has more than 8% of the world's petroleum reserves.

For now, though, there are few better displays of Dubai's open embrace of globalization than the partnership that Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum (a pioneering figure in the conservative, Muslim Arabian Peninsula) has established with Kerzner — a famously hard-working, hard-partying casino mogul who is Jewish. Starting more than a decade ago, their affiliation has matured into a full-fledged business relationship that seeks opportunities far beyond Dubai. In 2006, Istithmar, another of the "Dubai Inc." companies owned by Sheikh Mohammed's government, took a major stake in Kerzner International, which owns and operates luxury hotels from Mexico to the Maldives, principally under the One & Only brand. "[Kerzner] fits very well with Sheikh Mohammed," says bin Sulayem (who is also chairman of Dubai World, the parent company of Nakheel and Istithmar). "I could see the eye contact between them. Sheikh Mohammed said, 'This guy has vision, and these are the kind of people we want to see in Dubai.' "