Over the past eight years Dubai has rapidly become a global center of extravagance, an area characterized by ever more lavish building projects-- islands and peninsulas arising out of the sea and a skyline filled with cranes as more and more towers rise. But is Dubai in trouble? Worries about falling real estate prices and the amount of debt that Dubai has been carrying has led to fears that Abu Dhabi might have to bail out its flashier fellow Emirate. For years Dubai has commanded attention with tall towers and exotic properties but it is Abu Dhabi that has the oil wealth. In light of the crisis over the weekend two Dubai-based mortgage lenders, Amlak and Tamweel, will be merged into a single entity, the Real Estate Bank, which will be funded by the United Arab Emirates government.

Emaar Properties chairman Mohammed Ali Alabbar who is a top adviser to the emirate's ruler and also the chair of an advisory council set up to help Dubai maneuver through the financial crisis spoke at a conference in Dubai to reassure the world that Dubai is strong. He said the emirate's sovereign debt obligation is $10 billion while government-run companies have an estimated $70 billion of debt balanced against total assets are valued at more than $350 billion. He acknowledged the economic crisis and said that the country is looking carefully at funding projects going forward.

Some analysts have seen this as a necessary correction to the overinflated and unsustainable growth rates that have led some to predict this outcome for years. It can be guessed that some projects in development will either not make their estimated completion dates or may not be completed at all. Many of these projects were designed to lure tourists but at a time when even the wealthiest are reevaluating their spending, this desert oasis may have planned for guests that will be slow to arrive.