A new downtown L.A., sponsored by ... Dubai

What happens when you combine a collapsing dollar, America's addiction to oil, a slumping commercial real estate market, tight credit markets, and hopes for revitalization of downtown Los Angeles?

You get a situation where the royal family of Dubai plays a major role in shaping the future of Los Angeles.

News item: "Armed with $100 million from Dubai and a refined design plan, officials Monday said construction will finally begin next month on the Frank Gehry-designed residential and shopping plaza along Grand Avenue that is considered a linchpin to downtown L.A.'s revitalization."

More, from the L.A. Times: "The announcement comes after months of delays and questions about the viability of such a massive development in the midst of L.A.'s real estate slump. But those doubts were eased significantly Monday when the government agency overseeing the redevelopment approved the investment of Istithmar, a fund controlled by the royal family of Dubai."

OK, the floor is open. Add comments and observations, or e-mail story tips to peter.viles@latimes.com.
Photo Credit: Related Cos./Gehry Partners via L.A. Times.

Comments

[NationalBubble.com]

Great!
Let's just sell our country out in little pieces.

http://tinyurl.com/ypdltm

[SReno]

Check out your typical Real Estate Agent.

http://youtube.com/watch?v=R5uuq-ibCbg&feature=
related

[sunsetbeachguy]

Dubai seems to have forgotten the Japanese experience in buying Rockefeller Center, Pebble Beach, Heavenly Ski Resort, Steamboat Springs Ski resort, etc.

They all ended up getting sold back to Americans at pennies on the dollar.

But hey, what is a couple hundred million of recycled petro-dollars for a little ego stroke.

[mark g]

This is the Royal Family of Duabai version of taking the kids to the fair and pitching pennies at those bottle openings...

[MyLessThanPrimeBeef]

That's just great.

In addition to the empty units in Palm Island, Dubai that the builder has to resort to luring buyers with offers of free Mini Cooper, there will be more empty units on Grant Avenue, Los Angelges.

But, heck, they have money and will have more money than they know what to do when oil hits $200 a barrel. Here is another project: http://www.welt.de/lifestyle/article1812919/In_
Drehhaeusern_gehts_ganz_schoen_rund_.html

All environmental friendly with energy supplied by windturbines, towers rotating to take advantage of the sun and all...nevermind the fact that the buildings don't belong there in the middle of the ocean in the first place.

[Rich]

I said in a comment a few months back that LA real estate might not be overpriced in the world market given the cheap dollar, but that residential real estate doesn't market readily across borders. This, however, is a manifestation of how commercial real estate does allow participation in the world market. You should recall that throughout the booming '80's the Japanese invested in commercial real estate throughout the US, overpaying by local standards and infusing cash into our economy. The Japanese eventually got burned by our real estate crash of the late '80's and sold out of our market. We should welcome the idea that foreign investors see these projects as a good value rather than gripe about "foreigners taking over America blah blah blah..."

[puckhead]

Nationalbubble.com,

I don’t get it, are you actively rooting for a market gridlock and a recession? This is great news for LA. The credit markets are a mess and all of the US investors are in such a panic mold that projects like this were dead in the water. Maybe this investment by Dubai will bring some confidence back into the market and US banks will start lending money again and the economy will start moving. This project will bring lots of jobs into SoCal and pump some much needed business into the local economy. The project is for downtown housing which is kind of a “niche” market by itself and should not affect overall SoCal home prices. If the project is a bust, does anyone really care that Dubai looses some money? Overall, great news for SoCal.

[Rob]

Okay, tear down some of the last parking lots in DT and put up a bunch of buildings. Force everyone to pay $40.00 a day to park... ummm, time 356 days carry the 2.....yep. You will recoup your investment in 10 years. Genius...

[John]

Just look on the bright side.

Any mosques they choose to build couldn't possibly be more of an aesthetic disgrace than the Our Lady of the Angels Cathedral.

[Uncle Billy]

Dubai is an interesting place. Disneyland for the $100M plus club. Supposedly less than 6% of their economy is based on oil. 42% comes from trade, "etrepot" (duty free) and financial services.

It seems like the hot new cayman islands or panama, a place to move your money and let it get lost in the digital flow. If you're a hedge fund manager or ceo with oodles of extra taxable cash, head for Dubai -- everybody's doing it.

The guy who runs Istithmar, David Jackson, was one of a group from Lehman brothers that left to form Marco Polo Partners. They specialize in international trading -- the ability to send billions to other countries at the push of a button. Who wants to bet that they've had a huge uptick in business in the last couple of years? Nice coi-inky-dink... Jackson is a yalee, just like Dubyah.

So where's all that money coming from? Sure, some of it is $3.90 gas, but I'll bet a hefty portion comes right on the back of our housing collapse.

Since Dubyah said the following, I'm going to automatically assume that DFI (direct foreign investment is bad): "Let me talk about another aspect of keeping markets open. A confident nation accepts capital from overseas. We can protect our people against investments that jeopardize our national security, but it makes no sense to deny capital, including sovereign wealth funds, from access to the U.S. markets. It's our money to begin with. (Laughter.) It seems like we ought to let it back. (Applause.) "

I'm glad he thinks its funny. I wonder if his mama thinks its funny.

So is direct foreign investment ok if the source of the money is fuzzy and questionable or has been made at our expense?

To quote Dubyah again from the same speech:
"Anyway, I'm going to dodge the rest of your question. (Laughter.) Thank you for your time. (Applause.) "

Keep your tuxedo on, Mr. President.

[Joshua Reyes]

Puckhead's comment is positive and true. This latest development concerning the Royal Family's fund investing in the project in turn shows that foreign investors are still interested in the market, despite it's current condition.

[JohnnyB]

Hey, it's better than Dubai "sovereign wealth" buying up stakes in U.S. banks, investment houses and other core assets... oh, they're doing that too?

Never mind...

[CD]

John is right
That Lady of the Angels Cathedral is the worst looking building in LA. What an eyesore.Looks like a jail. What are they building across from that Church on the other side, it looks like a roller coaster ? All steel...
I welcome another Gehry building, he is fun....It's good for downtown LA.
Lift our spirit up a bit.....

[LeavinLA]

US investors couldn't get the project going. That foreign investment will create US jobs. We live in a global economy, people. Get over it.

[Tombstone Realty]

I believe Dubai is also the same country with that weird underwater sea building, and that other thing that looks like a sail.

So don't get your hopes up - they'll make LA just as ugly as Gehry is.

Besides, if you've ever walked by the Walt Disney Center on a hot day, you get hit with walls of radiant heat - now imagine if ALL downtown was like that. There would be nowhere to hide.

But apparently only the rich will have that problem.... we poor folk will be out in Lancaster.

[AimlessDriver]

But apparently only the rich will have that problem.... we poor folk will be out in Lancaster.
-------

Where they will be buffetted by .....wait for it.....walls of radiant heat.

You lose again, poor people.

[Kate]

That high-rise looks blinding.

[lefty]

hey guys, architect geary has his famous residence in: fantastic metro L.A.!! that's right, beautiful santa monica. and you know what, it is time for you to make your move back here so start shopping! good luck!

[seattlesnoop]

Great! Will Dubai also be providing the tenants, commercial and residential, that will inhabit this redevelopment?
Looks like the lights will be on but no one will be home.

[peter m]

"Armed with $100 million from Dubai and a refined design plan, officials Monday said construction will finally begin next month on the residential and shopping plaza along Grand Avenue that is considered a linchpin to downtown L.A.’s revitalization.”

Same old BS about 'revitalizing' dwtn. The collapse of Bear sterns/financial meltdowns on wall st will affect some hi-powered LA dwtn financial firms as well. US /worldwide financial credit collapse will reverberate and shake dwtn LA jobs like a sudden slip of one of the several hundred earthquake faults which run thru dwtn.

Combine that with hi paying state jobs and agencies located in dwtn getting the budget-cutting axe. Tons of state/fed agencies located dwtn . The LAUSD last year moved into a spankin-new Hi-rise off 110 fwy: Some of those staffers will, or should be, getting the budget axe

Combine all the above with the fixed unalterable age- old negatives with dwtn: Barren concrete aspect, homeless, surrounding third world hellholes,warehouse/ fashion districts having aging rotted 100+ yr old decaying industrial buildings reeking of sewer smells, sidewalks reeking of urine and gum, Hi=rises & condos as inviting and difficult of access as guarded pillboxes , ect.

Why not scam naive foreign buyers flush with cash to invest in Dwtn projects. RE developers,the REIC, realtors, brokers, dwtn boosters are basically scammers and conmen anyway, using any agi-prop ploy to get investors to throw money into dubious idiotic projects like building super duper 100 story futuristic blade-runner towers right smack on grand ave over former decaying 100 Yr old crumbing parking lots.

[IToldu2CashOut]

This is great news for LA. I'm sure there will be a back up plan to lease it as office space. It won't be done fore many years, so by that time real estate will be stabilized. Good for everyone.

[Shane Purcellis]

What's happening Downtown is reminding me a lot of what's happening just south of downtown in the USC neighborhood. Money keeps pouring in despite the fact that demand isn't there. Urban Partners is planning to build the University Gateway project even though the market already has vacancies and rents are starting to drop. Also, USC announced it's Master Plan to guarantee housing for all students by 2011 (www.usc.edu/masterplan), and equity and lenders are still giving money for development. In 5 years, there won't even be a need for the private housing sector at USC. This is crazy!

[MyLessThanPrimeBeef]

Seattlesnoop, if push comes to shove, there will be no problem finding tenants - they are otherwise known as excess odalisques and out of favor harem wives.

Do buy, Dubai.

Do buy!

Do buy!

Do buy!

[Geek Seek]

Nugget for MLTPB:

From the Sunday Times (London) --

The newspaper recently conducted a survey of property in England and Wales (but not within London) and discovered that more than two-thirds of property in areas that were once Roman settlements sell for price premiums of 27% or higher. Some reach premiums of 50%, she says.

For locales like Winchester, St. Albans, Welwyn and Bath, their proximity to London -- which served as the Roman's provincial capital -- account for their intrinsic value, she says. She notes that often, it's the towns with a Roman past that have developed into today's modern day educational and cultural centers.

It's no wonder that the Romans were so adept at scouting out real estate -- they were house-obsessed, with the wealthy often owning multiple homes outfitted with the latest amenities, such as swimming pools. And if the rich couldn't outright afford to buy a home, they borrowed. "There weren't mortgages as such, but there were primitive banks and a series of private deals -- not to mention good bargains to be picked up when overstretched borrowers defaulted..."

[MyLessThanPrimeBeef]

GeekSeek, thanks for that nugget.

It just goes to show that there is nothing new under the sun: like the flippers today, Romans were good at one of the oldest schemes of moneymaking - real estate speculation. Julius Caesar's partner in the First Triumvirate and a very rich man, Marcus Licinius Crassus, he made his fortunate speculating in Roman land and houses. And like many celebrities and business tycoons today, he thought he ought to get into politics. He then fancied himself as the second coming of the son of gods, Alexander of Macedon and decided to wage war on the Parthian territorialists. Why, I am not quite sure. In any case, as often happened to amateurs and egomaniacs, he lost a key battle and was later captured by the Parthians and died from having molten gold poured down his throat.

The connection to your story is this: Partia, for not having been under Roman control, at least not under Crassus, the real estate there along the middle and lower Euphrates today is, well, shall we say, not in a bubble?

[krone]

what the hell did you just say?

[krone]

anyway, i believe this project has the opportunity of becomming a truely revitalizing factor in downtown los angeles. there could be no greater test case since it is effectively like building an oasis in the desert, similar to los angeles itself.
also, as stated prior, the dubai investment is a very good sign that world investors currently believe in our near future economy, and money will be the language that binds that region and ours in a functioning world market.
this project, on many levels, is truely progressive.

[MyLessThanPrimeBeef]

Krone, it's a combined-effort inter-disciplinary two-part post. You have to read both.