Economy of Dubai

Dubai's gross domestic product as of 2008 was US $82.11 billion.^[1] The Great Recession slowed the construction boom.^[2]

The International Herald Tribune has described it as "centrally-planned free-market capitalism."^[3] Although Dubai's economy was initially built on revenues from the oil industry,^[4] revenue from petroleum and natural gas currently account for less than 2% of the emirate's gross domestic product. Dubai became important ports of call for Western manufacturers. Most of the new city's banking and financial centres were headquartered in the port area. Dubai maintained its importance as a trade route through the 1970s and 1980s. The city of Dubai has a free trade in gold and until the 1990s was the hub of a "brisk smuggling trade" of gold ingots to India, where gold import was restricted.

Today, Dubai has focused its economy on tourism by building hotels and developing real estate. Port Jebel Ali, constructed in the 1970s, has the largest man-made harbor in the world, but is also increasingly developing as a hub for service industries such as IT and finance, with the new Dubai International Financial Centre (DIFC). Emirates Airline was founded by the government in 1985 and is still state-owned; based at Dubai International Airport, it carried over 28 million passengers in fiscal year 2006 and 24 million the year before.

According to Healy Consultants, Dubai is the top business gateway for the Middle East and Africa.^[5] The government has set up industry-specific free zones throughout the city in hopes of giving a boost to Dubai property. Dubai Internet City, now combined with Dubai Media City as part of TECOM (Dubai Technology, Electronic Commerce and Media Free Zone Authority) is one such enclave whose members include IT firms such as EMC Corporation, Oracle Corporation, Microsoft, Sage Software and IBM, and media organisations such as MBC, CNN, Reuters and AP. Dubai Knowledge Village (KV), an education and training hub, is also set up to complement the Free Zone's other two clusters, Dubai Internet City and Dubai Media City, by providing the facilities to train the clusters' future knowledge workers. Dubai Outsourcing Zone is for companies who are involved in outsourcing activities can set up their offices with concessions provided by Dubai Government. Internet access is restricted in most areas of Dubai with a proxy server filtering out sites deemed to be against cultural and religious values of the UAE.

Real estate and property

The government's decision to diversify from a trade-based but oil-reliant economy to one that is service- and tourism-oriented resulted in the property boom from 2004–2008. Construction on a large scale has turned Dubai into one of the fastest-growing cities in the world.

The property boom is largely driven by megaprojects such as the off-shore Palm Islands and The World, and the inland Dubai Marina, Burj Khalifa complex, Dubai Waterfront, Business Bay, Dubailand and Jumeirah Village.

The Jumeirah Palm, the world's largest man-made island.

Dubai is home to skyscrapers such as Emirates Towers, which are the 12th and 24th tallest buildings in the world, and the Burj-al-Arab hotel, located on its own island in the Persian Gulf and currently the world's fifth tallest^[6] and most expensive hotel.

Emaar Properties constructed what was at the time the world's tallest structure, the Burj Khalifa. The height of the skyscraper is 828 m (2,717 ft) tall, with 160 floors. Adjacent to Burj Khalifa is the Dubai Mall, which at the time of construction was the world's largest shopping mall.

Also under construction is what is planned to become Dubai's new central business district, named Business Bay. The project, when completed, will feature 500 skyscrapers built around an artificial extension of the existing Dubai Creek.

In February 2005, the construction of Dubai Waterfront was announced, it will be 2½ times the size of Washington, D.C., roughly seven times the size of the island of Manhattan. Dubai Waterfront will be a mix of canals and islands full of hotels and residential areas that will add 800 km (500 mi) of man-made waterfront. It will also contain Al Burj, another one of the tallest buildings in the world.

Dubai has also launched Dubiotech. This is a new business park to be targeted at biotechnology companies working in pharmaceuticals, medical fields, genetic research and biodefense.

One of Dubai's plans in 2006 was for a 30-story, 200 apartment skyscraper that will slowly rotate at its base, making a 360 degree revolution once a week. The world's first rotating skyscraper was to be in the center of the Dubailand complex.^[7]

There are over 300 stores in the Gold Souk.

The International Media Production Zone is a project targeted at creating a hub for printers, publishers, media production companies, and related industry segments. Launched in 2003, the project was scheduled to be completed in 2006.

In May 2006 the Bawadi was announced, with a planned 27 billion US-dollar investment intended to increase Dubai's number of hotel rooms by 29,000, doubling it from the current figure offers now. The largest complex was to be called "Asia, Asia" and was planned to be the largest hotel in the world with more than 6,500 rooms.

The first villa freehold properties that were occupied by non-UAE nationals were The Meadows, The Springs, and The Lakes (high-end neighbourhoods designed by Emaar Properties, collectively called Emirates Hills).

Expatriates of various nationalities brought capital into Dubai in the early 2000s. Iranian expatriates were estimated to have invested up to $200 billion in Dubai.^[8] From 2005 to 2009, trade between Dubai and Iran tripled to $12 billion.^[9]

Dubai nationals have also purchased real estate in New York and London. Purchases in 2005 included New York's 230 Park Avenue (formerly known as the New York Central Building or the Helmsley Building) and Essex House on Central Park South.

The Dubai property boom of the mid-2000s peaked in 2008 and plummeted in a wave of activity which saw large scale projects, including partially completed properties, abandoned. Many developers failed, while others, including those with government backing, entered into debt-restructuring deals with their lenders. By 2012 the market began picking up steam again. 2013 was a stellar year with prices accelerating significantly, however the government and industry players began putting in place measures that would safeguard against another bubble developing. One notable difference is the number of cash buyers compared to those in previous years that borrowed heavily. Part of the reason for the current cash surge is the influx of investment from troubled countries.^[10]

In September 2013, the Dubai Land Department increased property transfer fees from 2 to 4%.^[11] In early 2014 the government regulator imposed restrictions on outside-companies acquiring real estate in the emirate, insisting such companies had to have a presence in Dubai, and had to be owned by a natural person or persons, and not by another company. The measures were largely seen as a means to dampen speculation in property prices.^[12]

Construction

Since 2000, Dubai's municipality has initiated construction phases in the city, predominantly in the Mina Seyahi area, located further from Jumeirah, towards Jebel Ali. This has come at a cost however. Dubai ( and UAE ) construction companies employ low-wage labourers from Asia for up to 12 hours a day, six or seven days a week.^[13] These workers often have their passports withheld and are threatened if they speak to media. During the 90s and 00s, many workers staged protests and those who were expats were deported.^[14][15]

In 2002 a change was made to the law allowing non-nationals of the UAE to own property (not land) in Dubai as fee simple, and 99-year leases are sold to people with ownership remaining with private companies. Property companies include Nakheel Properties and Emaar Properties. Rent rises were capped at 7% per annum up to 2007 under a directive from Mohammed bin Rashid Al Maktoum. Legislation in this area is still developing as the property market for foreigners is relatively new.

See also

• Dubai World
• Economy of the United Arab Emirates
• The National Sukuk Program
• Human rights in the United Arab Emirates

References

External links

• UAE Banking Digest