10 Reasons Why Dubai Is Back - Gulf Business
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10 Reasons Why Dubai Is Back

10 Reasons Why Dubai Is Back

Gulf Business rounds up ten indicators that show that the emirate is back on the growth trajectory.

Dubai’s economy was catapulted on a roller coaster rise to the top before it crashed during the financial crisis in 2008/2009.

The real estate industry collapsed, banks lost billions, jobs dried up, and the city’s jammed roads slowly cleared out.

But judging by recent economic indicators, business is slowly returning to the emirate.

“Government infrastructure and mega projects have increased this year but it hasn’t come back to what it used to be,” Abdul Aziz Al Ghurair, CEO of Mashreq, told Gulf Business.

“We are all benchmarked against that time before 2008, those glorious three years, but we won’t have that back in the near future.

“But the worst is behind us; we are on the path of recovery,” he said.

Here are ten pointers that prove that the city is gradually getting back on track.

1. Tourism boom

Dubai’s tourism industry is on a roll. Hotels recorded a 24 per cent rise in revenues and a nine per cent increase in guest numbers during the first quarter of the year, according to Dubai’s Department of Tourism and Commerce Marketing.

Hotels also saw a 22 per cent jump in guest nights and a 12 per cent rise in the average length of stay during the first three months of the year.

2. Investor confidence returning

The emirate’s Land Department recently announced that residential unit transactions during the first quarter of 2012 totalled Dhs3.1 billion, a nine per cent increase compared to the previous quarter. The total number of transactions also rose five per cent to 2,745 in Q1 2012, it said.

“Signs of investor confidence have returned and the Dubai investment market continues to witness strong interest for high quality, well located, income producing assets,” property consultant Jones Lang LaSalle said in its Q1 Dubai property overview.

3. Timely debt repayment

Although government-related entities (GREs) in the emirate continue to face massive debts, they have started repaying the amounts on time.

Earlier this month, Dubai’s Jebel Ali Free Zone (JAFZA) sought consent from stakeholders for the early redemption of its $2 billion equivalent Sukuk.

The Dubai Holding Commercial Operations Group (DHCOG) also paid on time its $500 million bonds that matured in February 2012.

Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai’s Supreme Fiscal Committee also confirmed earlier this year that Dubai’s GREs would not restructure the debts due in 2012. He said that the government would support its companies through “various options.”

4. Stock markets gaining ground

Dubai Financial Market Company (DFM) recently reported that its net profit reached Dhs30.5 million during the first quarter of the year, a 14-fold increase from the Dhs2.2 million the firm posted during the same period last year.

The results reflected the positive performance posted by DFM listed companies, it said.

Trading volumes during the first quarter rose 87.7 per cent year-on-year to Dhs20.47 billion, and DFM also registered 2613 new investors during the period, a 93.5 per cent year-on-year growth.

5. Retail expansion

Dubai is the second most attractive city in the world for international retailers, according to a recent survey conducted by property adviser CBRE.

In line with that, Dubai’s Mall of the Emirates recently announced that it will open 20 new stores and dining outlets this year, and Emaar Properties also revealed that The Dubai Mall will add more than one million square foot to its existing 12 million square feet area.

Additions will include new hotel rooms and entertainment and lifestyle choices, it said.

6. Rise in recruitment

The number of professionals employed in Dubai is expected to increase four per cent this year, while payroll figures will probably beat inflation at around six to seven per cent, according to Toby Simpson, managing director of The Gulf Recruitment Group.

“Although the global outlook still remains sluggish, Dubai employment activity is showing some signs of life,” he said.

“This is likely due to its hub status in the region as a whole benefitting its service sectors, the development of a burgeoning SME sector and confidence returning to the market post restructuring,” he added.

7. Growth in trade

Dubai’s foreign trade reached a record Dhs1.1 trillion ($299 billion) in 2011, up 22 per cent from the previous year, according to the customs authority.

Imports increased 21 per cent to Dhs442 billion, exports rose 44 per cent to Dhs98 billion, and re-export trade grew 18 per cent to Dhs161 billion.

Increasing competition in the local market, openness to international markets, growth in purchasing power, and improving services offered to importers led to the growth in trade, said Ahmed Butti Ahmed, the director general of Dubai Customs.

8. New project launches

Property developer Nakheel, which completed its $16 billion restructuring last August, has already announced two new residential projects in 2012. The first was a 100-unit townhouse project on the Palm Jumeirah, and the second, announced earlier this week, is a 192 unit residential project, also located on the Palm.

Also, in an extravagant move similar to pre-crisis days, Dubai’s Drydocks World recently signed a deal with a Swiss firm to develop undersea hotels in the emirate.

9. Welcome back, traffic jams

No statistics on this one, but office-goers on Dubai’s roads have certainly started complaining about the nightmarish traffic and the long jams. Now that’s a strong reminder of the pre-crisis 2007/2008 days when traffic issues were a source of everyday gripe and conversation.

10. Customers are back

Apart from the major factors, anecdotal evidence also suggests that Dubai is building up steam again.

According to Shahida, a driving instructor at one of Dubai’s main driving institutes, the number of residents seeking a driving licence has risen in the recent past.

“During the crisis we used to wait for students, but now all our slots are full and we even have a waiting list for new registrations,” she said.

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