Economy of Dubai
Encyclopedia
The economy of Dubai was valued at US$
46 billion as of 2006. The Late-2000s recession slowed the construction boom.
The International Herald Tribune has described it as "centrally-planned free-market capitalism." Although Dubai's economy was built on the back of the oil industry, revenue from petroleum
and natural gas
currently account for less than 6% 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 ingot
s to India
, where gold import was restricted.
Today, Dubai is an important tourist destination (see Tourism in Dubai) and port (Jebel Ali
, constructed in the 1970s, has the largest man-made harbour 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). Transport links are bolstered by its rapidly-expanding Emirates Airline
, founded by the government in 1985 and still state-owned; based at Dubai International Airport, it carried over 28 million passengers in fiscal year 2006 and 24 million the year before.
The government has set up industry-specific free zones
throughout the city. 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
, and IBM
, and media organisations such as MBC
, CNN
, Reuters
, ARY 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. However, areas served by TECOM (an internet service provider) are currently not filtered.
more valuable, resulting in the property boom from 2004–2006. 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 — these are just some of many projects planned for Dubai:
The aspirations of the ruling sheikhs are reflected by the ultra-modern architecture of the city. Dubai is home to iconic 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 very own island in the Persian Gulf
and currently the world's tallest and most expensive hotel.
Emaar Properties constructed the world's tallest structure, the Burj Khalifa. The height of the skyscraper is 828 m (2,717 ft) tall, with 160 floors. Burj Khalifa's neighbour is another behemoth: the world's largest shopping mall — the Dubai 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 a phenomenal 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 (497.1 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 park to be targeted at Biotech companies working in pharma
, medical fields, genetic research
and even biodefense
. The aim of this park is to foster the growth of this sector in Dubai and to utilize the region's talent in addressing this rapidly growing sector.
One of Dubai's recent groundbreaking plans is 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 is to be in the center of the Dubailand complex and should be completed by 2009.
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 is scheduled to be completed in 2006.
A new project was announced on May 1, 2006 by the authorities. It is named Bawadi
and will consist of a 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 will be called "Asia, Asia" and will 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 have been pouring capital into Dubai in the past several years, greatly contributing to the city's prosperity. Iranian expatriates alone are estimated to have invested up to $200 billion in Dubai. From 2005 to 2009, trade between Dubai and Iran
tripled to $12 billion.
Dubai interests have also purchased large amounts of real estate in foreign countries, in particular snapping up trophy properties in global centers like 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
.
See the Dubai Department of Tourism and Commerce Marketing's list of developments in Dubai for more information.
, towards Jebel Ali. Many areas of Dubai are dominated by the large number of construction cranes. Construction in Dubai and the UAE in general is a much faster process than in any Western country. This is partly because Dubai construction companies employ many low-wage labourers from the Asian subcontinent for up to 12 hours a day, six or seven days a week.
One of the main reasons for the boom in construction in Dubai is its drive to diversify the economy. The Dubai government does not want to depend on its oil reserves, which are largely believed to become exhausted by 2010 (Which has actually happened) and, as such, has diversified its economy to attract revenues in the form of expanding commercial and corporate activity. Tourism is also being promoted at a staggering rate with the construction of Dubailand and other projects that include the making of mammoth shopping malls, theme parks, resorts, stadiums and various other tourist attractions.
Another reason for the construction boom is the recent reversal of a law in 2002 that allows non-nationals of the UAE to own property (not land) in Dubai (albeit freehold
and 99-year leases are actually sold to people with ownership still remaining with private companies). The larger of the property tycoons are Nakheel Properties
and Emaar Properties
. Rents have skyrocketed with the recent inflow of professionals and companies from around the world who are attracted by Dubai's no-tax benefits although rises have recently been capped to 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.
An article in the Wall Street Journal in October 2009 reported that Dubai's economy, heavily dependent on real estate where prices have fallen 50% in a year, has been badly hit by the global financial crisis, unlike its wealthier neighboring emirate, Abu Dhabi. Dubai has $50 billion of debt coming due in the next three years, according to Standard & Poors. But its total debts are estimated to exceed $80 billion.
In another article in October 2009, Reuters reported that one in four homes is vacant in Dubai and a quarter of office space lies empty due to oversupply, and additional supply coming onto the market will continue to put pressure on prices, Colliers International said on Wednesday.
The property services firm said in a report the emirate will have 340,000 residential units by the end of 2009, with another 34,300 expected to come online in the next two years.
Meanwhile, leasable commercial space is expected to double to six million square metres by 2011, Colliers said.
“The survey indicates a market beset with falling demand and oversupply evidenced through increasing vacancy levels and falling take up rates”, it said.
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
46 billion as of 2006. The Late-2000s recession slowed the construction boom.
The International Herald Tribune has described it as "centrally-planned free-market capitalism." Although Dubai's economy was built on the back of the oil industry, revenue from petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
currently account for less than 6% of the emirate's gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. 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
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
in gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and until the 1990s was the hub of a "brisk smuggling
Smuggling
Smuggling is the clandestine transportation of goods or persons, such as out of a building, into a prison, or across an international border, in violation of applicable laws or other regulations.There are various motivations to smuggle...
trade" of gold ingot
Ingot
An ingot is a material, usually metal, that is cast into a shape suitable for further processing. Non-metallic and semiconductor materials prepared in bulk form may also be referred to as ingots, particularly when cast by mold based methods.-Uses:...
s to India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, where gold import was restricted.
Today, Dubai is an important tourist destination (see Tourism in Dubai) and port (Jebel Ali
Jebel Ali
Jebel Ali is a port town, located 35 kilometres southwest of the city of Dubai in the United Arab Emirates . The village has a thriving expatriate community with over 300 residents. The area is also home to "5,500 companies from 120 countries"....
, constructed in the 1970s, has the largest man-made harbour in the world), but is also increasingly developing as a hub for service industries such as IT
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
and finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, with the new Dubai International Financial Centre (DIFC). Transport links are bolstered by its rapidly-expanding Emirates Airline
Emirates Airline
Emirates is the airline based in the Emirate of Dubai part of the United Arab Emirates . Based at Dubai International Airport it is the largest airline in the Middle East, operating over 2,400 flights per week, from its hub at Terminal 3, to 111 cities in 62 countries across six continents...
, founded by the government in 1985 and still state-owned; based at Dubai International Airport, it carried over 28 million passengers in fiscal year 2006 and 24 million the year before.
The government has set up industry-specific free zones
Free economic zone
Many countries have, or have had at some time, designated areas where companies are taxed very lightly or not at all to encourage development or for some other reason...
throughout the city. Dubai Internet City
Dubai Internet City
Dubai Internet City is an information technology park created by the government of Dubai as a free economic zone and a strategic base for companies targeting regional emerging markets. The economic rules of DIC allow companies to avail themselves of a number of ownership, taxation and custom...
, now combined with Dubai Media City
Dubai Media City
Dubai Media City , part of Dubai Holding, is a tax-free zone within Dubai, United Arab Emirates. It has been built by the Dubai government to boost UAE's media foothold, and has become a regional hub for media organizations including news agencies, publishing, online media, advertising, production,...
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
EMC Corporation
EMC Corporation , a Financial Times Global 500, Fortune 500 and S&P 500 company, develops, delivers and supports information infrastructure and virtual infrastructure hardware, software, and services. EMC is headquartered in Hopkinton, Massachusetts, USA.Former Intel executive Richard Egan and his...
, Oracle Corporation
Oracle Corporation
Oracle Corporation is an American multinational computer technology corporation that specializes in developing and marketing hardware systems and enterprise software products – particularly database management systems...
, Microsoft
Microsoft
Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions...
, and IBM
IBM
International Business Machines Corporation or IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas...
, and media organisations such as MBC
Middle East Broadcasting Center
The Middle East Broadcasting Center Group is the first private free-to-air satellite broadcasting company in the Arab World which was launched in London in 1991 and later moved to its headquarters in Dubai in 2002. MBC Group provides multiple channels of information, interaction and entertainment...
, CNN
CNN
Cable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...
, Reuters
Reuters
Reuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
, ARY and AP
Associated Press
The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
. Dubai Knowledge Village
Dubai Knowledge Village
Dubai Knowledge Village is a educational free trade zone campus in the city of Dubai, United Arab Emirates, that provides facilities for training and learning institutions to operate with 100% foreign ownership. There are over 400 institutions operating within it, which include universities,...
(KV) ,an education and training hub, is also set up to complement the Free Zone's other two clusters, Dubai Internet City
Dubai Internet City
Dubai Internet City is an information technology park created by the government of Dubai as a free economic zone and a strategic base for companies targeting regional emerging markets. The economic rules of DIC allow companies to avail themselves of a number of ownership, taxation and custom...
and Dubai Media City
Dubai Media City
Dubai Media City , part of Dubai Holding, is a tax-free zone within Dubai, United Arab Emirates. It has been built by the Dubai government to boost UAE's media foothold, and has become a regional hub for media organizations including news agencies, publishing, online media, advertising, production,...
, 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. However, areas served by TECOM (an internet service provider) are currently not filtered.
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 has made real estateReal estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
more valuable, resulting in the property boom from 2004–2006. 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 — these are just some of many projects planned for Dubai:
- Off-shore:
- Palm IslandsPalm IslandsThe Palm Islands are an artificial archipelago in Dubai, United Arab Emirates on which major commercial and residential infrastructures will be constructed...
- The WorldThe World (archipelago)The World or World Islands is an artificial archipelago of various small islands constructed in the rough shape of a world map, located off the coast of Dubai, United Arab Emirates. The World islands are composed mainly of sand dredged from Dubai's shallow coastal waters, and are one of several...
- Palm Islands
- Inland:
- Dubai MarinaDubai MarinaDubai Marina is a district in the heart of what has become known as "new Dubai" in Dubai, United Arab Emirates. Dubai Marina is a canal city, carved along a two mile stretch of Persian Gulf shoreline. When the entire development is complete, it will accommodate more than 120,000 people in...
- The Burj Khalifa Complex
- Dubai WaterfrontDubai WaterfrontThe Dubai Waterfront was expected to become the largest waterfront and largest man-made development in the world. The project is a conglomeration of canals and artificial archipelago; it will occupy the last remaining Persian Gulf coastline of Dubai, the most populous emirate of the United Arab...
- Business BayBusiness BayBusiness Bay is a central business district under construction in Dubai, United Arab Emirates. The project features numerous skyscrapers located in an area where Dubai Creek will be dredged and extended. Business Bay will have upwards of 240 buildings, comprising commercial and residential...
- Dubailand
- Jumeirah VillageJumeirah VillageJumeirah Village is a new community by Nakheel near Dubai Sports City in Dubai, United Arab Emirates. Jumeirah village has two main areas, Jumeirah Village South and Jumeirah Village North. This project was launched in August 2004 and is due for completion in 2009...
- Dubai Marina
Emirates Towers
The Emirates Towers complex contains the Emirates Office Tower and Jumeirah Emirates Towers Hotel. The two towers, which rise to and , respectively, stand as the 12th- and 29th-tallest buildings in the world. The two towers are connected by a 9,000 m² two-storey retail complex known as "The...
, which are the 12th and 24th tallest buildings in the world and the Burj-al-Arab hotel, located on its very own island in the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
and currently the world's tallest and most expensive hotel.
Emaar Properties constructed the world's tallest structure, the Burj Khalifa. The height of the skyscraper is 828 m (2,717 ft) tall, with 160 floors. Burj Khalifa's neighbour is another behemoth: the world's largest shopping mall — the Dubai Mall
Dubai Mall
The Dubai Mall is the world's largest shopping mall based on total area and sixth largest by gross leasable area. Located in Dubai, United Arab Emirates, it is part of the 20-billion-dollar Burj Khalifa complex, and includes 1,200 shops...
.
Also under construction is what is planned to become Dubai's new central business district
Central business district
A central business district is the commercial and often geographic heart of a city. In North America this part of a city is commonly referred to as "downtown" or "city center"...
, named Business Bay
Business Bay
Business Bay is a central business district under construction in Dubai, United Arab Emirates. The project features numerous skyscrapers located in an area where Dubai Creek will be dredged and extended. Business Bay will have upwards of 240 buildings, comprising commercial and residential...
. The project, when completed, will feature a phenomenal 500 skyscrapers built around an artificial extension of the existing Dubai Creek.
In February 2005, the construction of Dubai Waterfront
Dubai Waterfront
The Dubai Waterfront was expected to become the largest waterfront and largest man-made development in the world. The project is a conglomeration of canals and artificial archipelago; it will occupy the last remaining Persian Gulf coastline of Dubai, the most populous emirate of the United Arab...
was announced, it will be 2½ times the size of Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
, roughly seven times the size of the island of Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
. Dubai Waterfront will be a mix of canals and islands full of hotels and residential areas that will add 800 km (497.1 mi) of man-made waterfront. It will also contain Al Burj
Al Burj
Nakheel Tower was a proposed skyscraper in Dubai, United Arab Emirates by developer Nakheel. The project was previously called Al Burj .In January 2009, it was announced that the project was put on hold due to financial problems...
, another one of the tallest buildings in the world.
Dubai has also launched Dubiotech
Dubiotech
DuBiotech, short for The Dubai Biotechnology and Research Park is a new development in Dubai aimed to attract biotechnology research and development to the emirate...
. This is a new park to be targeted at Biotech companies working in pharma
Pharmaceutical company
The pharmaceutical industry develops, produces, and markets drugs licensed for use as medications. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices...
, medical fields, genetic research
Genetics
Genetics , a discipline of biology, is the science of genes, heredity, and variation in living organisms....
and even biodefense
Biodefense
Biodefense refers to short term, local, usually military measures to restore biosecurity to a given group of persons in a given area who are, or may be, subject to biological warfare— in the civilian terminology, it is a very robust biohazard response. It is technically possible to apply...
. The aim of this park is to foster the growth of this sector in Dubai and to utilize the region's talent in addressing this rapidly growing sector.
One of Dubai's recent groundbreaking plans is 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 is to be in the center of the Dubailand complex and should be completed by 2009.
A new project was announced on May 1, 2006 by the authorities. It is named Bawadi
Bawadi
Bawadi is a project announced by the government of Dubai, United Arab Emirates on 1 May 2006. The developer is Tatweer, a subsidiary of Dubai Holding....
and will consist of a 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 will be called "Asia, Asia" and will 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 have been pouring capital into Dubai in the past several years, greatly contributing to the city's prosperity. Iranian expatriates alone are estimated to have invested up to $200 billion in Dubai. From 2005 to 2009, trade between Dubai and Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
tripled to $12 billion.
Dubai interests have also purchased large amounts of real estate in foreign countries, in particular snapping up trophy properties in global centers like New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
and London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
. Purchases in 2005 included New York's 230 Park Avenue (formerly known as the New York Central Building or the Helmsley Building
Helmsley Building
The Helmsley Building is a 35-story located at 230 Park Avenue in New York City. Before the erection of the Pan Am Building, now the MetLife Building, this building stood out over the city's second most prestigious avenue as it was the tallest structure in the great "Terminal City" complex around...
) and Essex House
Jumeirah Essex House
The Jumeirah Essex House, commonly known as the Essex House, is a luxury hotel located on 160 Central Park South in Manhattan. Built in 1931 as the Park Tower Hotel, it is situated across the street from the southern border of Central Park and is convenient to both the stylish shops on Fifth Avenue...
on Central Park South
Central Park South
Central Park South is the portion of 59th Street that forms the southern border of Central Park in the borough of Manhattan in New York City. It runs from Columbus Circle at Eighth Avenue on the west to Grand Army Plaza at Fifth Avenue on the east...
.
See the Dubai Department of Tourism and Commerce Marketing's list of developments in Dubai for more information.
Construction
Since 2000, Dubai's municipality has initiated a plethora of construction phases and plans across the entire city of Dubai, predominantly in the Mina Seyahi area, located further from JumeirahJumeirah
Jumeirah literally means "beautiful." It is a coastal residential area in Dubai, United Arab Emirates mainly comprising low rise private dwellings. It is administratively divided into three neighborhoods titled "Jumeirah 1," Jumeirah 2" and "Jumeirah 3." It has both expensive and large detached...
, towards Jebel Ali. Many areas of Dubai are dominated by the large number of construction cranes. Construction in Dubai and the UAE in general is a much faster process than in any Western country. This is partly because Dubai construction companies employ many low-wage labourers from the Asian subcontinent for up to 12 hours a day, six or seven days a week.
One of the main reasons for the boom in construction in Dubai is its drive to diversify the economy. The Dubai government does not want to depend on its oil reserves, which are largely believed to become exhausted by 2010 (Which has actually happened) and, as such, has diversified its economy to attract revenues in the form of expanding commercial and corporate activity. Tourism is also being promoted at a staggering rate with the construction of Dubailand and other projects that include the making of mammoth shopping malls, theme parks, resorts, stadiums and various other tourist attractions.
Another reason for the construction boom is the recent reversal of a law in 2002 that allows non-nationals of the UAE to own property (not land) in Dubai (albeit freehold
Fee simple
In English law, a fee simple is an estate in land, a form of freehold ownership. It is the most common way that real estate is owned in common law countries, and is ordinarily the most complete ownership interest that can be had in real property short of allodial title, which is often reserved...
and 99-year leases are actually sold to people with ownership still remaining with private companies). The larger of the property tycoons are Nakheel Properties
Nakheel Properties
Nakheel is a real estate developer in Dubai and creator of several land reclamation projects, including the Palm Islands, the Dubai Waterfront, The World and The Universe Islands. Its residential projects include The Gardens, International City, Jumeirah Islands and Jumeirah Lake Towers. Its...
and Emaar Properties
Emaar Properties
Emaar Properties , based in the United Arab Emirates, is a Public Joint Stock Company listed on the Dubai Financial Market. Established in 1997 with an initial paid-up capital of AED 1 bn, Emaar Properties is currently the Persian Gulf region's largest land and real estate developer...
. Rents have skyrocketed with the recent inflow of professionals and companies from around the world who are attracted by Dubai's no-tax benefits although rises have recently been capped to 7% per annum up to 2007 under a directive from Mohammed bin Rashid Al Maktoum
Mohammed bin Rashid Al Maktoum
Mohammed bin Rashid Al Maktoum , also Sheikh Mohammed, , is the Prime Minister and Vice President of the United Arab Emirates , and absolute monarch of Dubai.-Personal life and education:...
. Legislation in this area is still developing as the property market for foreigners is relatively new.
An article in the Wall Street Journal in October 2009 reported that Dubai's economy, heavily dependent on real estate where prices have fallen 50% in a year, has been badly hit by the global financial crisis, unlike its wealthier neighboring emirate, Abu Dhabi. Dubai has $50 billion of debt coming due in the next three years, according to Standard & Poors. But its total debts are estimated to exceed $80 billion.
In another article in October 2009, Reuters reported that one in four homes is vacant in Dubai and a quarter of office space lies empty due to oversupply, and additional supply coming onto the market will continue to put pressure on prices, Colliers International said on Wednesday.
The property services firm said in a report the emirate will have 340,000 residential units by the end of 2009, with another 34,300 expected to come online in the next two years.
Meanwhile, leasable commercial space is expected to double to six million square metres by 2011, Colliers said.
“The survey indicates a market beset with falling demand and oversupply evidenced through increasing vacancy levels and falling take up rates”, it said.
See also
- Dubai WorldDubai WorldDubai World is an investment company that manages and supervises a portfolio of businesses and projects for the Dubai government across a wide range of industry segments and projects that promote Dubai as a hub for commerce and trading. It is the emirate's flag bearer in global investments and has...
- Economy of the United Arab EmiratesEconomy of the United Arab EmiratesThe United Arab Emirates is a rapidly diversifying, highly developed economy, based on various socioeconomic indicators such as GDP per capita, energy consumption per capita, and the HDI....
- The National Sukuk Program