The overhang from the collapse of the property market is no doubt still very much around in Dubai. The abundance of empty apartments and commercial space illustrates that perhaps not all the fundamentals necessarily back a surge in rental prices to the highs of 2007. However, rents are certainly going up in concentrated pockets of Dubai and although the recovery is far from coming around full circle, it is tough to deny that the economy has and is making a strong comeback.
Indicators clearly show confidence is slowly returning to the market. Consumer spending rose in the third quarter of 2012 with a brighter outlook reported on jobs and spending, according to Dubai’s Department of Economic Development. The government agency’s quarterly Consumer Confidence Index showed an increase to 129, above the average of 100 and the highest since the corresponding period a year earlier.
Though lending in the UAE grew about 3 percent in the third quarter — markedly less than a 15 percent rise in Saudi Arabia — spending patterns in Dubai illustrate the resurgence of the economy. Dubai is one of three best-selling locations in the world for cosmetics chain Sephora. The Gulf region including the UAE was the best performing market globally in 2012 for luxury car maker Rolls-Royce Motor Cars. For fast food giant McDonald’s revenue from the market is growing as much as 20 percent annually.
“Dubai’s core assets of trade, tourism and infrastructure have proved to be very resilient to the global economy’s weaknesses, and the role of Dubai as a regional hub has been greatly reinforced recently,” says Philippe Dauba-Pantanacce, senior economist at Standard Chartered.
The economies of the UAE and Dubai, in particular, will continue to expand on the back of services, trade and tourism, HH Sheikh Ahmed Bin Saeed Al Maktoum tells Arabian Business.
“All indications show that UAE and Dubai economy will continue growing in 2013 by 3.8 percent,” says Sheikh Ahmed who chairs Emirates Group, Emirates NBD, and Dubai World. “Tourism, hospitality and trade will continue to play a major role in the growth."
The UAE’s economy was projected to have grown four percent last year and is estimated to slow down to 2.6 percent according to the International Monetary Fund (IMF).
A partial rebound in the property market, a resurgence in consumer confidence and an improved performance in the banking sector has helped the Dubai stock market reach a 39-month high. The publicly listed Dubai Financial Market (DFM) posted a AED35.2m ($9.6m) profit in 2012 after recording a loss of AED6.9m the year before.
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