In desperate times, we do desperate things. On countless occasions in the past few years, many of us have “imagined” a recovery based on the flimsiest evidence around. A car crash on Dubai’s Sheikh Zayed Road resulting in a traffic jam — all that traffic must mean Dubai is back. Bad weather in Europe resulting in flights being overbooked — that must surely mean Dubai is back. Renovation work in the mall resulting in massive queues — that must surely mean Dubai is back.
None, of course, turned out to be true. But in the past few weeks, something has changed. There is a whiff of confidence around, a feeling the worst is really over, and dare I say it, a possibility that the glory days of Dubai may yet return.
This year alone, eleven huge projects have been announced. It is worth listing them: Mohammed Bin Rashid City; Meydan’s new development across the Nad Al Sheba landscape; Madinat Jumeirah expansion; Meydan Tower; Taj Arabia; Business Bay Canal Project; Dubai Theme Park; World Discus Hotel; Habtoor Palace; The Dubai Modern Art Museum and Opera House District, and the relaunch the iconic QE2 cruise liner as a 300-room luxury floating hotel.
Now I know what you are going to say. Are these really going to happen, and if so, who is going to pay for them? It appears Dubai will not have to depend on global financial markets to fund large-scale projects as it has access to sufficient funding from within the UAE, the head of Dubai Economic Council told reporters last week.
Hani Al Hamli explained: “We do have our own resources and way to finance… We are sure that these projects will be achieved. We have our own resources in the emirates. I don’t want to disclose… This is managed by the finance department. When it comes to resources, we are part of the UAE and we have our own networks… There [are] neighbours who have massive natural resources. At the end of the day, [in] the UAE there is solidarity and a good governance and leadership.”
In other words, there will be no racking up of billions of dollars of debt to fund these projects, notably the fabulous plans for Mohammed Bin Rashid City. It also gives great comfort to see that Emaar — surely the only property developer to have its creditability 100 percent intact after the crisis — will be behind this project.
It’s easy to be cynical and suggest these announcements are part of a calculated PR spin, to persuade the rest of the world that the UAE is on the right track to growth. I don’t buy that. And the reason I don’t buy that is the numbers speak for themselves: Dubai’s economy expanded 4.1 percent from a year earlier in the first half of this year, indicating the Gulf’s main trade and financial hub is holding up well in a weak global environment. Hotel guest numbers in the emirate jumped 9.6 percent to 5 million in January-June, while hotels and restaurants saw a 16.1 percent surge in their business, according to the Dubai Statistics Centre. These kind of figures in Europe or the US would be heralded as nothing short of phenomenal.
What I believe the recent announcements show is willingness amongst the leaders and rulers in Dubai to be daring again. And it is already working — confidence is returning across all sectors of business, with foreign governments starting to look in envy again at Dubai, while foreign investors are again lining up to get a piece of the action.
Too many people have been too quick to call a recovery in the past – many “experts” absurdly did so in 2009 just as property prices were plunging 60 percent. But from the many CEOs I have spoken to privately this week, the message has been clear: the recovery has started.
Anil Bhoyrul is the Editorial Director of Arabian Business.
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