By Khalaf Al Habtoor
Leading UAE businessman Khalaf Al Habtoor on why he believes Dubai is back on the up.
In spite of morbidly gloomy predictions by foreign pundits that Dubai’s bubble had terminally burst, the economy is back on track.
Recent headlines, such as “Hard Times for the Arab Capital of Cool”, recently emblazoned in Building Design and Construction, show that some so-called experts are still failing to accurately read the tealeaves.
Dubai is the Arab capital of cool -and so much more - but difficulties caused by the global downturn are fading into history.
Almost exactly a year ago, an article in Britain’s Sunday Times was almost gloating in its message “The Party’s over in Dubai”, which was peppered with depressing unsubstantiated quotes like “I knew Dubai wanted to be No. 1 in everything. I just didn’t realize that included the No.1 boom and bust”.
The writer got it spectacularly wrong. The lights may have flickered briefly, but the party’s just beginning. I’ll let the facts speak for themselves.
In the first place, the global recession is coming to an end faster than was envisaged according to the Organization for Economic Co-operation and Development (OECD), which predicts a dramatic turnaround for Asian economies generally and is positive on the recovery of most G7 nations. This welcome news will renew investor confidence worldwide.
Secondly, earlier this month, the International Monetary Fund (IMF) praised the UAE government’s reaction to the global crisis and says the country’s GDP is set to expand by 3 percent next year and a sustainable 5 percent in 2012.
Also forecast, is a growth in domestic investment, an increase in global capital, burgeoning exports and a 2009 inflation rate of just one percent.
Against such a fertile backdrop, Dubai is well-placed to surge ahead and especially when concerns that Dubai might fail to meet its debt obligations have been allayed, thanks to the government’s innovative capital-raising strategies.
Dubai’s Finance Department recently raised US$ 1.93 billion from a dollar denominated, fixed-rate Islamic bond or sukuk sell-off. The government has further published a Euro Medium-Term Note (EMTN) prospectus aimed at raising US$ 4 billion to be spent on financing infrastructure projects.
Those doom merchants who claimed Dubai would not be able to pay its debt due this year, will soon be eating their words in the same way that those who foresaw that Dubai World-owned developer Nakheel would default on its obligations already have. In mid-October, Nakheel rebuffed the skeptics by repaying Dh 4.4 billion in debt to various banks.
While remaining focused on its current obligations, the government is shoring up the future. The recently inaugurated Dubai Metro has already served 2.5 million passengers and Dubai International Airport, which witnessed a 19.5 percent passenger traffic increase in September, is due to open a third concourse in 2012.
Next year, the world’s largest airport Al Maktoum International Airport will open in Jebel Ali, while Emirates is bucking the international trend by expanding its fleet and adding new routes.
Symbolic of the emirate’s unflappable confidence is its planned bid to host the 2020 Olympics, which would be the first time ever that the games are held on Arab soil.
There is good news for the private sector too, which, I can state with confidence as a businessman involved with almost all sectors of the economy. Our construction business continues to be awarded lucrative contracts and our hotels are enjoying high occupancy rates.
Our automotive subsidiary sold more vehicles in October than previous months. Moreover, due to record high demand, we are expanding our leasing fleet of 9,000 cars.
Likewise, our schools have reported the highest number of student enrolments ever and have long waiting lists. We are certainly not alone in this positive evaluation. It’s no accident that Ferrari chose Dubai to open its largest merchandizing store worldwide this month.
Dubai’s property market is also signaling recovery with prices having rebounded by nine percent since last April. In October, Emaar’s third-quarter net operating profit rose by 53 percent while its chairman Mohammed Al Abbar announced that there are “clear signals of real estate prices gaining momentum in premium areas…”
Lastly, to those few individuals who would derive some kind of warped pleasure from seeing Dubai turn into a ghost town, I would say categorically, ‘that’s never going to happen’.
Dubai may not be the only destination that bridges Europe and Asia but it is the only business, trading and tourism destination whose name is boldly engraved on the international map.
Visionary leadership, entrepreneurial flair, skill and sheer hard work have combined to create a unique metropolis out of a coastal town dependent on dhows for its trading with India, Africa and other countries in less than five decades.
I wish that the bad news gloaters would reflect on this miraculous achievement that no amount of money could buy - and, indeed, Dubai, does not really have a significant natural resources.
And what a metropolis it is! There is nowhere in the region or the world that is anything like it in terms of stunning architecture, infrastructure, leisure facilities and individual opportunity. And there is nowhere else that can boast such a multi-cultural harmonious ambience.
I sound like a proud national that’s because I am. It gives me a warm feeling just to stroll around and register the smile-count as compared to other places. It may sound simplistic, but people here are happy in a stable, secure and open environment. Just to list Dubai’s international awards for excellence would fill the pages of this newspaper.
Most importantly, Dubai opens its arms to anyone willing to contribute to its growth in return for a virtually tax-free lifestyle that is envied the planet over. Even America’s talk-show doyenne Oprah Winfrey looked incredulous during a recent segment when she learned that Dubai imposes zero personal taxation, provides free medical treatment and no-one here goes hungry or is homeless.
I would like to invite Ms Winfrey to come and see for herself; an invitation that is extended to anyone resolved to ignore those cheerless headlines and experience my incredible home town first-hand.
Khalaf Al Habtoor is chairman of the Al Habtoor Group
Free healthcare? When did this happen? Oh, I see, I am not eligible.
Totally agree with the this article.
We don't need words... we need action. Ooopppsss... expats shouldn't expect much. I'm an expat :( This is a beautifully written PR for a not so beautiful situation. When will these guys wake up???
Well said Al Habtoor. Dubai is more of a three quarters full and a quarter empty situation rather than a half full half empty,and yet people want to focus on the one quarter empty part. Dubai is definitely on course.Those who reside here stand the risk of being hard to please because the incredible is common place here. However,when you take a step back and reappraise objectively,you realise that the ship is steadying and the momentum is slowly but surely building again.2010 should be interesting.
The recession may be coming to an end, but my guess is that there is no party in sight, just a depression! The typical line i hear in the UAE is that "we are bumping along the bottom", no one agree that we might have fallen on to a ledge which is about to give way due to too much debt and ever decreasing consumer spending?
If the party is just beginning, someone forgot to tell the guests -- they aren't going to be showing up anytime soon!!!!!
True, but there are two sides to every story. "Our automotive subsidiary sold more vehicles in October than previous months. " What previous months, perhaps the previous two quiet summer months of August and September? Lending and loans are down in the automotive sector. Just like the real estate prices were too inflated and the bubble burst, the same will need to happen to the prices of everyday goods in order to sustain any kind of measured growth. Once we see this unnecessary 30-80% mark-up on goods in shops all across malls in Dubai abolished, then people might actually start to want to invest money in Dubai rather than send it back to their home town. Numerous people are now buying necessities such as clothing back in their home town as the prices cannot be justified out here. (Example - A shirt from well known UK high street shop in Dubai Mall - DHS420, peel off the sticker and it says GBP35. Do the maths!) Tax free Dubai - Great in theory - just don't buy anything here and you might actually save. Finance wise, a recent article I read said that only 1,400 staff are currently working in DIFC. - an average of less than two employees per trade license. Yes, passenger numbers are on the rise in Dubai Airport, but how many of these actually set foot on Dubai sand? Its the transit passengers that are contributing to these figures. Perhaps put the party on hold for a little while longer, unless of course you manage to get credit to pay for it!
This is wonderful to hear just as DEWA telling me yesterday that I'm not now being charged 40% more on my monthly bill, it's just the new design / layout of their bills...! I'm so so happy that I was wrongly reading everything..! The truth is more akin to a plane circling the airport and the fuels running out...fast.! 2010 will be extremely interesting to see just how all these debts are repaid. Not to worry though they'll be more good news in the morning..!
Yes the party is just beginning.................oops but no music!!!
Not just expatriates are struggling for housing and accommodation. No taxation? What about the huge indirect taxation that is being imposed in every walk of life now including DEWA bills etc., Free Healthcare? Free education? A pipe dream to most.