The Eagles flew into Dubai last week for probably the biggest concert the emirate has witnessed. A memorable Thursday saw a sandstorm (that nearly caused the concert’s cancellation), some rain, a perfect evening and great music for the 20,000 + devotees. A master class from Glenn Frey and his cohorts.
A welcome move by HH Sheikh Mohammed bin Rashid Al Maktoum is his initiative for Smart Learning in all the country’s schools aiming to provide every pupil with a tablet PC and high speed 4G networks. This will be implemented over the next five years and will cost around US$ 300 million.
Meanwhile it is reported that Emirates Airline has not ruled out the future purchase of foreign carriers with its Chairman, Sheikh Ahmed bin Saeed Al Maktoum, quoted as saying “if they (such opportunities) fit the Dubai business model. . . if it is at the right price, we are always interested”.
As Emirates flies daily to Rio, Sao Paulo and Buenos Aires, Dubai tourism chiefs are now expecting a knock-on effect with an increasing number of visitors from South America. Undoubtedly, the region has a huge potential for growth and will help offset any reduction in European visitors as a result of the Eurozone crisis.
The fledgling airline, flydubai, has confounded its critics once again when its CEO, Ghaith Al Ghaith, indicated that the airline would make a profit in only its third year of operations. This will happen despite the increase in oil prices and other regional problems arising from the Arab Spring.
Dubai, along with London, has been surveyed as the most attractive international market for the world’s leading retailers. In the past five years alone, over 1.2 million square metres of retail space have been created and the fact that it surpasses the likes of Paris, New York and Hong Kong speaks volumes for the way Dubai has gone about its business.
Despite the global economic malaise, the UAE saw a 13% increase to over US$ 10 billion in FDI projects in 2011. This is a sure sign that investor confidence is fast returning to the local market.
Another positive indicator came with the news that the value of Dubai’s Q1 exports and re-exports rose by 7.8% to over US$ 17 billion. Furthermore annual exports rose by 44% to US$ 27 billion, imports by 21% to US$ 120 billion and re-exports by 18% to US$ 44 billion. This impressive growth reflects the importance of trade to Dubai’s economic revival. With trade growing 22% last year, to a record US$ 300 billion, it further enhances Dubai as one of the leading trading centres in the world.
It will come as a surprise to many residents to discover that Dubai Silicon Oasis is home to over 30,000 souls with plans to eventually accommodate 160,000 residents. 2011 saw the technology park record a 134% hike in profits whilst ending the year with an asset base of over US$ 2 billion.
These positive signs go a long way to boosting investor confidence and the fact that food prices are beginning to fall across the board will help lift the emirate’s spirits even further. Government action, in tightening controls on both suppliers and retailers, and the recent introduction of an on-line price monitoring system, have seen a 15% reduction in the price of a basket of basic foods.
On the week, the Dubai Financial Market saw a 49 point fall to close at 1638 – down some 3%. The Q1 bull run that saw the Index rise some 24% from 1341 has run out of steam and may even be the start of a jittery Q2.
The immediate economic concerns are the factors beyond Dubai’s shores. The further deterioration in the euro debt crisis and the worsening of geopolitical uncertainty will have serious negative ramifications for Dubai. How the situation pans out with Iran remains another potential headache as does the Syrian problem. (How does the UN think that six unarmed monitors can start to resolve this crisis?)
Spanish banks’ bad loans have now jumped to nearly US$ 190 billion or 8.2% of the total loans – surely another nail in their economic coffin. A further 7.2% fall in Q1 house prices and an expected rise in already unacceptably high unemployment levels point to a massive recession and an inability to meet agreed fiscal targets. It can only be a matter of time before we see a breakup of the eurozone – and the repercussions of that happening will be immense. This time the eurocrats have indeed “taken it to the limit”.