Dubai Inc - Subsequent Developments - Essay Example

Office space remained at a premium in the city, with nearly full occupancy across most primary and secondary-grade supplies. The past two–three years witnessed a boom in the construction sector. Large-scale, world-class constructions such as Burj Dubai (which would be the world’s tallest building – height 818M, Floors-162, completion by 2009) have taken place and are in progress. Apart from that several real estate projects like the Walk, Jumeirah Beach Residence, Business Bay, the Executive Towers, Vision Tower, Bay Avenue, the Villa, etc also became popular. Real-estate values surged fourfold over the past five years, fueled by a supply shortage and an influx of expatriates. Rising commodities prices drove inflation, which accelerated to a record 11.1 percent in 2007.

The population of Dubai expanded from 12,00,000 in 2003 to 14,78,000 in 2007. Dubai's real gross domestic product (GDP), which surged to a record Dh198 billion in 2007, is predicted to sustain an average growth rate of 11 percent for the next eight years. Dubai's exports have been growing by an average of more than 28 percent annually during the past five years.

The financial sector also witnessed ample growth during the previous years. The Dubai International Financial Centre (DIFC), which opened in September 2004, is the world's fastest-growing international financial center and has attracted high-caliber firms from around the globe as well as its region. A world-class stock exchange, NASDAQ Dubai (formerly known as the Dubai International Financial Exchange or DIFX), opened in the DIFC in September 2005. Financial services in the DIFC are regulated to international standards by the Dubai Financial Services Authority (DFSA). The credit market also has become more competitive, currently, there are 13 lenders in the market including four international banks - Standard Chartered, HSBC, Lloyds TSB, and Barclays Bank.

Dubai Shopping Festival (DSF) conducted normally in January gained an international reputation year after year and attracts thousands of foreign tourists. Hotels, travel agents, and tour operators contribute to the selling of the event worldwide.

Development and expansion activities for Dubai International Airport continued. The new terminal 3 became fully operational in October 2008. Work on a Cargo Mega Terminal has begun. A metro link with the city is expected to be operational by 2010.

There were fast developments in information and communication sectors in Dubai in the past few years. ‘du’, the integrated telecom service provider in the UAE, launched mobile telecommunication services on 11 February 2007 across the UAE in addition to internet and pay TV services in some of the free zones of Dubai. It is 40 percent owned by the UAE Federal Government, 20 percent by Mubadala Development Company, 20 percent by Emirates Communications & Technology Company LLC, and 20 percent by public shareholders. It is listed on the Dubai Financial Market (DFM) and trades under the name du.

The Emiratization program also got momentum in respect of higher management and technology levels. The Department of Tourism and Commerce Marketing (DTCM) has initiated an Emiratization drive in Dubai by attracting a dedicated and talented workforce. As part of the Emiratization process, the du has recently announced the appointment of two senior executives in key areas of the company's technology operations. Ahmed Hassan Al Hosni is the new Senior Vice President (SVP) of IT and Saleem Mohamed Al Balooshi is the SVP of Operations.

However, the recent economic crisis which is globally felt has now affected the real estate and construction activities in Dubai for the last few months. Analysts anticipate a drop in real estate pricing by 20% and this recession may last for another 12 months or so. The banks may tighten property loan and personal loan sanction conditions. Despite these, experts studying the effects of the global credit crisis on Dubai’s economy are optimistic and have opined that the real estate sector is witnessing only a healthy correction and is inherent to the very nature of the market.

Another area of concern is the continuing decline in oil prices and its impact on the financing activities of the sheikhdom. Dubai may need help from Abu Dhabi to service its debt, according to Moody’s Investors Service. Dubai borrowed $80 billion to finance its transformation and make up for the lack of natural resources. Presently it has just 4 billion barrels of oil reserves, compared with Abu Dhabi’s 92.2 billion barrels. It is envisaged that this crisis is also temporary and Dubai INC would successfully overcome the same in due course. Read More