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September 14, 2007
Dubai: Image and Reality
I made my first trip to the Middle East earlier this week. I had no clear conception of what to expect when I landed after my 13 hour flight from New York City. I had read the major story in Vanity Fair about Dubai, which reinforced all of the stereotypes of fun in the sun, a free spending Las Vegas in the Middle East, with surreal attractions such as an indoor ski slope and a restaurant in the midst of an aquarium. What I found in fact was a city seeking to emulate Singapore, a hard working, diverse population, and a clear growth strategy based on trading and tourism. I saw a quote from Winston Churchill on the desk of one of the executives I met which perfectly describes the attitude of its residents: “To improve is to change; to be perfect is to change often.” Here are some specific observations on my journey.
1) The city is treated as a corporate organization. It is led by Sheikh Mohammed, who is convinced of private sector led economic progress. The conditions for business are ideal, including liberal immigration policy, zero income tax and aggressive infrastructure improvements.
2) Dubai is in a hurry to grow. Unlike its neighbor, Abu Dhabi, it has little oil (5 per cent of its GDP) and must rely on its wits to stay ahead. It aims to more than double its population from 1 million to 2 million in less than a decade. More importantly, the new Dubai Strategic Plan for 2015 aims for compound annual growth of 11 per cent, trebling GDP to $108 billion. The current projects in this tiny emirate have a value of over $200 billion. As 25% of the world’s construction cranes are on-site, it seems possible.
3) There is an emerging mass affluent class, earning $50-100,000 per year, usually double income families with children. This is a new trend all over Asia, in markets such as India, Egypt and Morocco but most pronounced in Dubai. These families seem to want the Southern California lifestyle, with a golf course, shops and other amenities near by.
4) The largest population segment is Indian, representing half the total residents. Many of them are professionals who are in banking, accounting, and law. There are also many construction workers of Indian descent. But what is surprising is that the population is also representative of over 180 nationalities that live and work in this city that never sleeps!
5) The government reserves available in Dubai are part of the $1.7 trillion in the five Middle Eastern nations, the largest concentration of reserves in the world, exceeding the $1 trillion in China. Recent investments by the sovereign investment fund in overseas properties such as MGM Grand are driven by a desire to diversify holdings beyond the domestic economy.
6) The natural conditions of Dubai have been reshaped by developers. There were 16 kilometers of beach front in Dubai only 10 years ago, the original state of affairs. Today there are 850 kilometers; it is expected that there will be 2,600 kilometers of beach front when all the redevelopment is completed. Much of this is reclamation of sea front, with one property in the shape of a giant palm leaf.
7) There is a hands-on entrepreneurial culture, with executives very involved in their businesses. The workaholic approach is part of the drive for a better lifestyle; it reminds me of China and India. Status is based on achievement, not inheritance.
8) The growth of the city has outpaced its infrastructure. The traffic is quite heavy, with bottlenecks such as a single road into and out of a large development. A mass transit line is expected to be completed by 2009 along the Sheikh Zayed highway, the central corridor for the city.
9) There is a very stylish night life and glamorous hotel scene. The Buddha Bar and the dhow shaped Burj Al-Arab Hotel live up to expectations, full of expatriate bankers, bon vivants and fun-seeking travelers.
As one executive told me, “the Dubai story is completely fragmented. Nothing is connected. We have to get to a vision.” Just as for other boom towns such as Shanghai, the reality of Dubai must be beyond the spectacular buildings and economic progress. Already the Dubai Open is one of the most popular stops on the global tennis tour. But for me, Dubai’s rapid growth signals the continued dispersion of authority and influence toward the developing world and especially the BRIC countries (Brazil, Russia, India and China). I would appreciate your views as always.
Posted by Edelman at September 14, 2007 10:24 AM |
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Comments
When it comes to media, the Media City in Dubai seems to lack vision for me. Yes, there are studios there from most of the news networks, but they need the outdoor cafe culture of Beirut. Problem there is the weather...the months of June, July and August are sheer hell. They have the studios, but where are the stars? That said, apart from the traffic, it is indeed an amazing place, always full of surprises.
Posted by: Jonathan Marks at September 14, 2007 3:03 PM
Dubai is a small example of what can the Middle East give to the world except of tragic wars and hate. Today there are two and a half real western open cities with growth potential in the ME. Dubai, Tel Aviv and parts of Cairo. In the day this 3 cities will interact freely and money will move from side to side, the Middle East will rock the world and I don’t mean the boom boom booom style.
Posted by: sagichemetz at September 22, 2007 10:22 AM
Having just returned from a two month stint in Dubai, I think that Dubai IS a country with vision, and a very modern one at that. Who could have imagined a city in the desert sand taking flight so quickly in the span of 10 years. Credit goes to Dubai for that! However, what I find lacking is the attention to detail in their mega projects and a realistic projection of their property market. The PR of Dubai is great, but can they at the end of the day, deliver to the expectations set out at the beginning? I hope it can because what is PR if expectations are not met i the end...
Posted by: HamidaH at October 24, 2007 11:28 PM