DUBAI BRIEFING February 2005

News this month

Soaring

Dubai will begin work in February on a massive second airport, boasting six runways and capacity for 120m travellers a year. The project had been on hold for years, and work was not due to begin for another decade. But with traffic mounting at the existing airport, the government said it will fast-track the project. (In 2004, passenger traffic at Dubai International Airport rose 20%, to 22m.) The first phase of the new Jebel Ali Airport City, involving one runway, will cost about $550m.

The project is part of Dubai’s aviation master plan, which aims to make this new airport one of the world’s leading hubs. It coincides with the rapid expansion of the Emirates airline, which was set up by Dubai's government in 1985. Emirates has ordered 45 of the new Airbus A380 superjumbo airliner, the biggest single order. Some say Dubai's plans are over-ambitious, but the emirate has a trump card that few other hubs can match: the government does not tolerate public opposition, so it faces little of the environmental protests that restrict developers in Europe, Asia and North America.

Overheated?

Dubai’s economy grew by a staggering 17% in 2004, according to the city’s Department of Economic Development (DED). Real-estate investment was the big driver of the boom, accounting for some 20% of the economy in 2004. But real-estate consultants have warned that as much as 85% of the demand for the tens of thousands of new homes being built is from speculators. Though Dubai’s population of 1.2m is growing at around 7% per year, it is unclear whether actual demand will support the rash of new projects.

Investment bankers have also voiced concerns over the booming UAE stockmarket. The Shuaa Capital UAE General index climbed 103% in 2004, raising fears of a speculative bubble. Shares in Emaar Properties, one of Dubai's “big three” real-estate developers, rose from just over Dh2 per share in January 2004 to Dh14 in January 2005.

Root them out

Dr Ali Abdullah Al Ka’abi, the new Labour Minister, has pledged a crackdown on social-security abuses, making sure that the annual Dh700m ($190m) welfare budget reaches the neediest. (Only UAE nationals are eligible for welfare support.) He criticised the lack of means-testing for welfare applicants under the current system, noting that some regular claimants also hold big stock portfolios. Labour Ministry staff plan to review all existing welfare cases. Any cost savings will be used to increase welfare payments, which have not kept up with inflation, and to fund training schemes to help unemployed UAE nationals find work.

The business of bling

Society magazine OK! was launched in Dubai in January, to spotlight the rapid growth of celebrity culture here in recent years. What was once a wasteland of kitsch hotel bars and dour corporate functions has become considerably more glamorous. An aspirational glitterati has emerged, fuelling a booming industry in society magazines and newspaper columns. Cynics claim there are more photographers than guests at many of the “swanky” parties these rags cover, and editors are often found scraping the bottom of the barrel for material—one title recently featured the opening of a supermarket. But there’s no doubting the demand for these new magazines, which fly off the newsstands. Advertisers such as Armani and Hugo Boss are throwing money at them, which presumably enticed OK! to join the party. Others are rumoured to be following suit later this year.

Catch if you can

February 2005

Dubai Shopping Festival

January 12th-February 12th 2005

Love it or loathe it, Dubai's Shopping Festival remains a glittering fixture in the emirate's calendar. The month-long retail promotion, which this year celebrates its tenth anniversary, features discounts on everything from designer clothes to dishwashers, with daily raffles offering luxury four-wheel prizes, and a slew of special events. The big draw in 2005 is the new Global Village, a sprawling open-air crafts fair selling “traditional” goods from around the world.

The festival's formula clearly works. In 2004 it attracted 5.4m visitors (mostly from Saudi Arabia, Kuwait and Qatar)—a dream come true for Dubai’s shops and hotels, but a nightmare for residents, who have braced themselves for heavy traffic and congestion.

For details visit the official shopping festival website.