Economist.com Cities Guide: Dubai Briefing - July 2005

News this month

Exporting luxury

Dubai’s luxury hotels have lured millions of visitors to the desert. Now one chain wants to go global. Jumeirah International, a state-run firm that owns and manages a number of iconic Dubai hotels, including the Burj Al Arab, unveiled plans in late June to manage a network of 40 local and international properties within five years.

Its current portfolio of eight properties includes six in Dubai and two in London, the Carlton Tower and the Lowndes. The firm recently pulled out of negotiations to buy the Hotel Intercontinental in Paris. But Gerald Lawless, the chief executive, says Paris is still in the company’s sights, along with New York, Sydney and Shanghai, among others. Coinciding with this ambitious expansion plan, the company is undergoing an $8m rebranding effort, to unify its corporate image better. Instead of Jumeirah International, the new corporate name will be simply Jumeirah.

A needed break

The UAE has passed a law banning labourers from working in the summer during the hottest time of day. Perhaps sensing the ire he would draw from contractors, Dr Ali bin Abdullah Al Kaabi, the country’s reformist labour minister, announced the ruling in late June, just days before the legislation took effect on July 1st. The UAE’s construction boom has lured tens of thousands of workers, most of them Asian immigrants, to Dubai. Many of them work through the mid-day heat without a break for as little as $10 per day; the new ban halts work between 12.30pm and 4.30pm.

The move drew fierce criticism from contractors, who say they are already facing bankruptcy because of soaring prices for steel and cement. Affluent suburbanites are also complaining that the rule could lead to labourers seeking shade in their gardens while passing the four-hour break. Dr Al Kaabi has dismissed critics, saying the UAE should guarantee human rights for all workers in the Emirates.

Rocket or rollercoaster?

After the blistering gains of Dubai's stockmarket in the first half of 2005, many fear the market is overheating. The Dubai Financial Market index closed at 1,079 on June 30th, up 148% since the year's start. A report by Nomura, a Japanese bank, warned that UAE stocks were “blatantly overvalued”, and recommended selling them. Bankers are sounding alarms about local and expatriate investors who have borrowed heavily to buy stocks—they could be left with billions of dirhams of bad debt when the market corrects.

The index is volatile: in the first days of July it fell 20%; rumours swept the trading floor of investors forced to sell their Porsches and BMWs to repay short-term loans. Yet there are some optimists who think the gains are justified by rising corporate profits, most conspicuously in the banking sector. First Gulf Bank saw profits up 357% in the first half of the year, and two other banking heavyweights, National Bank of Abu Dhabi and Dubai Islamic Bank, each reported triple-digit earnings growth.

Gaining rights

Women will soon be able to divorce their husbands in Sharia courts, following a landmark ruling from the UAE cabinet. The right was previously enjoyed by men only. The cabinet has approved the relevant draft Personal Status Law, securing its passage later this year. The move is part of a wider push to boost women’s rights in the UAE, which also saw the appointment of the first female cabinet minister in late 2004 when Sheikha Lubna Al Qasimi became minister of the economy.

There are some provisos in the new divorce law: women who get a divorce must repay the dowry paid by the husband, and couples must go through family counselling before filing for divorce in a Sharia court. The law also made several adjustments to rules governing marriage, such as the handling of inheritances. One new rule mandates that the mentally ill, lepers and the impotent cannot get married.

Better late than never

The UAE's lending boom has many worried about a potential bad-debt crisis. To help banks better assess the risk they carry, Dubai and Abu Dhabi have unveiled plans for the country's first credit bureau, due to launch by October.

The rise in borrowing for stockmarket speculation is becoming a cause for concern, particularly because banks have such spotty information about their customers. At present, the UAE’s 21 local and 28 foreign banks—including HSBC and Citigroup—have no way of knowing the credit history of their customers when they apply for a loan or credit card. Many bankers suspect that UAE nationals and expatriates have a string of loans and credit cards with rival banks. That has not stopped the banks from lending: some say lending increased by up to 50% in the first half of 2005, after surging last year.

Catch if you can

August 2005

Films at iBO

Until August 29th 2005

iBO, the funky, no-frills nightclub formerly known as Terminal, swaps its dance floor and tequilas for beanbags and beer every Monday night with weekly film screenings.

The Stella Artois Movie Of The Week series was launched in June and continues through August. August 1st brings “Ed Wood”, directed by Tim Burton, with Johnny Depp as the famously eccentric B-movie filmmaker, followed by “Cinema Paradiso” on the 8th. Vince Vaughn and John Favreau run amok in Las Vegas in “Swingers” (pictured) on August 15th, while Robert De Niro uncoils his fists as boxer Jake LaMotta in “Raging Bull” on the 22nd. Stanley Kubrick's “The Shining” will be screened the following week.

iBO, Millennium Airport Hotel, Garhoud. Doors open 8pm; film starts at 9pm. Members get in free. Tel: +971 (0)4 398-2206. For more information, see the club's website.

More from the Dubai cultural calendar