Dubai's desert blooms

Sarah Woods examines Dubai's meteoric rise, from arid desert expanse
to Cosmopolitan City where dazzling architecture and world-class beach
resorts set the tone

Just three decades ago, Dubai was a ramshackle collection of fishing huts strung along a winding creek. Pearl trading formed the economic bedrock of this isolated windblown settlement and life was slow and simple. Today, a fastpaced, dynamic and sophisticated city thrusts skyward in gleaming futuristic spires. In economic and evolutionary terms Dubai's transformation has been nothing short of dramatic.

“That Dubai has successfully transformed itself into one of the world's leading business, retail, leisure, conference and exhibition destinations is due largely to the early vision of Sheikh Rashid, - the so-called ‘Father' of modern Dubai,” explains Ian Scott, director of the UK and Ireland representative office of Dubai Tourism and Commerce Marketing (DTCM). “He took steps to diversify the economy away from the constraints of the finite oil industry and has been ably succeeded by his son- today's ruler.”

The discovery of oil in 1966, amid soaring fuel prices in the 1970s, produced considerable windfalls for the small oilproducing Gulf States. Soon, the foundations of Dubai's modern society were laid with landmark building projects. The city's World Trade Centre became a proud symbol of ambitions to become an international centre of commerce. Major ports and free-trade zones were initiated as Dubai International Airport flourished.

In a decade, Dubai's GDP has nearly tripled in size to AED136 billion, according to the Dubai Department of Economic Development (DED). Some 18 per cent of Dubai's direct gross domestic product and 29 per cent of its indirect GDP is generated by the city-state's burgeoning tourism sector. Dubai now boasts more than 420 hotels - up from 191 in 1994. It also attracts some 6.3 million foreign visitors each year.

Dubai's tourism figures have risen 228 per cent in the last decade, from 1.9 million visitors in 1996 to 6.3 million in 2006,” observes travel journalist Linda Jackson. “Hotel capacity is expected to more than double to 86,600 rooms by 2016 with tourism receipts forecast to top more than $US3 billion.“

It's unique position at the crossroads of trade and commerce between East and West offers a gateway to a market that spans the Middle East, North and South Africa, India and Southeast Europe (an area encompassing 31 countries, 53 languages, 1.8 billion people, $1.5 trillion of combined GDP and 114 million people with GDP per capita greater than $US2, 000, according to the Dubai International Finance Centre). Dubai is politically stable, has a liberal government renowned for its efficiency and commitment to a free and balanced economic policy - coupled with businessfriendly regulations and tax incentives.

“Increasingly, people are taking full advantage of Dubai's massive tax benefits such as the absence of corporate and income taxes, no foreign exchange controls and no trade barriers,” explains Ian Scott. “Furthermore, there is 100 per cent repatriation of capital and profits and five per cent customs duties tariff. Almost 30 Free Zones also exempt residents from customs duties and offer 100 per cent foreign ownership.”

A recent star

Celebrity A-listers are frequently spotted in Dubai's hotpots with Brad Pitt, George Clooney and Claudia Schiffer just a few of the Hollywood visitors. Premiership footballers are also regular holidaymakers in Dubai with Manchester United maestro and Portuguese international Cristiano Ronaldo a recent star about town.

Stewart Banks, Product Portfolio Executive for Dream Homes WorldWide comments, “The property market is marching on up at a rate of 10 - 15% capital appreciation per annum and rental yields are incredibly high at between eight to 15 per cent per annum due to the high demand. This is before Dubai Sports City is complete, so you can imagine how that demand will only reach higher as the vast influx of workers look for accommodation”.

Emma Holifield at Property Frontiers agrees: “Sports City is a prime example of an iconic development project with true global panache,” she confirms. “We're selling upscale properties in The Cube, a 5-star condo residence overlooking world-class sporting facilities that is set to host the Asian Games 2014 and is a prime contender for the 2020 Olympics. They're priced from £87,500 - just 20 minutes from Dubai International Airport, offering promising rates of return.”

According to Lehman Brothers, as of April 2007 the number of infrastructure projects in GCC countries topped 2,000. An estimated $US1.3 trillion has been earmarked for projects for the period 2007-2012 with the core in Dubai and Abu Dhabi totalling more than $US300 million. In 2006 the government of Dubai confirmed a 15-year plan of infrastructure investment of US$130 billion.

Initially, acquiring property in Dubai was restricted to UAE nationals and to citizens of the member states of the Gulf Cooperation Council (GCC). In May 2002, H.H. Sheikh Mohammed bin Rashid Al Maktoum announced the liberalisation of the real estate sector on a freehold basis in designated areas of Dubai.

“Two recent pieces of legislation have made foreign purchases much easier and safer,” adds Stewart Banks. “Foreigners can now purchase freehold property within 15 designated zones and in addition escrow accounts, where clients' stage payments are held by an independent third party, must be in place for all off-plan product by the end of 2007.

To gain an approved escrow account the developer must have certain items in place such as a license to trade, full building licenses and a contract between themselves and the master developer. This in effect means that the necessary due diligence is done by the authorities on the clients' behalf and makes Dubai possibly the safest city in the world in which to invest.


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