x Abu Dhabi, UAEWednesday 26 July 2017

With population milestone, Dubai is back in the high life again

Now that the emirate's population has hit two million for the first time, Dubai is poised for an economic rebirth. Jonathan Gornall charts the city's comeback.

Construction has resumed on many of the skyscrapers that make up the Dubai Marina skyline, while others that are already completed now house many of the estimated 4,000 new residents that arrive in Dubai each month. Mike Young / The National
Construction has resumed on many of the skyscrapers that make up the Dubai Marina skyline, while others that are already completed now house many of the estimated 4,000 new residents that arrive in Dubai each month. Mike Young / The National

It's 6pm on a Friday and Bing Crosby, crooning out of a loudspeaker alongside a waiter who is dressed as Santa and attempting to lure passersby into the waterside restaurant, is dreaming of a white Christmas.

As this is December in Dubai, he is probably heading for disappointment. But observing the crowds up and down the promenade and packing the thriving and proliferating restaurants around the Marina, it's hard to shake the impression that for Dubai, a city all but written off at the height of the financial freeze, Christmas may have come at last.

According to Dubai Statistics Centre the emirate's population, creeping up at the rate of about 4,000 newcomers a month, tipped over the two million mark this week for the first time.

It's an arbitrary figure, of course, but along with a cluster of other clues - such as busier roads, beaches and malls, scarcer taxis and suddenly reanimated building sites - it points towards a tempting conclusion. Whisper it, but after the very public pounding of the past two years, is it possible that Dubai is off the ropes and back in the fight?

The Marina, a nexus of the two main drivers underpinning the growth of Dubai - property and tourism - is not a bad place to take its pulse. And look out of any window in this suddenly thriving dormitory suburb and it is clear that the heart of "New Dubai" is beating strongly.

Where over a year ago there was silence, empty walkways and still waters, today once-abandoned building sites ring with the sounds of renewed construction, joggers and walkers compete with rental pedal karts, baby-buggies and cyclists, and the waters churn with the passage of vessels of all sizes, from kayaks and rowing boats to tourist-laden cruise dhows and luxury yachts.

And there are more concrete clues, as well. Chief among the more obvious is the revived building activity, symbolised by the imminent handover of some of the most impressive buildings to rise on the shores of the Marina, where a forest of striking skyscrapers is creating a stunning skyline that draws camera-wielding tourists by the coachload.

Due for handover in the next few months, Tameer's Elite Residence and The Princess Tower - at 414m the tallest exclusively residential block in the world - will add a total of 1,460 apartments to the already bustling Marina scene. Select Property, meanwhile, is close to delivering three other neighbouring giants: the Torch - due for completion originally in 2008 - Botanica and Bay Central, which together will add another 1,700 households in a total of 3,160 about to come online.

Bad news perhaps for landlords, who may well see rents in the Marina fall further, but good news for the shops, restaurants and other business that are now flocking to the area.

Experts voice cautious optimism.

"I'd agree that Dubai is on the road to recovery," says Craig Plumb, head of research for the Mena region for real-estate company Jones Lang LaSalle, but he takes his clues from outside the property sector.

"There are lots of signs that Dubai is bouncing back, but real estate tends to lag the rest of the economy. So what you'd normally find is that the trade and tourist levels will pick up, the schools will get busy and the taxis will get busy, before the real-estate market comes back and that's very much what's happening here."

Stroll out of the Marina and you will find that along the nearby Sheikh Zayed Road work has started again on a key piece of government-funded infrastructure - Al Sufouh Tramway. Work on the project, which was launched in 2008, appeared to have ground to a halt some time last year. Now, says Dubai's Roads & Transport Authority, the project is 30 per cent complete and on track for completion in November 2014.

The tramway will run for 10km and call at a dozen stations, linking Jumeirah Beach Residence in the south with Jumeirah Hills in the north, via stops including the Marina, Mina Al Siahi, Media City and the Palm Jumeirah. An added bonus, says the RTA, is that it "will provide a permanent solution to the traffic congestion" along the chaotically bustling JBR, itself a testament to the robust state of Dubai's economic health.

The sense that all Dubai's roads are getting busier is no illusion, says Nasser Abu Saheb, director of strategic transport planning at the RTA. "The urban and economic activity in the city has increased compared to 2009, which has increased the need for commuting," he says.

"Driving on the major roads in Dubai [gives] a general sense of traffic in Dubai. As business sentiments improve, vehicle registrations and travel activities grow in general."

It is hard to be precise about the number of cars using the roads - Salik tolls are taken only where there are alternative routes available to motorists - but the increasing use of public transport, including the Metro, strongly suggests a city getting back in the fast lane.

In the whole of 2010, 289.1 million passengers used public transport in Dubai; by June this year there had been 159.4 million and, says Saheb, "we expect this figure to reach 350 million by this year end", an increase of more than 20 per cent.

Tarek Coury, an economist at Dubai School of Government, cautions against reading too much into the population reaching the magic two million mark, because it isn't magic, he says, it's par for the course.

"There's nothing surprising about the growth in population. Population growth tends to mirror the growth in the GDP, in particular in the non-oil sectors; and what we've observed for the past 30 years is that GDP growth in the non-oil sector has been about 5 per cent per annum and during the same time the population growth has also been about 5 per cent."

Coury doesn't buy into the apocalyptic picture that was painted of Dubai's downfall. "They have been bad years but it's all relative," he says. And now, as well as a tourism sector that has done "super-well, retail growth in Dubai is just through the roof".

What's more, Dubai has "managed essentially not to default on debt and the companies that still owe a lot are doing pretty well in the market and so more likely than not they will be able to meet their debt obligations".

On the whole, he says, "I think things look pretty good. The whole world is experiencing a recession so things have to be put in the international context. Relative to other countries, we did OK."

The population hitting two million might not warrant a celebration, but "tourism is a sensible thing to be happy about", he says, and largely responsible for what has proved to be Dubai's ultimate resilience.

Various sources put the direct impact of tourism on Dubai's GDP at between 20 and 30 per cent, but there is also a big overlap with the wholesale and retail trade sectors, which in 2010 accounted for about 30 per cent of the emirate's GDP. Doubtless, he says, "tourism is one of the important drivers of the economy, and I think this aspect of Dubai's economy is quite sustainable".

Figures released last month by the Dubai government showed not only an 11 per cent increase in hotel guests, to 6.64 million visitors in the first three quarters of the year, but also that they were staying longer: the number of guest nights increased by 26 per cent.

This "stellar performance" of Dubai's tourism industry, as Khalid A bin Sulayem, director-general of Dubai's Department of Tourism and Commerce Marketing, characterised it when the figures were released, was "a testimony to the aggressive promotional and marketing drive that the department has been pursuing [and] the inspiring public-private sector partnership to tap the tourism potential of Dubai".

Perhaps the best barometer of the city's prospects are its hotels, including the fact that new ones seem to be sprouting up all the time.

This year, says Toufic Tamim, vice president of sales and marketing for Mövenpick, which has operated in the city since 2004, "has seen an upturn in both room occupancies and average rates in Dubai despite the injection of a substantial amount of room supply".

While the Arab Spring doubtless "caused a shift of demand from some countries in the Middle East", it wasn't only the prospect of safety that lured travellers to Dubai. The crucial additional factor, rooted in the infrastructure planning that took place in Dubai in the Eighties and before, and which will outlive any temporary effects of the Arab Spring, was "the multiple recreational activities that the city offers".

And those activities continue to multiply. Dubai's cultural scene is already thickly textured; March, for example, will see the sixth staging of Art Dubai, the largest contemporary art fair in the Middle East, while the Dubai International Film Festival has attracted global attention since its foundation in 2004.

In January, that scene will gain another layer when the institution that is Beirut's Music Hall opens a branch on the Palm, in the new Jumeirah Zabeel Saray Hotel. The hotel, which served as the setting for several scenes in the new Tom Cruise film, Mission: Impossible - Ghost Protocol, is already a showbiz veteran, but the real star of that show, however, was the Burj Khalifa.

The Burj Al Arab, completed in 1999 and conceived by Sheikh Mohammed bin Rashid, the Ruler, as a world-recognisable symbol of Dubai and its tourism, has served successfully in that role for a decade. If anyone doubted Dubai's wisdom in building a second global icon, in the shape of the world's tallest building, they have only to watch the film, which opened last week to international rave reviews and record box offices and serves as a 133-minute promotional film for Dubai.

Small wonder that Sheikh Mohammed bin Rashid, the Ruler of Dubai, was spotted chatting on the red carpet with Tom Cruise at the recent film festival. "We Love Tom," read the posters being waved by fans, and well they might: who knows how many tourist dollars the film will send to the city?

Such visionary marketing reinforces the confidence of hotel chains such as Mövenpick which, like other groups, is putting its faith - and money - in Dubai. It currently has four properties in the city, with four more under construction.

Sami Nasser, vice president for Sofitel Middle East, Africa and Indian Ocean, also says that his group has also seen "a significant increase" in occupancy rates in Dubai this year, among both business and leisure travellers.

"We need to be cautious," he says, "But for the past three months we have noticed positive signs of improvement. More and more traffic on the roads, the rents of apartments and housing are sensible, occupancy rates of the hotels are better than last year and more and more passengers are flying through Dubai with longer stop-overs. The signs are encouraging."

Sufficiently encouraging to persuade Sofitel, which currently operates one 432-room hotel in the city, on JBR's The Walk, to press ahead with plans to open two more in the next two years.

Tourists, however, aren't the only visitors drawn to Dubai, which has developed a healthy conference and exhibition sector that has weathered the storm and is now showing signs of moving forward.

"I am cautiously optimistic," says Matthew Williams, managing director of Terrapinn, an international company that has been running exhibitions and conferences in the Middle East for 13 years and opened an office in Media City in 2007. "I don't think we're getting carried away with the position we find ourselves in, but we are seeing growth in terms of visitor numbers and exhibitors and sponsors at our big shows, and quite considerable in some cases."

Plus, he says, "the ability to launch new exhibitions is one of the best barometers of how the economy is going, and we've launched a major new event at the Madinat Jumeirah arena which is running next April. The Mobile Show has been a big success for us already in terms of numbers. It just goes to show that people are still allocating budget to this part of the world."

The Arab Spring, he believes, has been "a huge thing for Dubai, it actually strengthens the value proposition in terms of being the safest place to do business and the most stable place to live or work in the GCC and North Africa".

According to government figures there was an astonishing boost in foreign trade in the first quarter of 2011, up 34.2 per cent compared with the same period in 2010, a jump in value from Dh136.6 billion to Dh183.3 billion. Imports alone accounted for a growth rate of 28.2 per cent, and the main items give some taste of a city not only back in the money, but also getting down to business again: top of the shopping list were pearls, precious stones and metals, followed by machinery, sound recorders and TV and electrical equipment, and then vehicles, aircraft and vessels.

Another clue to growth can be found in data from the Dubai Statistics Centre, showing the total number of operating licences, including industrial, professional and tourism, issued by the Department of Economic Development in the first half of this year. While only 2,385 licences were cancelled, 7,256 new ones were issued and 53,075 were renewed.

Among the many new businesses that have opened around the Marina in the past year is Naked Pizza, the first overseas branch of a company founded in New Orleans in 2006 with the twin social missions of making healthier pizzas and helping the revitalisation of the city's economy after Hurricane Katrina.

The man who brought the brand to Dubai was Ian Ohan, a Canadian who has lived in the city for 11 years and, until 2009, had been working in property-development investment and finance. He saw the founders being interviewed on Bloomberg, liked the fact that the company "aligned purpose and profit", and took the leap, despite the state of Dubai's economy back then.

Asking him "Why?" in his office at the foot of Marina View Towers is now a redundant question. Since he opened this first outlet on January 17 this year, three others have followed around the city, with many more in the pipeline in Dubai, Abu Dhabi, Saudi Arabia, Oman and Kuwait. In the US, Naked Pizza now has 20 stores with more than 400 new franchises under contract for development, and now the Dubai office has been made the international headquarters for an operation receiving 20 inquiries a week, with franchises already awarded in Lebanon, Australia and India and deals under way in the UK.

Over the past year, Ohan has seen business pick up in the Marina and the other locations in the delivery area, including JLT, JBR and the Palm. He estimates the population has increased by 15 per cent over the course of the year, to about 50,000 residential units and 6,500 businesses.

"We have felt a difference and we see it every day, in this location in particular. In all of our locations we have felt an increase. The market has increased in size."

Back in January, not long after a big international coffee chain quit the very same building in which his operation is now thriving, Ohan's decision to launch a business in the still ghostlike Marina might have seemed rash. But not to him.

"When we first moved in here, everything was very quiet," he admits. But over the past 13 years, he says, "I've seen Dubai go up and down - mostly up, but there have been downs that other people haven't seen - and I have a lot of faith in the Government.

"There is a vision in place and I felt they had the unique ability to turn things around quickly; they had too much at stake."

The proof that his decision was correct is right outside the window: "Now it is so active and vibrant. The Marina is actually becoming the community it was meant to be."

Despite all the gloomy predictions, the vision that is Dubai is delivering again. Mission not so impossible after all, perhaps.