2011 proved to be a much better year for the Dubai economy than many forecasters expected with a surprise to the upside for aviation, hospitality, retailing, oil prices and even real estate, all partly due to the Arab Spring unrest in the region.
Tourists came to Dubai because other countries became off-limits, and some rich Arabs chose to make their home in Dubai and moved businesses here. At the same time a combination of global money printing by the central banks and growth in China sent oil revenues to record levels.
Record oil revenues
As the CEO of FlyDubai, Ghaith Al Ghaith remarked yesterday at the Dubai Airshow the surprise was that oil prices not only jumped above $100-a-barrel but stayed at these levels for longer than ever before. WTI crude looks set to top $100 this week. Brent crude has been way above $100 all year.
Oil revenues are the cash flow of the region, and clearly the regional trading hub is a big beneficiary. The hoardes of multinational trading empires based in Dubai have had a very good 2011 or at least better than the pessimists expected at the start of the year.
The question then is can this good fortune continue into 2012? ArabianMoney can see no good reason to think it will not, short of a geopolitical event like an Israeli strike on Iran, although how long that would actually disturb the upturn is open to debate.
Part of the reason for this optimism is the take-up of the real estate space left by the boom that crashed three years ago. Dubai has quietly gotten on with completing this property and it is now available – new and at lower cost – for the next phase of the expansion of the city.
Dubai real estate
Many regional trading hub cities find themselves short of space in a growth phase, and there is a hyperinflation of property that suppresses growth rates in other sectors. Not so in Dubai where there are plenty of apartments, offices and shops to accommodate an expanding population. ‘Build and the people will come’ was always the Dubai mantra. Even over the past three years official figures show a 200,000 increase in population.
As the economy continues to recovery more and more new residents will arrive in Dubai creating a snowball effect with additional demand for homes, shops, restaurants and consumer goods. 2012 looks like being another year of recovery.