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Modest slowdown
And Dubai is slipping. Its double-digit economic growth is reportedly expected to fall by more than half to around 4%-6% this year, while Abu Dhabi is forecasting a more modest slowdown to around 7%.
Dubai's real estate sector, once the jewel in its crown, is unravelling at an alarming rate, with projects put on hold and companies cutting jobs.
Earlier this month, Britain's Casa Dubai, which specialized in selling Dubai property to British consumers, went into liquidation after admitting that it had made 'virtually nothing' in sales since August. In a statement on its website, the company even said a major developer had gone on the run from the police with GBP500,000 worth of clients' money.
Not everyone believes this spells doom for Dubai. HSBC economist Simon Williams told Forbes that the quality of the emirate's service sector was unequalled in the region, and that Abu Dhabi would not necessarily take its place as a result of the slump. 'Growth will be stronger in Abu Dhabi this year,' he said, 'but anyone doing business in the UAE has always recognized that Dubai and Abu Dhabi are very different places.'
Abu Dhabi's reliance on oil revenues is also a problem, with oil prices down more than 70% since their summer peak of $147.50 a barrel last year. But the emirate's wide-ranging development plan is paving the way for something more long-lasting, with investment in energy, technology and even intellectual capital, symbolized by the opening of satellite campuses for New York University and Paris' Sorbonne, quietly balancing out the more obvious big hotels and golf courses.
'The economy Abu Dhabi is building is recession-proof,' said Davidson. 'Yes, it does have tourism, yes, it does have real estate, but these are not central pillars of the new economy. These are icing on the cake.'
Staff Reporter
