What will Gulf business be like in 2010?

The first thing to note about any economic boom in history is that it does not last forever. The question is rather, how long will a boom last and what will be built while it is going on, for what is built today will stand tomorrow when the boom is long gone.

AME Info gets regular feedback from readers who criticize this website's focus on Dubai. But over the past few years the lion's share of new investment in infrastructure in the Middle East has gone into Dubai, with an estimated $200 billion worth of projects now underway.

If you visit Abu Dhabi or Doha you see the start of a similar scale of construction activity. But it is just starting and not nearing completion as is the case for at least $100 billion worth of projects in Dubai.

Infrastructure creation

Thus if something crashed energy prices tomorrow morning, and the GCC states suddenly felt their revenues shrinking, Dubai would have gained the most in terms of infrastructure.

You just look around the city: a new airport about to finish, another bigger one about to start; massive mall projects; the tallest building in the world under construction; hundreds of residential and commercial towers going up; the two palm islands and associated projects; many new hotels being built; and Dubailand, a theme park bigger than present urban Dubai.

Yet energy prices are still trending higher, and this year will be another record for energy revenues in the GCC. So despite the recent stock market falls there is no reason to predict an early end to the boom.

On the other hand, if we look to 2010, which is only a few years away, it is quite clear that Dubai will emerge as the most modern and sophisticated city in the GCC, if it is not already, and extend its lead over the other cities which have been much slower to put development activity into place.

2015 could be different

Indeed, if the high level of energy prices continues as many experts now predict then by 2015 it could be that other cities begin to catch up. The plans in progress in Abu Dhabi and Doha are impressive, and Jeddah will have its King Abdullah Economic City.

There also has to come a point when the Dubai boom consolidates and that usually means a real estate crunch that chokes off new development while the supply of new property is absorbed. But at least Dubai will have the supply of infrastructure to handle the expansion of the GCC economy that will inevitably accompany higher energy prices.

It is interesting how many GCC investors have chosen to invest in Dubai rather than their own countries, and it may well be that as time goes on the same proactive business policies are adopted elsewhere and investment then flows to other cities. But predicting which city will be on top by 2010 is not very difficult.