Summary: Pre-pandemic, Dubai’s economy was stuttering but now the picture is bleaker and much more challenging.
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Today’s piece accurately summarises Dubai’s predicament, and is an analysis which would not be published locally because of it’s profound implications for local security and stability. I would only add to the analysis that the over-supply in the real estate market was in part caused by the unwillingness of the major players to cut back on the numbers of properties they were pushing into the market, hoping that supply from some of the smaller companies might be curbed by government limits imposed on property registrations.
The relatively poor performance of the economy in 2018 and 2019 can at least in part be ascribed to Abu Dhabi-led political initiatives which cut back trade with Iran and Qatar. Emirates and Fly Dubai lost through-traffic from both these countries, probably equivalent to about 5% of passengers carried – not an enormous figure, but one which swallowed up anticipated growth. Most of Qatar’s imports up to 2017 used to trans-ship through Jebel Ali – this trade has disappeared probably for ever, as Qatar has now built its own facilities: and there is a similar story for Iranian imports and exports, most of which again used to be routed via Jebel Ali. Anti-Iranian financial sanctions have really bitten over the past few years, again limiting transactions routed through Dubai, but also the ability of Iranians to pay for tourist trips to Dubai and to purchase property. Dubai has tried to attract business from other markets to compensate, from China and Eastern Europe; but the loss – probably for ever – of a sizeable proportion of its entrepot trade has been an economic cost borne by an apolitical Dubai, and not one felt by its more politically-driven instigator, namely Abu Dhabi.