Dubai's economy: the paths of the future

The big saloons abandoned in airport car parks are now a distant memory. That was back in 2009, when expatriates who wanted to get out of a metropolis in the throes of a real estate and financial crisis had no qualms about leaving behind the momentary evidence of their success. But today, the sudden drop in growth (-2.5 %) has been forgotten. And from the top of the 828-metre Burj Dubai tower, which was renamed Burj Khalifa in honour of the Sheikh of Abu Dhabi who came to the city-state's aid at the time, Dubai seems to be taunting the world with its futuristic power. Inaugurated in 2010, right in the middle of the storm, the world's tallest skyscraper symbolises the beginning of renewal. A renewal that is now crystallising around one expectation: that of next November. Not because the scorching temperatures will have given way to a more bearable heat, but because the results of Dubai's bid to host the 2020 World Expo will finally be in.

Hosting Expo 2020

If, as the authorities fervently hope, the small emirate of two million inhabitants is selected, then a new era will begin. For the Metropolis, with its shifting silhouette, does not shy away from metamorphosis. In the run-up to Expo 2020, a 438-hectare site has been chosen, where a veritable city within a city is set to emerge, located equidistant from downtown and neighbouring Abu Dhabi, between what will soon become the world's largest airport and the world's third-largest port. "We are in the running with other emerging countries such as Turkey, Brazil, Russia and Thailand, but we believe that Dubai has every chance of winning, because its infrastructure is unrivalled for this type of event. With, in particular, a hotel stock that will reach 80,000 rooms by 2020".says Ikaraam Ullaheconomist at the Dubai Chamber. It would be the first World Expo to be held in the Middle East, and the third on the Asian continent after Osaka in 1970 and Shanghai in 2010. Of course, the economic and tourism repercussions would be phenomenal, with the emirate expecting to welcome 25 million visitors. That's a huge jump on 2012, which saw just under ten million tourists pass through the metropolis, a very satisfactory figure nonetheless, and higher than before the crisis. But there's no doubt that Expo 2020 will give Dubai even more scope: More roads, more metro, train and tram lines, a huge new convention centre, extravagant buildings like Mohammed bin Rashid City, a vast entertainment district that would include a Universal Studios theme park, a mega shopping centre, around a hundred new hotels, marinas... At the same time, Dubai would consolidate its position as the region's leading destination for MICE, trade fairs and international conventions. "The Expo 2020 project, which was launched in 2012, is also part of the drive to diversify the economy of a country that has almost no oil resources, other than offshore".continues Ikaraam Ullah. Services already account for 90 % of the city-state's GDP. This year, Emir Mohammed Bin Rashid Al Maktoum announced his intention to make Dubai the centre of Islamic finance, by developing 'sharia compliant' products such as sukuks, bonds that comply with Koranic law, and by supporting the growth of Noor Islamic Bank, founded in 2008.

Between Europe and Asia

Among the various facets of this diversification strategy, making Dubai the hub between Asia, Africa and Europe is undoubtedly the most crucial. Extensions to the port of Jebel Ali, the world's third-largest port operator, should soon increase its capacity from 12.5 million to 15 million containers a year. More than 6,000 companies, mainly foreign, have already set up their regional offices in the port's free zone. A key point for world trade, Dubai is also a magnet for the headquarters of major groups in the aeronautics, arms, industry, hotel services and distribution sectors. At the same time, Al Maktoum International Airport is set to become the world's largest airport by the end of 2015, with a capacity of 90 million passengers by 2018. "The Emirates is currently one of the few regions in the world experiencing airport growth, and Dubai's air trafc increased by 6 % between December 2011 and December 2012."explains François SporrerDirector of Near and Middle East at Ubifrance. But the diversification of the economy also extends to industry, with oil derivatives, to the steel industry with aluminium, while real estate continues to attract both regional and international clients. "In 2008, property accounted for 30 % of GDP. Its share fell sharply after the crisis, and the city focused mainly on its future as a logistics hub".continues François Sporrer. Nevertheless, despite the desertion of certain neighbourhoods considered unattractive, prices are rising. To a certain extent, this phenomenon is reassuring, as it points to a healthier economy. But it is also worrying: could Dubai be on the verge of slipping back into the property bubble? "People buy in Dubai to invest more than to live, and the race for the highest, most impressive and most extravagant in the world has not really stopped".he stresses. Despite this, new districts are now being built more carefully and rigorously, according to more carefully thought-out urban development plans, in a spirit comparable to that of the free zones that have been Dubai's strength since their creation in the 1980s. These zones are concentrated by sector, such as finance, services, transport, trade and so on. They attract foreign investors, giving them the opportunity to do business without local partners. Grouped by theme, such as Media City, Internet City, Knowledge City, Healthcare City or DIFC - the financial district - they create de facto centres of excellence that feed off each other.

Start-ups and clusters

The success of these clusters is also due to Dubai's political and social stability and its traditional openness to the world. In 2011, for example, the United Arab Emirates ranked 40th on the World Bank's list of the easiest countries in which to do business, and moved up to 26th place in 2012. This leap forward is due to strong encouragement for start-ups, a very good internet network and a healthy economy. In January, there was a 13 % increase in exports, while forecasts for 2013 are for GDP growth of between 3 and 5 %, higher than global expectations, estimated at around 2 %. "In a way, the Emirates have benefited from the Arab Springsays François Sporrer. Visitors to the region, who used to opt for Egypt or Lebanon, are now choosing Dubai". This stability, reflected in the intervention of the Emirates and Qatar alongside NATO in Libya, is reassuring to the West, even if visitors from the Middle East remain the main driver of tourism. For example, Saudis alone account for 30 % of luxury purchases in Dubai. "The city's dynamism is virtually on a par with that of Singapore, and over the last two years everything has picked up again: hotels are opening, building sites are starting up again".also notes Isabelle LeroyDirector of the French Business Council. According to her, the French community is experiencing unprecedented growth, reaching an annual peak of 15 % over the past two years. In all, nearly 20,000 French nationals are officially registered in the Emirates, including more than 14,000 in Dubai. A young population, with 60 % under the age of 40. But there's no need to dream: Dubai is no longer Eldorado. Isabelle Leroy warns: "The days of very high salaries and, above all, great benefits for expatriates are, if not a thing of the past, at least a thing of the past. Dubai is a very competitive market, where a large number of nationalities are present, each with its own areas of excellence, since just over 15 % of Dubai's inhabitants are Emiratis." While the French continue to be well positioned in traditional products such as luxury goods, hotels and agri-food, they are beginning to make their mark in emerging fields such as technology, medicine and sustainable development.

A sustainable effort

Dubai is becoming increasingly aware of the importance of adopting a more environmentally-friendly attitude. Recently, several initiatives have been taken in this direction. The main one is to encourage the installation of a large number of solar panels to meet 10 % of the city-state's energy needs. There is also talk of a significant reduction in energy consumption and the development of public transport, with the addition of trains to the two metro lines already built and the creation of a third line, as well as the construction by 2018 of a rail link connecting the emirates and extending as far as Oman. Alstom is currently building a tram network in the Marina district, while the Emaar group has created Byky, a system similar to Paris's Vélib', with stations located in micro-neighbourhoods such as Dowtown Burj Khalifa. "Sustainable development is a real concern for the authorities. They finally understand that, in the long term, neglecting ecology would be detrimental".concludes Isabelle Leroy. But that's not all. Niche areas are emerging in Dubai: companies specialising in 3D, holograms and new media are gaining ground, with the establishment of companies such as Fractal and Dassault, which recently opened an aeronautical simulation system. In 2006, Lammtara Pictures, a local production company, launched Freej, a cartoon featuring caricatures of crazy Emiratis wearing traditional clothes and parodied masks. "Since then, there has been a growing demand for this type of series throughout the Middle East.explains Mohammed Haribproducer and creator of Freej and director of Lammtara Pictures. That's why Dubai is developing this expertise. The idea came to the businessman while he was still at university, and he enjoyed drawing his veiled but mischievous grandmother as a kind of superhero. In the near future, the Dubai super-mamma is set to hit European screens. Clearly, there's no age limit in Dubai for conquering the world.