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Chaotic Dubai builds up ... as oil dries up
'We are now ready to live without oil,' says Dubai's Department of Tourism. Transformation of city-emirate on the Gulf part of a plan 'to position Dubai as the leading centre for commerce and tourism in the world'
Deborah Stokes in
Financial Post
Saturday, July 08, 2006
There are more than 100 nationalities and every stratum of society in this city-emirate on the Gulf, from rich Arab sheikhs to expat Western executives and Asian labourers. And every day, they share the most equalizing experience: sitting in traffic jams.
"The traffic is ruining this city," says Raflek, an Indian driver, as we idle in a sea of cars on Sheikh Zayed Road, Dubai's main thoroughfare and the most dramatic example of the transformation of this tiny emirate from another oil-rich Gulf state to a can-do capitalist mecca.
Ten years ago, there were a couple of towers along this road. Today, gleaming hotels, shopping malls and skyscrapers line up end-to-end along its several-kilometre stretch, broken up by sandy lots where construction has not yet started but the billboards are already up.
"It is getting to be like London, where all we talk about is the traffic and the weather," says Claire Malcolm, a British expat who has been working in Dubai for the past four years. The endless traffic jams that can turn a half-hour commute into a two-hour stall in the sweltering desert are the most visible growing pains in what has become the world's biggest construction zone -- all fuelled because Dubai is running out of oil.
Dubai is both a city of 1.3 million people and an emirate, one of seven federations that make up the United Arab Emirates. Smaller in size than Calgary, it is dwarfed by its reputation. In its June issue, Vanity Fair devoted 20 full pages to it, claiming "Las Vegas is a sputtering 20-watt bulb compared with this fire in the desert." Dubai's building frenzy has become cliche: One in six of the world's cranes are here; an estimated 500 skyscrapers under construction; the world's tallest building, biggest mall, most luxurious hotels.
The population is growing at a rate of 8% a year as guest workers stream in. It is estimated local Emiratis will represent only 4% of the population by 2010. Sandwiched between the sea and the desert, Dubai is sprawling out into both. Ambitious man-made islands, such as the Palm Jumeriah and the World projects, are being dredged out of the Gulf. Mini-cities and duty-free zones, where foreign companies are attracted by the "light" regulations -- no income or corporate taxes -- are pushing back the desert. There are Media and Internet City, Healthcare City and even Humanitarian City, with its Middle Eastern headquarters of organizations such as Unicef and the World Wildlife Foundation. Two dozen schools are planned for Academic City, which will include separate men's and women's universities. Then there are the infrastructure projects: roads, bridges, canals and a subway line, to be completed in 2011.
But the clock is ticking in Dubai. It is estimated Dubai's oil reserves will be depleted by 2016. Dubai's construction chaos is, in fact, part of a well-orchestrated plan for life after oil. Dubai's economy grew by 16% in 2005, compared with a growth rate for the UAE of 7%. Oil now accounts for only 6% of Dubai's income.
"We are now ready to live without oil," says Hamad Mohammed bin Mejren, manager, Department of Tourism, for the government of Dubai. Tourism is now one of Dubai's biggest earners. From six million visitors in 2005, the target is to reach 15 million annual visitors by 2010. "Our vision is to position Dubai as the leading centre for commerce and tourism in the world."
Mr. Mejren was born in 1967, the year oil was discovered in Dubai. Before that, the small town eked out a living from the Dubai Creek, which bisects it still, fishing and pearl diving.
See DUBAI on Page FP5
Airline with a twist, Page FP5
dubai
Continued from Page FP1
"Even I find it difficult to keep up with everything that's happening," he says as he compares a photograph of the Sheraton Hotel, surrounded by desert in 2003, and today, obscured by towers.
Closer to home, there are voices in Alberta calling for a similar plan for the future to lessen the province's dependency on oil. "No one is interested in talking about diversity because everyone is so busy making money," says Todd Hirsch, the chief economist at the Canada West Foundation, and author of a recent report on the province's economic future titled As Good as it Gets. According to Mr. Hirsch, Alberta's booming oil economy is stifling the growth of other sectors. "We won't run out of oil -- there's so much oil here. But at some point in time, the world is going to get over its dependency on crude oil and the big question is, what will Alberta do at that point."
The man widely considered the architect of Dubai's current transformation, Sheikh Mohammed bin Rashid al Maktoum, is now its ruler, having taken over from his brother after his death in January from a heart attack while visiting Australia. But the ruling Maktoum family showed evidence of foresight as early as the 1960s, when it spent massive amounts of money to deepen its port, and entered the port management business.
"Dubai is like a dictatorship. But it has been managed carefully and prudently," says Phil McArthur, a Canadian ex-pat and managing director of commercial real estate for Al-Futtaim, one of the largest private companies in Dubai, and the developer of Festival City, a major residential and resort complex along a four kilometre stretch of the Dubai Creek.
In his 10 years working in Dubai, Mr. McArthur says he has met the Sheikh a few times. "He asks questions like a chairman of a corporation: 'Who are your customers? What are you doing to attract them,'" Mr. McArthur says.
More business reforms are coming. A new law announced in March will clear up some of the uncertainty regarding foreign ownership of property, allowing limited freehold ownership and 99-year leases. The Muslim state is even changing its traditional weekends to start on Friday, rather than Thursday, in order to move closer to Western business hours.
Of course, all of this hasn't come without costs. Beyond the traffic, property prices are soaring, forcing residents to move further out of the city to cheaper accommodations. Last year, a new rental increase rule went into effect, capping increases at 15%. Media reports are now turning to the plight of Dubai's labourers, lured by the prospects of jobs and tax-free income, but finding themselves working gruelling hours in the desert heat and living in workers' camps that are a far cry from the city's five-star glitzy hotels.
But if all goes according to plan, life after oil in Dubai could be far richer and longer lasting than it was with it.
__________________
Chaotic Dubai builds up ... as oil dries up
'We are now ready to live without oil,' says Dubai's Department of Tourism. Transformation of city-emirate on the Gulf part of a plan 'to position Dubai as the leading centre for commerce and tourism in the world'
Deborah Stokes in
Financial Post
Saturday, July 08, 2006
There are more than 100 nationalities and every stratum of society in this city-emirate on the Gulf, from rich Arab sheikhs to expat Western executives and Asian labourers. And every day, they share the most equalizing experience: sitting in traffic jams.
"The traffic is ruining this city," says Raflek, an Indian driver, as we idle in a sea of cars on Sheikh Zayed Road, Dubai's main thoroughfare and the most dramatic example of the transformation of this tiny emirate from another oil-rich Gulf state to a can-do capitalist mecca.
Ten years ago, there were a couple of towers along this road. Today, gleaming hotels, shopping malls and skyscrapers line up end-to-end along its several-kilometre stretch, broken up by sandy lots where construction has not yet started but the billboards are already up.
"It is getting to be like London, where all we talk about is the traffic and the weather," says Claire Malcolm, a British expat who has been working in Dubai for the past four years. The endless traffic jams that can turn a half-hour commute into a two-hour stall in the sweltering desert are the most visible growing pains in what has become the world's biggest construction zone -- all fuelled because Dubai is running out of oil.
Dubai is both a city of 1.3 million people and an emirate, one of seven federations that make up the United Arab Emirates. Smaller in size than Calgary, it is dwarfed by its reputation. In its June issue, Vanity Fair devoted 20 full pages to it, claiming "Las Vegas is a sputtering 20-watt bulb compared with this fire in the desert." Dubai's building frenzy has become cliche: One in six of the world's cranes are here; an estimated 500 skyscrapers under construction; the world's tallest building, biggest mall, most luxurious hotels.
The population is growing at a rate of 8% a year as guest workers stream in. It is estimated local Emiratis will represent only 4% of the population by 2010. Sandwiched between the sea and the desert, Dubai is sprawling out into both. Ambitious man-made islands, such as the Palm Jumeriah and the World projects, are being dredged out of the Gulf. Mini-cities and duty-free zones, where foreign companies are attracted by the "light" regulations -- no income or corporate taxes -- are pushing back the desert. There are Media and Internet City, Healthcare City and even Humanitarian City, with its Middle Eastern headquarters of organizations such as Unicef and the World Wildlife Foundation. Two dozen schools are planned for Academic City, which will include separate men's and women's universities. Then there are the infrastructure projects: roads, bridges, canals and a subway line, to be completed in 2011.
But the clock is ticking in Dubai. It is estimated Dubai's oil reserves will be depleted by 2016. Dubai's construction chaos is, in fact, part of a well-orchestrated plan for life after oil. Dubai's economy grew by 16% in 2005, compared with a growth rate for the UAE of 7%. Oil now accounts for only 6% of Dubai's income.
"We are now ready to live without oil," says Hamad Mohammed bin Mejren, manager, Department of Tourism, for the government of Dubai. Tourism is now one of Dubai's biggest earners. From six million visitors in 2005, the target is to reach 15 million annual visitors by 2010. "Our vision is to position Dubai as the leading centre for commerce and tourism in the world."
Mr. Mejren was born in 1967, the year oil was discovered in Dubai. Before that, the small town eked out a living from the Dubai Creek, which bisects it still, fishing and pearl diving.
See DUBAI on Page FP5
Airline with a twist, Page FP5
dubai
Continued from Page FP1
"Even I find it difficult to keep up with everything that's happening," he says as he compares a photograph of the Sheraton Hotel, surrounded by desert in 2003, and today, obscured by towers.
Closer to home, there are voices in Alberta calling for a similar plan for the future to lessen the province's dependency on oil. "No one is interested in talking about diversity because everyone is so busy making money," says Todd Hirsch, the chief economist at the Canada West Foundation, and author of a recent report on the province's economic future titled As Good as it Gets. According to Mr. Hirsch, Alberta's booming oil economy is stifling the growth of other sectors. "We won't run out of oil -- there's so much oil here. But at some point in time, the world is going to get over its dependency on crude oil and the big question is, what will Alberta do at that point."
The man widely considered the architect of Dubai's current transformation, Sheikh Mohammed bin Rashid al Maktoum, is now its ruler, having taken over from his brother after his death in January from a heart attack while visiting Australia. But the ruling Maktoum family showed evidence of foresight as early as the 1960s, when it spent massive amounts of money to deepen its port, and entered the port management business.
"Dubai is like a dictatorship. But it has been managed carefully and prudently," says Phil McArthur, a Canadian ex-pat and managing director of commercial real estate for Al-Futtaim, one of the largest private companies in Dubai, and the developer of Festival City, a major residential and resort complex along a four kilometre stretch of the Dubai Creek.
In his 10 years working in Dubai, Mr. McArthur says he has met the Sheikh a few times. "He asks questions like a chairman of a corporation: 'Who are your customers? What are you doing to attract them,'" Mr. McArthur says.
More business reforms are coming. A new law announced in March will clear up some of the uncertainty regarding foreign ownership of property, allowing limited freehold ownership and 99-year leases. The Muslim state is even changing its traditional weekends to start on Friday, rather than Thursday, in order to move closer to Western business hours.
Of course, all of this hasn't come without costs. Beyond the traffic, property prices are soaring, forcing residents to move further out of the city to cheaper accommodations. Last year, a new rental increase rule went into effect, capping increases at 15%. Media reports are now turning to the plight of Dubai's labourers, lured by the prospects of jobs and tax-free income, but finding themselves working gruelling hours in the desert heat and living in workers' camps that are a far cry from the city's five-star glitzy hotels.
But if all goes according to plan, life after oil in Dubai could be far richer and longer lasting than it was with it.
