Dubai is staring at an economic collapse. One of the world’s most popular tourist destinations is feeling the heat like never before.
No tourists, no oil money, the pandemic has left Dubai scrambling for money. If nothing is done most of Dubai’s businesses will shut down over the next six months.
Dubai, a city of skyscrapers and artificial archipelagos, a global hub for free movement of trade, people and money, and a symposium of luxury shopping and lively nightlife – well, all that’s in the past. The pandemic has shaken the most resilient sheikdom in the United Arab Emirates.
An astounding 70 per cent of the businesses in Dubai are expected to shut shop in the next six months.
Dubai is one of the least oil-reliant economies in the Gulf but that’s no insulation from the ravages of the lockdown. Dubai’s fuel is hospitality, tourism, entertainment, property, and retail.
One of the busiest international airports in the world with two popular airlines – Emirates and Etihad have had all operations grounded.
The world’s most dominating skyscraper — the Burj Khalifa, the Dubai Mall, Palm Jumeirah, Mall of the Emirates, and even the Dubai gold souk. All are in the pits of despair with business shut down during the lockdown.
Half of Dubai’s internationally known hotels and restaurants will go out of business in the next month alone. 74 per cent of the travel and tourism businesses will down shutters, according to findings by the Dubai chamber of commerce. Businesses in the UAE are slashing salaries, sending employees on unpaid leave, and reducing staff.
Dubai did allow some of its malls and businesses to reopen at around 30 per cent capacity but, there were hardly any customers.
UAE is heavily-reliant on its 80 per cent expatriate population to eat out and shop. Most of these rich expatriates including Indians have left for their home country.
In late March, Dubai did announce an economic package to cushion the impact. With the oil-prices remaining at lower than expected levels and, economies still scampering back to normalcy, more oil money is hard to find to boost the economy. The pandemic cannot be blamed entirely for the collapse. Dubai’s hot cake for the recent decades — real estate is metaphorically crumbling to the ground.
Residential property prices are down 30 per cent from the 2014 peak. On the commercial side, mostly of hotels and restaurants revenue per room is down 25 per cent since 2015.
Last year, Dubai’s economic growth was slightly over one per cent. The worst since the global financial crisis in 2008.
For all the expansionary projects undertaken in recent decades. Dubai and its vast web of state-linked industries are facing billions of dollars in looming debt repayments and for the foreseeable future there will be no oil money, no tourism, no foreign funds, no big real estate deals.
A city that seemed glorious under its blinding night lights, is today struggling to stay alive.