For decades, Dubai has been known as a rich country in the United Arab Emirates. It has undergone rapid changes with massive infrastructure development, making it a gulf nation with huge number of skyscrapers and towers. However, what is happening today seems to reveal the real face of Dubai. At least this is what’s shown by market research Dubai.
Back then to a decade ago, Dubai suffered bad crisis during global financial crisis. Even though the city-state received massive bailout provided by National Bank of Abu Dhabi, it seems to be a not an effective solution to resolve Dubai economy problem.
Dubai Economy Degradation
While builders are doing their job to build new infrastructures such as restaurants, offices, and stores, it is inevitable that Dubai is facing economy problem. Recently, expatriates are known to pack up and leave the country that makes Dubai offices, stores, and restaurants are less occupied. Even market research reported that Dubai stock market reached its worst since 2008.
Despite the fact that Dubai is less dependent to oil, still its revenue cannot be parted from this field. Crude oil prices that keep falling since 2014, more or less, squeezed the government and forced them to find revenue from other sources.
According to market research Dubai, condition is getting worse since Dubai bosses raised government fees and other issues such as strict visa rules. This, of course, insists foreigners to leave the country and lose their jobs. It is not a surprise that Dubai keeps struggling to bring its economy back to health.
Dubai Financial Market
Local stock market is also affected by economy degradation in Dubai. Investors seem to be afraid of the future. As tracked by Dubai Financial Market General Index, the local stock market lost almost half of its value during the past 5 years. Compared to data in May 2014, recent index shows trading falls 49% to 2,683 from 5,302.
Global trade that is slowing down, however, has not helped the city-state. Dubai positions itself as a trading hub among Gulf countries. While it is supposed to bring economic advantages for Dubai, the slowdown in trade combined with protectionism brings suffer to Dubai’s business.
What Dubai Should Do
The city-state will come to its worst if it does not take any real action to resolve the problem. One thing that should be considered by Dubai is reining the builders. Based on head of market research Abu Dhabi, the capacity outpaces consumer spending and population growth. In addition, authorities are unwilling to stabilize market by constraining permits.
It cannot be denied that land sales are a great source of city-state revenue. However, in a condition the government does not restrict the permits, retail space is predicted to expand 50 percent only in the next 3 years. Furthermore, rapid development will possibly make the city sink.
The last but not least, the government needs to know better. Debts problem should be resolved, while at the same time it should be able to control city development unless it is going to have more building than human population.