High hopes: a second chance for Dubai
With the region's aviation industry gaining momentum, will businesses in Dubai find a way to get their second wind and flourish once again?
November 20, 2011 2:45 by Precious de Leon
With the kind of showboating we’ve seen from Gulf carriers in the latest Dubai Airshow, it’s clear that the GCC’s aviation industry is going to be a key element in keeping the Middle East relevant in the global trading route.
So key, in fact, that one billion dirhams ($273.3 million) has been secured for investment into the completion of Dubai World Central.
There are a lot of high hopes for Dubai’s “aerotropolis” as the current airport will be transferred there and it creates links to nearby Jebel Ali Free Zone and opens up the possibility of bigger capacity for business. The area is currently operating only for cargo transport but commercial passenger flights are expected to be in operation next year.
True to form, Dubai builds this project to include five runways, terminals and warehouses, as well as residential and office space, manufacturing zones and, oddly but unsurprisingly, golf courses.
Now zoom out at the bigger picture and it looks like the GCC is going back to basics itself–as much of a ‘basic’ as money can buy at least. Emirates 24/7, for example, reports that the GCC ports are “expected to spend nearly $15 billion on the expansion of their ports within the next five years.”
This sea ports study from the Kuwaiti-based Markaz financial centre noted that Dubai is currently ranked ninth among the top 10 container ports in the world in 2010 (the highest rank among GCC players), although Abu Dhabi has ambitious projects that may overtake Dubai’s current standing and eventually create overcapacity.
The growing strength of China and India’s economies is expected to have hugely positive ripple effects for the GCC’s ports, serving a strategic route for investors wanting to get into and out of these countries.
SPREAD THE LOVE
Now let’s take things up a notch and look at the opportunities existing businesses and sectors in Dubai and the whole of the UAE could potentially grab with this expected growth.
Regional businesses cannot expect the same easy reception investors gave their pitches prior to 2008. This time around, there’s a bit of baggage. For one, there’s the burst property bubble of which all relevant parties still have much to recover.
And there’s also the UAE’s banking sector, which is still in flux as the government pushes for merging most of the existing local financial entities, with Emirates NBD taking in a handful of the smaller financial service companies.
The shockwave from these two sectors alone is unmistakable in other industries, which have experienced loss in profits and, worse, job redundancies.
So with the promise of a strong air and sea ports business–ironically the asset that got the GCC its current stellar global economic status–how are regional businesses going to grab this hopeful second chance?
TAKE THE BULL BY THE HORNS
By the horns, we hope. With a more pragmatic approach, based on clear, open regulation, protection of both parties, a more secured investment–as secure as investments can be, of course.
It’ll be a tough to allay apprehension. But any savvy investor understands that big payoffs can only come from taking risks, albeit well-calculated ones.
The money is there. The willingness to invest is potentially there. Now, with some spit and elbow grease, it’s up to regional businesses to show the world that there’s more to the region then shiny new buildings and money to help throw weight around.
Could this be a second chance for businesses in Dubai? Can’t know for sure, except that the outcome won’t be from pure luck but from true grit from business owners and investors.