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In Dubai's luxurious Jumeirah Beach Residence, rents for luxury condominiums dropped by about 15 percent from the previous year, which could indicate that the rich economic revenue of the city's economy has been reduced. Emirate is no longer valid.
For over two decades, Dubai has flourished as one of the most important cities in the world and has been a source of attraction for people and financiers around the world.
Nine years ago, Dubai needed a $ 20 billion rescue package from the oil-rich emirate of Abu Dhabi to avoid a debt crisis caused by the Collapse in real estate prices. But Dubai's economy has regained its strength and has increased by a third since then with the support of foreign trade and tourism and the status of the emirate as a major hub for business services. companies in the region.
But Dubai is going through a difficult time now. Housing prices have fallen by more than 15% since the end of 2014 and continue to fall. The stock market has fallen 13% since the beginning of the year, recording the worst performance in the region.
Dubai released 4,722 new business licenses in the second quarter of 2018, down 26% from the same period in 2016, the year when new licenses peaked.
These declines may be temporary due to the economic slowdown in the Gulf region resulting from lower oil prices. But other figures suggest that some of the traditional engines of growth in Dubai are losing momentum, which could mean a long-term decline.
The growth in pbadenger traffic through Dubai International Airport has dropped to near zero this year, after 15 years of sharp increases. Long-term flights could weaken more and more Dubai's dominance as a hub linking Asia to Europe.
"The time when we could move to Dubai to make a fortune is perhaps coming to an end," says Exotics Capital, Global Head of Equity and Strategic Research at Exotics Capital. adding that the emirate is becoming more and more attractive. Of the whole world. But he said it was not clear whether Dubai's transportation and economic zones could continue to grow fast enough to attract and retain enough foreign workers to support demand in the property market. 39; emirate.
Structural Challenges
Economists see that the risk of a new financial crisis is limited after billions of dollars of debt restructuring, and the debt of companies related to the government of the emirate dropped ten years ago.
The main economic growth has not slowed significantly. IMF officials estimate that GDP will grow by more than 3 percent this year. The Dubai Department of Economic Development said in a statement this week that the emirate continues to attract business and investors as a competitive center for sustainable business development.
But most of the growth this year is due to a significant increase in public spending as Dubai builds infrastructure to host Expo 2020. Dubai's budget for 2018 has increased by 19.5 percent per year. compared to 2017 to reach a record level of 56.6 billion dirhams (15.4 billion dollars). The government can not continue to increase spending so quickly indefinitely.
"The emirate is facing structural challenges, including an increasingly difficult geopolitical environment," said Jim Crane, an energy researcher at Rice University in Texas and author of "The City of Gold – Dubai and the dream of capitalism ".
In the past, Dubai has achieved prosperity by maintaining friendly relations with all countries in the region, and by accepting the trade and investment of all countries.
But it has become impossible. Last year, the United Arab Emirates, Saudi Arabia and other countries cut off diplomatic relations and transport links with Qatar, ending the role of Dubai as a basis for trade with this very rich little country. Currently, goods that were previously shipped to Qatar via Dubai are transported through other countries such as Oman and India. Multinationals use their offices in Europe and the United States, not Dubai, to manage their business with Qatar.
Meanwhile, US and Gulf allies, including the UAE, are seeking to squeeze the Iranian economy by cutting off their financial and commercial ties. Diplomats in the region say the effort is more intense than Washington 's previous attempt to isolate Iran many years ago.
This is important because the UAE exports and re-exports to Iran, the vast majority of which pbad through Dubai, for a total of $ 19.9 billion in 2017.
The CEO of a foreign finance company in Dubai has said that the emirate is facing unprecedented competition. Neighboring countries on capital, at a time when low oil prices were forcing these countries to develop non-oil sectors.
The funds are already going from the stock market to the Saudi stock market. In the years to come, direct investment could fall. The American oil services company McDermott said that she was expecting to gradually move from the port of Jebel Ali in Dubai to a new Saudi factory in the mid-1920s.
Dubai is seeking to strengthen its competitive position. In recent months, the government has announced that it will reduce government fees, cancel some airfare, reorganize tuition fees, and take other measures to support foreign businesses and residents.
The UAE cabinet, headed by Dubai leader Sheikh Mohammed bin Rashid Al Maktoum, announced a reform that could be the most influential. The government has promised 100% foreign equity participation in UAE-based companies and long-term residence visas of up to 10 years for foreign investors and specialists.
This can enhance the attractiveness of foreign investment in Dubai by helping foreigners who plan to stay in the emirate for a long time and encouraging them to buy houses.
The details of the new policy still have to be disclosed, and their application can be problematic. Dubai's "free zones" allow for 100% foreign ownership and may face difficulties if they no longer have this exclusive right. Many UAE nationals earn money as partners without any management role for foreign businessmen.
Read also: The luxury ship Queen Elizabeth II returns as a floating hotel in Dubai
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