Dubai and the GCC

When you get into a cab in Dubai you often get the unexpected… of course this is true for Chicago as well. In fact, I think I had the same driver last week in Chicago and this week from the Sheraton Jumeriah to Knowledge City in Dubai… you know the guy, he’s picked you up also. But what strikes me about cab drivers in the world lately (at least the places I go) is that they all are listening to “world music”… you known it as “hip hop” but it’s on in every cab I get into and it’s not like the driver sees me coming and says “yes, it’s hip hop for this guy.” Our driver this morning was from India… a young guy with a suit on and a red tie… didn’t say much, but it was “hip hop” the whole way. My driver yesterday afternoon was Palestinian… a bit older than me… no political talk, just a brief comment on how he “always gets the Americans." Don’t know what that meant but again hip hop united us.

That said, what is going on with Dubai anyway? It’s hard to tell really, the New York Times bashed the place last week. Guess they were tired of bashing Detroit and the latest news on Chicago/Illinois corruption hadn’t hit the front pages yet so “let’s look international.” If you read some of the English language international papers you would think that Dubai was turning into a ghost town. You hear about abandoned projects, empty condos, thousands of foreigners/expats fleeing the country each week and leaving their Lexus or Mercedes at the airport (but then again, the whole place is expats). You might also read about how credit has frozen up and it's almost impossible to get a loan...

Well, here is what I’ve seen this week… lots of cars are still on the road and not all of them in the airport parking lot or on an auction block somewhere (although the auctions are taking place)… my flight into Dubai from Atlanta didn’t have an empty seat…the local newspapers report that there are long waiting lists for slots in private Indian and English secondary schools, lots of work is still being done on a breathtaking (oversupply) number of buildings… the stations for the Metro rail system are still going up (and will be done on time)… there are still multiple car pile ups on the main roads (usually involving at least three Range Rovers and a couple of Mercedes). The Mall of the Emirates still seems crowded with shoppers and the Rolex store looked pretty busy if you asked me… I didn’t go in. Lot’s of people were using the indoor snow ski slope and it’s not even hot out yet… about 80F today, but a bit dusty.

But the truth? Well, don't look to the papers it's still illegal to report bad economic news. There are stories of stalled building projects, of real estate that won’t move and it strikes me that there are a lot of dark apartments in the high rises… the bubble has burst… again. Well, if it hasn't burst it’s certainly deflated, ask the cab drivers they will tell you about their friends going back home. Will Dubai turn into a ghost town? No, not in my opinion. We are we going to need oil for the next 50 years and they have it.

How deep will the world recession be and what will Dubai and the rest of the GCC do? The folks paid to guestimate these things seem confused, they talk about "the lack of good data" on the UAE and what's happening. I’m not an economist, so I don’t have the credentials to provide an “expert” guess anyway (as if they have been any good anyway!) But, I’m a Florida native… I've experienced booms and busts firsthand… the history of Florida is one of severe ups and downs… I think it’s the same here, at least until they run out of oil. The plan is still the same, ramp up commerce and finance, shipping/transportation is critically important, take advantage of the geopolitical position, real estate is big part of the mix and tourism is a big part of the future.

But it must be hard on the locals, growing up in Florida we often looked with distain upon the snow birds, the winter (and summer) visitors who brought much needed cash for our economy. What are the locals in Dubai thinking?… they like the attention, they are human and love the wealth that comes with the oil, the Ferraris and the flowing robes go well, Bentley would already be out of business if it were not for the UAE. At the same time, this wealth clashes with the culture and sets up difficult situations for them, for us… for the many construction workers who have come here to build these cities in the desert as well as the Brits, the Germans, the Russians and the Americans who work in the high rises that spring out of the sand. As Dubai slows down, the outflow continues (if you are not employed you have to leave the country)… official estimates are for a population loss of 8% this year and this might be a huge underestimate.

Maybe that’s good… not for the companies stuck with unrented extra space, not for the investors who got in late, not for the laborers who are here to send money back to their families… maybe the place needed to slow down a bit and take a breath, give the power grid a chance to stabilize (the UAE uses more electricity per person than any other country)… the government said it learned from the last oil slowdown… maybe it’s human nature, but they got hammered again. But so did all of us… been to Miami or Naples or Ft. Myers Florida recently? Well a lot of those folks are over here looking for jobs. I'm not worried... the UAE will be back and so will “South Beach.” In the meanwhile... need a new Mercedes? I know where you can get a real deal.