Investment Property in Dubai

Economy

Main industries

Dubai’s rise to global prominence was kick started by the discovery of oil in the UAE, but the emirate itself is not a large-scale producer and oil is only responsible for between 6% and 10% of Dubai’s annual GDP (which reached $37 billion in 2005). The bulk of the remainder is divided between manufacturing, services (including financial services) and tourism, with construction also playing an increasingly important role.

Socio-economic factors

Along with the rest of the UAE, basic socio-economic factors are very positive. Literacy among Emiratis and Western expatriates is near 100%, nominal GDP grew by 23% in 2006, and unemployment is all but non-existent (at the end of 2006, unemployment in the emirate was recorded at 2.6%). The expat population is attracted in large part by Dubai’s tax regime; income taxes are effectively zero.

Influx of multinationals

The services and IT sectors have benefited hugely from Sheikh Mohammed’s expansion programme. The creation of various specialist ‘cities’ around Dubai – Media City, Internet City, etc. – has sparked an influx of multinational corporations including some of the biggest names in world business. If Dubai is intended to be a regional financial and technological hub, the participation of firms such as Microsoft, IBM, Sony and many others is crucial and so far this support has been extensive.

Investment-friendly environment

Sheikh Mohammed has welcomed big-name arrivals, as they not only directly bring in substantial investment (Dubai received $2.095 billion of foreign direct investment in 2003, and this was predicted to double by 2010) but also create the jobs needed if Dubai’s growth rate is to be sustainable. The scale of some of the new construction projects - in particular Business Bay, which will be the site of an astonishing 500 skyscrapers when complete – makes them entirely dependent upon take-up by foreign businesses.

Dubai Strategic Plan

Dubai’s leader recently revealed a set of targets that he intends the emirate to meet over the next eight years. Sheikh Mohammed announced the details of the Dubai Strategic Plan (DSP) – 2015, which covers the main objectives of the emirate up until 2015. Goals to be reached by 2015, as detailed in the DSP, include increasing GDP to reach $108 billion, and increasing real per capita income to $44,000.

Vision for Dubai

Given that the Sheikh’s Vision for Dubai (announced in 2000) set out similarly ambitious targets and reached them comfortably, investors have good reason to expect the same of the DSP. The targets covered in the Vision for Dubai included increasing GDP to $30 billion and raising per capita income to $23,000; after five years of the ten-year plan, GDP was at $37 billion and per capita income reached $31,000.