Skip to main content
Part of complete coverage on

Dubai staging a comeback amid economic gloom

By Arvid Ahlund, CNN
December 6, 2012 -- Updated 2357 GMT (0757 HKT)
STORY HIGHLIGHTS
  • Four years ago Dubai was at the height of an unparalleled economic boom that then turned to bust
  • Most recently, it outlined plans to build a brand new city
  • Analysts say the Arab Spring has made Dubai a safe haven for those who worry about the turmoil elsewhere
  • The hope is that projects like Mohammed bin Rashid will lure millions more visitors a year

(CNN) -- Four decades ago it was merely barren desert land. Four years ago it was at the height of an unparalleled economic boom that turned to bust amid the global financial crisis. Today the emirate of Dubai is staging a lively comeback, once again announcing the kind of ambitious plans that made it famous in the first place.

Most recently, it outlined plans to build a brand new city. Named after its ruler, Mohammed bin Rashid, it is intended to house a hundred hotels and a Universal Studios entertainment center. It is the latest in a string of glitzy projects, among them the world's tallest building, the world's largest shopping mall -- even man-made islands and in-door ski resorts.

In 2009, cheap credit had spurred a considerable real estate bubble in the Gulf state, which once it burst, caused property prices to tumble and debt to spiral out of control.

The lifeline came from the neighbor Abu Dhabi, which extended a multi-billion dollar bailout loan. Dubai was forced to get its house in order.

Dubai wrestles with economic recovery

Today, the emirate has gone back to its core strength, Philippe Dauba-Pantanacce, senior economist at Standard Chartered, tells CNN. One of the biggest growth drivers, he says, is the airport activity.

"It's estimated that by the end of this year, 56 million people will have gone through Dubai airports. That makes it one of the three to four biggest airports in the world."

But travelers are no longer just passing through. Analysts say the Arab Spring has made Dubai a safe haven for people in the Middle East who worry about the turmoil elsewhere.

"Tourists from other Gulf states have increased by 45% in 2012. This has pushed up hotel occupancy to nearly 90% -- a world record," Dauba-Pantanacce says.

That has lifted confidence.

"The trajectory is positive at the moment," says Stuart Anderson, managing director at Standard & Poor's, adding that Dubai has benefited from rising oil prices.

Yet, for a state that was once riddled with debt, some say financing remains a concern.

"Though Dubai has been able to make good on all its obligations in 2012, the Dubai story cannot be completely separated from the debt overhang which is still there," Dauba-Pantanacce says.

The hope is that projects like Mohammed bin Rashid will lure millions more visitors a year. And though similar projects were shelved only a few years ago, the citizens of Dubai avow that the hard lessons have been learned.

ADVERTISEMENT
Part of complete coverage on
February 6, 2013 -- Updated 1526 GMT (2326 HKT)
Advocates say the exam includes unnecessarily invasive and irrelevant procedures -- like a so-called "two finger" test.
February 6, 2013 -- Updated 0009 GMT (0809 HKT)
Supplies of food, clothing and fuel are running short in Damascus and people are going hungry as the civil war drags on.
February 6, 2013 -- Updated 1801 GMT (0201 HKT)
Supporters of Richard III want a reconstruction of his head to bring a human aspect to a leader portrayed as a murderous villain.
February 5, 2013 -- Updated 1548 GMT (2348 HKT)
Robert Fowler spent 130 days held hostage by the same al Qaeda group that was behind the Algeria massacre. He shares his experience.
February 6, 2013 -- Updated 0507 GMT (1307 HKT)
As "We are the World" plays, a video shows what looks like a nuclear attack on the U.S. Jim Clancy reports on a bizarre video from North Korea.
The relationship is, once again, cold enough to make Obama's much-trumpeted "reset" in Russian-U.S. relations seem thoroughly off the rails.
Ten years on, what do you think the Iraq war has changed in you, and in your country? Send us your thoughts and experiences.
February 5, 2013 -- Updated 1215 GMT (2015 HKT)
Musician Daniela Mercury has sold more than 12 million albums worldwide over a career span of nearly 30 years.
Photojournalist Alison Wright travelled the world to capture its many faces in her latest book, "Face to Face: Portraits of the Human Spirit."
February 6, 2013 -- Updated 0006 GMT (0806 HKT)
Europol claims 380 soccer matches, including top level ones, were fixed - as the scandal widens, CNN's Dan Rivers looks at how it's done.
February 6, 2013 -- Updated 1237 GMT (2037 HKT)
That galaxy far, far away is apparently bigger than first thought. The "Star Wars" franchise will get two spinoff movies, Disney announced.
February 8, 2013 -- Updated 0718 GMT (1518 HKT)
It's an essential part of any trip, an activity we all take part in. Yet almost none of us are any good at it. Souvenir buying is too often an obligatory slog.
ADVERTISEMENT