Tammy Camp

Economic Crisis in Dubai

Posted on 15. Apr, 2009 by Tammy Camp in Adventure Travel, Dubai, Middle East

It took a recent trip to Dubai for me to get my first true, honest glimpse of the current economic crisis that is so profoundly hitting every corner of the world. As I roamed the grand streets of Dubai, they lay empty, rendering the city a mere ghost town of what I had imagined it would be. As I chatted with locals, they gave me a glimpse into a much different Dubai. They informed me that previously it had been impossible to get a dinner reservation without at least two weeks’ notice. A wait for a requested taxi being less than a few hours was also a thing of the past.

Horror stories of thousands getting laid off and having to flee the country because they could no longer afford their mortgages escaped their lips as if they had been waiting for an opportunity to get these eye-witnessed nightmares off their chest. Unlike in the United States and the United Kingdom, if you default on your mortgage or loans in Dubai, you are thrown in prison. This severe punishment has caused many laid-off workers to flee the country in an effort to avoid jail time. These escapees literally abandon everything they have acquired during there stay in Dubai. With only two suitcases in hand, they then drive to the airport, where they leave their keys and a note that says, “Return to Dealership” in their leased cars.

Burj Al Arab in Dubai. The world's first seven star hotel.

My eyes now wide open, I asked one local Arab, “If we are in a worldwide recession, then are the billionaires of the world still staying in the Burj Al Arab, the world’s first seven-star hotel?” He replied, “That hotel has never nor will ever profit. The Burj Al Arab is subsidized by the Dubai government as a United Arab Emirates landmark as opposed to being for-profit hotel.” For the uninitiated, the starting prices for the Burj Al Arab start at $1,000 and range all the way up to $25,000 per night.

Things are beginning to look up for the Dubaian population, however. On February 22, 2009, Dubai was given a bailout by oil-rich Abu Dhabi, the wealthiest of all the countries in the United Arab Emirates (UAE). The Economist reported, “The central bank for the United Arab Emirates (UAE) bought $10 billion-worth of Dubai’s five-year bonds. The bail-out confirmed everyone’s assumption that Abu Dhabi would not let the second-biggest member of the UAE fail.”

(Please refer to the following article by at the Economist.com for a more in-depth view of Dubai’s bailout and financial status.”)

Will this bailout help return the city to its former glory? Only time will tell. For the time being, though, I have this to say to those who are just now trying to do business in Dubai: “You’ve missed the boat.”

Tags: Dubai, Middle East, UAE, United Arab Emirates