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
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.
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.