Oil and geopolitics have always dominated Middle Eastern economic cycles. In 2017, the United Arab Emirates reported the lowest economic growth rate since the 2009 crisis. Given a partial recovery in oil prices and diversification of the economy, GDP growth slowed to 1.7% in 2017 and has since gained momentum in 2018. We can identify five factors that influence the Middle East Economics.
1. Gross Domestic Product
Growth in the region is expected to accelerate from 2.8% in 2017 to 3.1% in 2018. In addition, higher oil prices should provide the fiscal space that allows governments to increase spending and support growth.
Dubai’s economy is among the most diversified in the region, thanks to factors such as a highly attractive business environment that has brought in large amounts of foreign investment. Despite producing little oil, growth has been affected in recent years by the knock-on effects of the fall in international oil prices and a consequent slowdown in neighbouring hydrocarbon-dependent territories. However, this has benefited other sectors, such as transport, tourism and other indirectly related activities.
Oil production, which once accounted for 50 percent of Dubai’s gross domestic product, contributes much less today.
2. Population Growth
The most populous of the seven United Arab Emirates and home to more than 200 nationalities, Dubai is growing faster than its neighbours as the No. 3 regional tourist destination behind Turkey and Saudi Arabia. At the end of 2017, Dubai can count more than 2.4 million residents and nowadays, according to the Dubai Statistic Center the current resident population of Dubai is 3.1 Million (updated June 2018).
Situated within eight flying hours of two-thirds of the world’s population, Dubai has the region’s busiest international airport measured in total passengers and fourth-largest airline based on revenue per passenger kilometre.
3. Strategic Location
The UAE enjoys a strategic location between Asia, Europe and Africa. Thousands of Chinese businesses use Dubai as a hub for trading in Africa. Indian traders use the emirate to access the world. Latin Americans see the country as a launching platform into South Asia. Western nationals use Dubai as a hub for the Middle East.
4. Fluid Prices
The flexible prices and many typologies of houses/apartments in Dubai may allow capital appreciation. Most areas are still developing, but each one is characterised to be already mature and stable.
All of Dubai's areas have fluctuating prices during the year. For the past couple of years, the differential ratio seems more stable, with a fluctuation between -2% and +2% monthly, an improvement compares to the previous years.
5. Consistent Governme
Government spending on infrastructure continues to receive a major injection of capital. Abu Dhabi continues to develop the infrastructure required for one of the wealthiest cities in the world. Dubai is continuing to keep its prestigious name as the city with the most records in the world; in the coming two years, the government is preparing for one of its biggest events:
Dubai is implementing new projects for hosting World Expo in 2020; AED 30 billion will be spent on infrastructure at the Expo site and throughout the city.
The UAE plans to spend AED 6 billion on major infrastructure developments across the country, including road networks and federal buildings. Khalifa Initiative in the northern emirates is designed to ensure that, residents of these emirates enjoy the same facilities as those living in the larger emirates of Abu Dhabi and Dubai. The UAE is also working on the Etihad Rail project, which will offer a significant leap in land transport by year 2021.
Let's explore some of Dubai's most significant future developments:
Ain Dubai, Bluewater's Island, Dubai Marina
Bluewater's Island, a Meraas development, is set to become the main attraction of Dubai Marina, which will also feature entertainment, retail, residential and hospitality offerings. The creation of world-class entertainment destinations marks a core component of Meraas’ strategy. In line with Dubai’s tourism vision for 2020.
Dubai Creek Harbor, Ras Al Khor
Swooping down along palm tree-lined boardwalks with waterfront living amid Dubai's future tallest tower, a new video released by developer Emaar showcases one the city's most exciting projects, expectation 2025.
Museum of Future, Downtown
Unique incubator for futuristic innovation and design, currently under construction in Dubai, UAE. Opening in 2019.
Aladdin City, Dubai Creek
Aladdin City is one of those projects that’ll have the remarkable capacity to stand out in a city where there is already a flurry of extremely diverse and ground-breaking buildings. Said to be inspired by the 11th-century fables of Aladdin and Sinbad the Sailor.
Al Wasl Plaza, Expo 2020 Area
The project's scope of work consists of a central hub linking all three thematic pavilions located at the center of the Expo 2020 site, Dubai.
Uptown, Jumeirah Lake Towers
Operated by Dubai Multi Commodities Centre (DMCC), the project is located within walking distance of JLT and will feature more than 200 retail outlets and restaurants, as well as 3,000 residences.
Route 2020 Metro, Infrastructure
The 15 km branch will start at Nakheel Harbour & Tower on the existing Red Line, then run on 11·8 km of viaduct with stations serving The Gardens, Discovery Gardens and Al Furjan. The stations at Jumeirah Golf Estates and Dubai Investment Park would be on a 3.2 km underground section, before the terminus at Expo 2020 site.