In Dubai, riches or recession?

Expat finds glitzy city's status a mystery

Kirsten Gobi photo
The view coming into Dubai with the Burj Dubai, the tallest building in the world, in the background.

Kirsten Gobi, a Spencer native and former high school art teacher, followed her husband's management consulting job to Dubai. She now owns a stamp on her passport declaring her a "housewife: not allowed to work."

By Kirsten Gobi
March 10, 2009

DUBAI, United Arab Emirates -- How heavy a toll is the global downturn taking on Dubai? It’s hard to know.

Not long after my arrival here a year and a half ago, I heard a woman in front of me in a bank tell the manager that she needed to withdraw enough cash to buy a Bentley. More recently I saw a Jeep Wrangler painted entirely in the Gucci logo design as well as a completely-gold plated Mercedes.

It is hard to reconcile the gloomy picture of Dubai that I read about in the foreign media -- and hear from my fellow expatriates -- with the sunny, bustling area I live in. Because of government controls on what kind of information can be disseminated, there is little transparency. In a city with such allure and mystery beneath its surface, it is natural that residents make a hobby out of speculation, so to me Dubai’s situation seems just a patchwork of rumors.

Some things are real, however. Several friends of our friends have lost their jobs and one friend’s neighbor did a runner, as it is called -- leaving in the middle of the night, house and car abandoned in order to flee from creditors. More than half of construction in the United Arab Emirates has been put on hold, according to a Dubai-based research firm, and the British pound and euro are down, which affects many people here. Real estate sales are down in a city where many people make their money on these sales and construction projects, so it is inevitable that some excess labor will be shed. The other day, there were small reports in the papers here of unemployment.

There is an air of uncertainty in a lot of conversations among the expats I know in Dubai. Big relocation packages are not as common as they were a couple of years ago for the expat community, who make up an estimated 80 percent of the population. There are special reasons expats are fearful. There are lots of ways to rack up incredible debt; rents can start at $25,000 for a one-bedroom apartment. Houses and apartments typically come bare of any essentials. Many expenses such as insurance and school fees must be paid for in full for one year up front. You can be thrown in jail for not paying your debt and once unemployed your accounts will be frozen. There are no clear guidelines for how to deal with these situations, as Dubai is a fairly new city and unemployment is a new issue. Generally, people come here for jobs and don’t expect to lose them.

Although I hear all this and of traffic being lighter, parking spaces more available, taxis seeming easier to get, and rentals staying on the market longer, it is confusing to me because I then see or experience something that contradicts it. I still waited a while for a taxi last month. The prices of many things are still very high here. But the city is not as desolate as described in some US newspapers.

We live at the Jumeriah Beach Residences, where the apartments are not luxury but the setting outside is. We, like many people in the complex, moved in when rents were cheaper; they have been raised 100 percent since we moved in and it is now a recently finished residential area with many restaurants and shops. On the weekends the traffic is backed up with cars, many of them some of the highest-end vehicles in the world. Two weeks ago, we dined at one of the al fresco restaurants and counted five Ferraris, an Aston Martin, and a Bentley all cruising down the strip along the beach while we were waiting for our appetizer.

The malls are still heaving with shoppers on the weekends and on a recent trip to buy a cellphone we couldn’t even approach the counter; it was so crowded. I see shops closing around our apartments, but for every shop closing there are new ones still under construction and opening. The amount of construction still going on is hard to gauge. Cranes and cones are an everyday reality and the landscape is always changing.

I do wonder, though, that if a downturn fully hits here, who will live in all of the homes and who will shop in all these malls.

To learn how you can contribute to the Passport blog, contact the Globe's assistant foreign editor, Kenneth Kaplan, at k_kaplan@globe.com.