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WHAT happens to a city built on a single promise that people and capital will always keep arriving? Then one day the music stops. A vacant apartment you own is not an investment. It is a monthly bill. That is the quiet terror creeping through many people I have spoken to who own property in Dubai. The fear is working its way through every tower, every bank and every balance sheet in the city. It is being felt not only by those who own residential property but more acutely by owners of commercial property — shops, offices and hotels. The unasked question on everybody’s mind is: how much longer does this go on?
Abu Dhabi can wait. Even with the Strait of Hormuz throttled, the emirate has enough reserves and sovereign wealth to cover salaries, subsidies and imports. Simply put, the UAE’s capital can absorb a long disruption without serious difficulty.
Dubai cannot.
The issue is not with Dubai’s core government spending which runs at roughly $2 billion dollars a month. While there has been a sharp fall in the emirate’s revenues from property registrations and the Jebel Ali Free Zone (JAFZA), that amount of expenditure is manageable. The real vulnerability lies beneath — in the four engines that drive Dubai’s non-oil economy. All four are now under stress.
