Dubai, on the brink of a debt default in 2009, is emerging as the closest thing to a safe haven in the Middle East and North Africa as violence erupts in countries such as Libya and Bahrain. Photographer: Charles Crowell/Bloomberg
Imad Awad, a 45-year-old financial
controller for oil-field equipment-supplier Weatherford
International Ltd. (WFT) in Libya packed his bags and moved with his
family to Dubai after protests erupted there.
Awad, a Palestinian with Jordanian nationality, was one of
almost 200 staff and family that Geneva-based Weatherford
relocated from the Libyan capital of Tripoli in mid-February.
About 15 executives moved to Dubai with their families and the
rest to other locations in the Gulf or their home countries.
“Dubai is a lovely, peaceful city with great services,”
Awad, who moved with his wife and three children, said in a
telephone interview from his Dubai hotel. “My children are
going to school here.”
Dubai, on the brink of a debt default in 2009, is emerging
as the closest thing to a safe haven in the Middle East and
North Africa as violence erupts in countries such as Libya and
Bahrain. Families from Tunisia, Egypt and elsewhere are moving
to the more politically stable emirate, attracted by its liberal
lifestyle, schools and housing, now cheaper after the credit
crisis cut prices by more than half.
Whether the relocations prove to be permanent or temporary,
the shifts are a sign of Dubai’s recovering economy, say
executives and economists in the region. A measure of that
improvement is Dubai’s cost of borrowing, which sank to a record
low on April 4 compared with Malaysia, according to data
compiled by Bloomberg. Dubai’s economy, the second-biggest of
the seven in the United Arab Emirates, may grow as much as 4
percent this year, according to Citigroup Inc. (C), compared with
2.2 percent last year.
Business Recovering
Dubai Airports, home to the biggest Arab airline, Emirates,
expects passenger traffic to climb 11 percent to 52.2 million
this year, it said in January, after growing 15 percent from a
year earlier. Dubai-owned DP World Ltd. (DPW), the world’s fourth-
biggest ports operator, reported a 4 percent increase in
container volume in the U.A.E. in 2010 as trade recovered.
Dubai’s Department of Finance said today it hired four
banks to help raise $800 million in financing backed by road
toll receipts to fund transport projects. Separately, Dubai
Electricity Water Authority said it plans to repay 5.4 billion
dirhams ($1.47 billion) in syndicated loans this month, with
half the amount being returned before its maturity date.
U.N. Mandate
The U.S. and allies such as France and the U.K. are
enforcing a United Nations mandate to protect Libyan civilians
from Muammar Qaddafi’s fighters. Bahrain declared a three-month
state of emergency on March 15 after troops from Saudi Arabia
and other Gulf states arrived to quell a month of protests for
democracy and civil rights, while unrest that toppled leaders in
Egypt and Tunisia has spread to Oman, Yemen and Syria.
“We have seen companies repositioning themselves to run
their business at least for the time being from Dubai,” Fahd Al
Gergawi, chief executive officer of the Dubai government’s
foreign-investment office, said in an interview.
Vitol Group, the world’s largest independent oil trader,
moved employees out of Bahrain amid police crackdowns on anti-
government protesters, a company spokesman said March 17. About
a dozen traders and operations staff are employed in its Bahrain
office, and non-Bahraini citizens were working from Vitol’s
office in Dubai, although they have since returned to Bahrain
after the protests subsided, the spokesman said.
‘Natural Hub’
“The U.A.E. and Qatar are the only places that have not
seen any form of protests, and I think it does strengthen the
argument of the U.A.E and Dubai in particular being the natural
hub for businesses working across the Middle East,” said Simon Williams, a Dubai-based economist at HSBC Holdings Plc. (HSBA)
Enigma Relocation, which helps expatriates find homes and
settle in Dubai, assisted at least a dozen employees from two
financial-service companies in Bahrain move to Dubai. Al Jaber
Aviation, an Abu Dhabi-based private charter airline, saw as
much as a fourfold increase in demand for its jets from Tunisia,
Egypt, Bahrain and Libya to move “important people” and
business executives after the political troubles began, said
Mark Pierotti, the company’s chief operating officer.
“We are extremely busy,” said Debbie Powell, a director
at Enigma.
GEMS Education, the largest private-education provider in
the U.A.E. with 26 international and Asian schools, is receiving
about 25 calls and 40 e-mails a day from families in places such
as Bahrain, Yemen and Syria who are considering relocating to
Dubai, it said. GEMS has “already offered seats to 45 students
who were evacuated from Tripoli, Libya this month” to Dubai and
who were studying with GEMS in Tripoli, the company said.
Money Inflows
People from around the region “are trying to bring money
in as they consider this a safe haven,” said P Krishna Murthy,
the head of the financial-services division at the Al Rostamani
Group, which owns money changer Al Rostamani Exchange. “The
U.A.E. and Dubai happens to be at the forefront of this.”
Deposits held by U.A.E. banks increased 2.8 percent in the
first two months of this year after climbing by 6.8 percent
during all of last year, helped by the country’s stable
environment, Marios Maratheftis, Standard Chartered Plc (STAN)’s head
of research for the Middle East, said at a conference April 5.
“Bank deposits in the U.A.E. will continue to rise in the next
few months.”
Mohammed Ibrahim, a 42-year-old Iranian, moved three weeks
ago from Bahrain, where he worked in a clothing shop, and is now
driving a taxi in Dubai. Nicholas Cartwright, a Citigroup Inc.
banker, is also considering a move to Dubai.
Return to Dubai
Cartwright, 26, was interviewing for a new Citigroup job in
Cairo on the same day as the protests there turned violent. He
looked into the job because he feared the political situation in
Lebanon, where he is living, would worsen. He turned down the
Cairo position and is weighing a return to Dubai with the U.S.
bank, where he lived from 2008 to 2009.
“I thought of Egypt as a safer more long-term option, only
for this to be flipped on its head in a matter of two days,”
said Cartwright, a Citigroup assistant vice president, comparing
the North African country to Lebanon, which has witnessed
sectarian strife for decades. “Many people thought there would
soon be a trend for a refocus from Dubai to other countries in
the Middle East like Abu Dhabi, Qatar and Egypt. Now, Dubai
might just be everyone’s safest and most stable bet again.”
Dubai is home to about 1.9 million people, more than 80
percent of whom are expatriates of about 100 nationalities.
While it is no more a democracy than some of the countries
people are now fleeing and has been criticized for human-rights
abuses of workers and those held in prison for long periods
without trials, Dubai does have a stable government run by
Sheikh Mohammed Bin Rashid Al Maktoum.
Real Estate
The emirate has spent billions of dollars since 2002 to
develop its real-estate industry including building the world’s
tallest tower, and set up a financial center with its own
regulator and stock exchange. The Dubai International Financial
Center is home to the regional offices of Goldman Sachs Group
Inc., Citigroup and Standard Chartered.
Dubai’s rapid development wasn’t without its costs. The
emirate and its state-owned companies ran up debt of at least
$129.3 billion amid a building boom that began in 2002,
according to estimates by Credit Suisse Group AG in January. The
global credit crisis, which battered Dubai’s property industry,
froze credit markets and hurt trade and tourism, pushing the
emirate to borrow $20 billion from the central bank and the Abu
Dhabi government to avert a debt default.
“In a funny sort of way, Dubai’s problems, the fact that
they happened in 2009, is not a bad thing,“Viswanathan Shankar, Standard Chartered’s CEO for the Middle East, Africa,
Europe and the Americas, said. “Today, that looks like history
and today Dubai looks more like a safe haven.”
To contact the reporters on this story:
Arif Sharif in Dubai at
asharif2@bloomberg.net;
Camilla Hall in Dubai at
chall24@bloomberg.net
To contact the editor responsible for this story:
Edward Evans at
Eevans3@bloomberg.net
