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Shaikh Ahmed punctures fears of another Dubai bubble

All’s well with Dubai’s economy as safeguards are in place and growth has surpassed target, says Emirates chief.

DUBAI HAS dismissed fears of another bubble and said safeguards are well in place to ensure there will not be a repeat of the 2009 crisis.

Shaikh Ahmed bin Saeed Al Maktoum, President of the Dubai Civil Aviation Authority, Chairman and Chief Executive of Emirates airline & Group and Chairman of the Dubai Supreme Fiscal Committee, told Khaleej Times in an exclusive interview that there’s nothing to back up such scepticism from certain quarters.

“There is no real bubble in Dubai and there’s nothing to indicate it is leading up to one. The countries that were crippled by the 2009 economic crisis have learnt their lessons well and most of them are now almost back on track, and so is Dubai,” he said in Taipei after flight EK336 touched down on Monday atthe TaoyuanInternationalAirport, the carrier’snewestpassengerdestination.

“The real estate bubble that everyone seems obsessed with is really not there. The creation of regulatory bodies to oversee developers, brokers and financiers, besides others safeguards that have been put in place will ensure there will not be a repeat of the 2009 crisis,” he added.

Shaikh Ahmed said all’s well with Dubai’s economy as the emirate has surpassed the targeted GDP growth and achieved 4.9 per cent growth in 2013. “Dubai’s fundamentals as a regional hub of shipping, services, people, trade and capital have not changed. If one considers the construction sector, a corporate diversification yielded high returns for five years, which helped (install) new infrastructure and fund the acquisition of new talent.”

Dubai’s property market will also continue to grow even as its economy continues to climb, Shaikh Ahmed said, and debunked the myth that Dubai is all about the property market.

“Dubai has always been about growth. The core business model of Dubai remains sound. With or without a booming real estate sector, Dubai is a commercial and tourism hub for a region that encompasses the markets of emerging Africa, South Asia, Russia, Central Asia and of course, the Gulf region.”

Talking about the importance of the aviation sector for Dubai, Shaikh Ahmed said Emirates is one of the major contributors to Dubai’s economy. “We now support 28 per cent of Dubai’s GDP growth and will continue to do so as we move towards our target of 20 million passengers by the time Expo 2020 opens.”

Shaikh Ahmed was confident that Emirates will continue to sustain its profitability. “Strategies are in place and we will continue to expand and connect with more destinations even as we order new aircraft.”

The Emirates chief said the regional skies are not overcrowded and there is still room for competition and profitability.

“Everyone wants a slice of the cake and taste success and the cake is big enough for all who want to enter the industry and take a slice of it. It would be up to us to see how much of that slice we can take.

“I’ve always maintained, there is room for all. Over the years, there have been many new players like Qatar Airways, flydubai and Etihad, and all of us (are) doing well with enough of the cake left for those still eyeing a piece,” he added.

Ruling out any threat of overcapacity, Shaikh Ahmed said Dubai will continue to invest significantly in new aircraft and airport expansion in preparation to host World Expo 2020. He said Expo 2020 will play a significant role in the airline’s long-term strategy.

“Expo 2020 is not for just two or three weeks. It’s for six whole months. This will allow us to spread our wings further and sustain the (airline’s) growth and profitability long after the expo is over.”

patrick@khaleejtimes.com