Dubai’s Stained Economy Seeps into Abu Dhabi; Raises Concern for UAE

Arab Unreported
Nov 1 · 4 min read

The golden clouds of the United Arab Emirates are increasingly clearing up, revealing the economic crisis that the country is facing. This slowdown is often associated with Dubai economy alone. However, in recent times, Abu Dhabi has also been appearing to take the route of the falling slope behind Dubai.

During the 2009, an economical crisis hit Dubai, where it suggested of shouldering around $60 billion in debts on its greatest real estate project, Dubai World. Back then, an announcement seeking six-month delay for the repayments was made, sending shockwaves across the market. The era marked a recession period, the traces of which are still affecting the Dubai economy.

The “City of Gold” also gradually began to lose its oil reserves, on the back of which it has build its economy. In 2010, it was reported that Dubai’s oil reserves are expected to exhaust in 20 years. Consequently, a diversification plan came up, where the oil-reliant economy was being envisioned to be more tourism-oriented. In effect, Dubai’s real estate sector also witnessed an upsurge.

From 2011, the residential property prices in Dubai saw a constant rise till around 2013 and remained quite stable for most of the 2014. However, when Dubai’s real estate was booming, residential property market in Abu Dhabi fell from 2010 till 2012, with minor recovery periods in between, before picking up till early 2014.

After 2014, the residential property market of both Dubai and Abu Dhabi has only moved downwards. However, the prices in Abu Dhabi went down much lower than Dubai. Moreover, the overall property prices of the two cities also saw a downfall for four years, till 2018. Despite the falling real estate market of both cities, the economic crisis has mostly remained a tag solely for Dubai. This might be because the overall property market graphs reflect a stagnant and falling prices to be much lower than the UAE capital.

For a country where diversification is the only way to enhance its economy, tourism and real estate have a greater role to lift up a nation that is possibly on the verge to collapse. However, the UAE economy has been hurt by a grave blotch on its real estate market.

In August 2019, the Vice President and Prime Minister of the UAE and Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum also highlighted the issue in a “Letter of the New Season” on Twitter. He stated that the country is in a dire need of revamping the sector to “bring added value to the national economy”. He also highlighted that the UAE is “not moving according to the average economic rates”.

In early September, Sheikh Rashid Al Maktoum had also curbed the pace of planned real estate as the prices have been declining threatening a surpass of demand with growing scale of developments. The UAE will soon be hosting Dubai Expo 2020, which expected to bring disappointments to the economy with the addition of a pipeline of projects in an already oversupplied property market. The trap is expected to bring down the prices even further.

However, where the declining the UAE economy has been only Dubai’s story by far, but the black sea also involves buckets of contribution from the capital Abu Dhabi. Where the Emirates is still struggling to erase the patch on the Dubai economy, the emerging speckle on the capital only raises concerns.

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