UAE to face winds of change

The Mall was symptomatic of a sudden reduction of people and money which have, for half a decade, flooded into Dubai.

Two days later, the one month old Terminal Three at Dubai Airport had the shortest Emirates Airlines queues seen for a very long time.

Bankers told us that they had seen, literally, an overnight drop in business enquiries. And, they said, they had seen some property prices and rentals falling by as much as 20% in the preceding month.

Now the effects are beginning to be seen. Businesses in Dubai's International Financial Centre is waiting to see if there is a flattening of demand, or a sudden reduction.

A sudden reduction means that their operations will become unsustainable.

Dubai has seen a dramatic increase in inflation in the past year although government figures show a relatively small rise - and for residents, the government figures are not far from correct. However, "non-basket" items such as taxi fares, hotel rates and other costs have seen prices for visitors rise by, in some instances, approaching 100% in the past year. And until recently, rentals and property prices were soaring - again, non-basket items that do not show up in basic inflation figures.

Dubai is not on its uppers - but things are going to be tight, and as the financial services industry worldwide slows down, Dubai is not insulated. As DIFC businesses reduce headcount or even shut up shop completely, that will mean expats leaving, and with them the primary driver of the retail and property markets.

A quick trip around restaurants and bars two weeks ago revealed a significant reduction in business as against just weeks earlier. Many new smart venues were empty. "value" chains were popular.

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