The tiny emirate of Dubai has emerged as the world’s leading haven from Covid for business and investment, writes John Arlidge
Covid-19 has sparked many battles. Mankind vs the virus, China vs the West, Australia vs Novak Djokovic. None has been stranger than the race to become the world’s ‘safe space’ – an environment for business and investment that offers a low risk of Covid.
There were two contenders. Singapore wanted to leverage its infamously strict social rules, outdoor lifestyle and reputation for hi-tech efficiency to win the battle. Early lockdown and the city state’s rigorous test and trace system brought the virus under control quickly, prompting the World Economic Forum to announce it would move its annual summit from Davos to the Lion City.
But it had competition from another small city state, with its own spiffy airline and airport, strong social controls, endless sunshine and much more prime beachfront: Dubai. Thanks to its young population, tough rules on social distancing and mask wearing and al-fresco lifestyle, Covid-19 infection rates remained low in the emirate for most of the pandemic, save for a few months early last year.
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And the winner is… no, not Singapore, as many had predicted. The United Arab Emirates, the collection of Gulf sheikhdoms of which Dubai is the leading business hub, has topped Bloomberg’s Covid Resilience Ranking, a survey of where the virus is being handled most effectively with the least social and economic upheaval. The UAE also came first in the latest Covid-19 Pandemic Resilience Index, compiled by the Consumer Choice Center, an advocacy group based in the US.
A fast vaccine and booster roll-out, second only to Israel, has meant that 95 per cent of UAE residents, including migrant workers, were inoculated last year. Singapore’s vaccination rate has been far slower and the city, airport and airlines remain mired in tests and restrictions. Repeated attempts to open key air corridors, notably between Singapore and Hong Kong, have failed. The WEF abandoned its attempt to host ‘Davos in the tropics’ because of stubbornly high infection rates.
Dubai’s more business-friendly time zone and connectivity have also helped it to claim victory. Emirates is the world’s largest airline by passenger miles flown, serving 155 destinations in 81 countries. Despite lockdowns, Dubai International airport has retained its crown as the world busiest international hub.
Investors are flocking to the city. Dubai’s population of HNWs rose to around 55,000 last year, up from 52,000 in 2020, reveals research firm New World Wealth. ‘The world’s elite are now here and relentlessly pursuing the most expensive homes,’ says Faisal Durrani, the Dubai-based head of Middle East research for estate agency Knight Frank. ‘It’s not just people from the usual major European countries such as Britain and Germany. We’re seeing interest from Monaco, Switzerland, the US, Singapore and China.’
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Knight Frank estimates that 57,069 buyers sank as much as £25.6 billion into the emirate’s property market last year, more than the total for 2019 and 2020 combined. Dubai recorded 52,425 home sales worth £22.8 billion last year, up 127.5 per cent on the whole of 2020. There were a record 93 sales above US$10 million last year, driving sales of $10 million-plus homes to 4.2 per cent of all transactions in the city by value, double the long-term average.
Many investors are buying homes to live in with their families, not as investments, as has historically been the case. ‘The old mantra of “build it and they will come” is being replaced with “build it and they will come and stay”,’ says Durrani. Larger homes, which offer the best scope for working and studying from home, are most in demand. Villa prices have increased 21.2 per cent year-on-year. Villas on the Palm Jumeirah have more than doubled in value since the start of the pandemic and are now at a record high.
Property sales have helped the UAE’s non-oil economy to reach its healthiest state since June 2019, according to analysts at IHS Markit. Employment grew in the six months to December 2021, while the number of business licences issued rose by 70 per cent. Hotel room rates are the highest since 2018, with average occupancy exceeding 82 per cent, consulting firm STR reports. Life has returned to offices – CBRE figures show high-end office occupancy is now above pre-pandemic levels. Big names have flocked to town. Giorgio Armani hosted his big post-pandemic comeback show, One Night Only, in Dubai. (In spite of the name, it went on for three days.) Overall, Dubai’s economy will grow by 6.2 per cent this year, Oxford Economics predicts, after shrinking by 9.3 per cent in 2020 and recovering to 5.0 per cent growth last year.
The idea that a city just a hundred miles from Iran might be considered ‘the world’s safe space’ seems odd, to put it mildly. But Philippe Zuber, boss of Kerzner International, the company best known for developing One&Only resorts, Atlantis hotels and branded real estate, explains: ‘Dubai has struck a good balance between keeping the city open for business and managing public health.’
To attract even more investors, the government has started offering ten-year ‘golden visas’ to entrepreneurs. It has been luring remote ‘nomad’ workers with residency rights and has reformed company law, removing the requirement for onshore companies to have an Emirati shareholder. Anyone made redundant can now continue living in the emirate for six months to try to find a new job, rather than having to leave within 30 days. Retirees can now live in Dubai in exchange for investment in property. Successful early applicants included Pakistani cricketer Shoaib Malik.
New moves designed to attract investment include switching the working week from the Middle East’s standard Sunday–Thursday to Monday–Friday. The government also recently decriminalised cohabitation for unmarried couples, consumption of alcohol without a licence, and carrying products containing marijuana. When other countries, notably Britain and the US, are mulling wealth taxes to pay for the pandemic, Dubai’s no income tax policy makes it look even more attractive.
It’s not all a desert dream, however. Critics argue Dubai is a carbon-guzzling dictatorship and a home for dirty money, increasingly from Russia. The scandal surrounding the ruling family’s treatment of Princess Latifa – she has claimed she has been held prisoner – is a stain on a city state that markets itself as open, liberal and tolerant, especially when it comes to women’s rights. Homosexuality remains illegal – something that could deter firms from investing or hosting events there for fear of a backlash from LGBT staff or activists (although it has not deterred Armani). And corporation tax at 9 per cent will be introduced from June 2023.
For now, however, none of these factors is reducing the number of new arrivals – including many from Dubai’s rival, Singapore. Attracted by the weather and open border, tech executive Dustyn Smith, 36, moved to Dubai last September from Singapore. He and his wife have both since found jobs there. ‘Dubai ticks all the boxes,’ they say.
Image: Paul Collicut
