However most of this population growth was due to the importation of huge numbers of foreign workers, mainly Indians and Pakistanis, who labored hard to develop Dubai but did not really reap the benefits of the explosive growth that their labor made possible.
And of course following the events of 1973 the oil industry became of paramount importance to the subsequent growth and development of Dubai. At that time Sheikh Maktoum resolved to build a city that would be a center of tourism and financial services, taking advantage of up cash and talent from across the world. He invited the world to come tax-free - and they came in their millions, swamping the local population, who eventually came to make up just five percent of Dubai's population. A city seemed to fall from the sky in just three decades, whole and complete and swelling. At the same time Dubai experienced explosive growth in its position as a center of banking, and tourism in the Gulf. And it also became an important strategic asset to the United States and to the Arabian Peninsula in general.
Yet today with the global retrenchment that is currently going on Dubai is faced with the following questions: one, is this pullback that has gained so much media attention since September a temporary phenomenon , two, is it a moderate recession of limited duration that will soon lead to a continued cycle of growth and development Or, even more disturbingly, are the developments that we are witnessing today the precursor to things even more disturbing than a temporary recession of a year or two but perhaps be a development that is only beginning and which may lead to consequences unimaginable even a year ago.
Current economic conditions
There has been a steep real estate market decline since fall of 2008.
Last year at this time vacant commercial office space in Dubai was hard to find.
and the vacancy rate was barely 1%. Yet today, only eight months later, many of the new developments towers completed in recent months that were built in expectation of a ever continuing boom stand empty. Jumeriah Lakes, the Dubai Technology, Electronic-Commerce and Media Free Zone (TECOM) , Bur Dubai, the Business Bay and Financial Centre districts, Deira, and others stand gleaming and new, but empty. In contrast to last year, the vacancy rate for commercial real estate now stands 16%, and is climbing. Even so, while the vacancy rate soars, new buildings whose construction began at the peak of the boom are being completed every day. Dubai is littered with office towers that will not see paying tenants for perhaps years and also with new hotels that will be barely filled with guests. Morgan Stanley reports that in recent months $260bn of property projects have been binned or delayed. In addition, residential units and villas are seeing declining valuation and rents with homes on super chic Palm Jumeirah down 50% to 60%. There are even tales, reported by the New York Times, that Palm Jumeirah is sinking and that cockroaches are coming out of the taps of its seven-star hotel.
You can't underestimate the impact of the credit market situation and the fact that a lot of Dubai's real estate development was built on an era of cheap debt and easy