Dubai: The new gold rush

The foundation for all of this is of course oil: a commodity that Dubai will soon effectively run out of as any kind of real revenue producer. Today it amounts to about 6 percent of the country's income. So 15 years ago, the then-Sheik from the ruling House of Maktoum decided he had to have a plan. He created a tax-free tourist and business haven along the traditional silk trading route and the modern Dubai was born.

A decade of infrastructure expansion has led to an explosion of major construction, particularly on the tourism and hospitality side over the last five years. The early investors were all local, like Emar Properties and Dubai Holdings. But now most major international brands have smelled money in the water. Atlantis, Kerzner International’s next $1.5 billion investment is being built here.

“We're going to open up in Dubai with 1,500 rooms, we' re going to employ 4,500 people from more than 30 different nationalities and I think creating that uniqueness in the Middle East is going be a big draw for them to say, 'I wanna see Dubai, we want to see Atlantis,’” said Kerzner's Liebman.

Plenty of people are already seeing Dubai. The core trade is regional with visitors from other Arab countries, but roughly 30 percent of visitors are from Great Britain. The European Union has long been a hot market for the Middle East, and now the Russians are coming too. The goal: 15 million visitors a year by 2010.

The market that's opening up on the business side is the Middle East. Eighty percent of Fortune 500 companies have at least some presence in Dubai.

“They're not here for Dubai. Dubai is not big enough for them. They're here for the whole of the Middle East. They've chosen Dubai to be the regional center for them because they feel comfortable to be here — laws, regulations, family atmosphere, infrastructure, airport and obviously zero taxes,” Husam Hourani of Dubai Development lawyer.

'Slave' labor concerns
Since nothing is perfect, not even in a place that plans to build its own Eiffel Tower, only bigger, there are concerns over what some have called 'slave' labor. Of the 1.7 million permanent residents only 500,000 or so are native Emirates, the rest laborers contracted from the sub-Asian continent — Pakistan, India, Sri Lanka — and work for a reported $200 a month. Once that work force makes it into the UAE moving them around is a major issue and expense.

"At the peak we estimate something like 30,000 workers on the job, if all goes as it should. This again is a huge logistics issue getting them in and out of the site,” said Steve Blackburn, project manager for Dubai Sports City.

There are also concerns over exactly what passes in and out of the port. Particularly on the traditional dhows: Drugs? Terrorists? But these are not questions you hear often by the poolside or in any of Dubai's clubs. Life at those places is good, a vacation of sorts. The real elephant or camel in the room is: will the boom last?

Can continued double-digit economic growth fueled by construction, real estate speculation and tourism continue? So far this year real estate mortgage transactions are more than $2 billion with the government issuing $4 billion worth of bonds on the international market starting this month.

“It’s hard to say when it's topped. We're definitely in the early stages. What we see is the initial growth of the region. Dubai initiated it, now it's spreading out to the different countries,” said Shahen of Capital Partners.

In the Persian Gulf what's happening here is called the “Dubai Experiment.” It's got more going on than a belly dancers stomach ... but so far ... it's still shakin'.

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