A haven for money in the middle east, Dubai is losing its shine

Ever since the first gleaming towers sprang out of the desert, Dubai has gotten used to rapid change. It’s no stranger to boom-and-bust. What’s happening now is different: a slow bleed.

The city’s iconic builders are plowing ahead. Cranes are everywhere. But no one is sure who’ll occupy all that new retail and office space. Already, Dubai’s malls are noticeably less full of stores and restaurants than they once were. Expatriates, the lifeblood of the economy, have started to pack up and go home — or at least talk about it, as the cost of living and doing business surges.

Corporate mainstays, from Emirates airline to developer Emaar Properties, just reported disappointing Q3 profits. The stock market is having its worst year since 2008.

Business unease was already apparent in April, when Sheikh Mohammed bin Rashid Al Maktoum convened a meeting with more than 100 executives in his palace overlooking the Persian Gulf.

The bosses raised issues including hefty government fees — which are eroding the comparative advantage of tax-free Dubai — to strict visa rules that push foreigners out when they lose their jobs.

The oil slump since 2014 hit big spenders from neighbouring Gulf states who used to flock to Dubai (tourists from China and India are filling the gap, but they’re more price-conscious). Saudis, in particular, are feeling the pinch, as their own government imposes fiscal austerity and confiscates private wealth. The city’s role as a trading post is being undermined by a global tariff war — and in particular by the US drive to shut down commerce with nearby Iran.