You can find almost anything in Dubai, except for the elderly. The migrants in charge of the Emirate of Dubai’s economy are made up of groups of youths, and since residence in the United Arab Emirates is directly tied to work and employment, then retirement usually means a return flight to one’s homeland. Tourists, as well, tend to be of the younger variety, most of whom visit the country to frequent nightclubs and relax on its beaches. But the Emirate may soon show some gray hair.
Last September, authorities in Dubai announced issuing residence visas to people over the age of 55, but these new regulations only apply to the wealthy. To obtain this visa, applicants must own distinguished and prestigious accommodation or must purchase property valued at more than 2 million AED.
The Sheikhdom hopes that seniors considering settling down in Portugal or in Florida’s Palm Beach, will choose to live in the Gulf Emirate instead. If these hopes are realized, it is possible that this plan, which took 2 years to draft, will boost Dubai’s ailing economy, predicted to shrink an estimated 11% this year.
Unlike most other Gulf countries, Dubai, one of the seven emirates of the UAE, does not depend on gas or oil to power its economy. Hydrocarbon resources represent only 1% of the sheikhdom’s total local production. Instead, it depends on the production of ongoing construction and building to feed into an economy that largely relies on services. When visiting the city, it gives off a feel of one giant frenzied construction site; full of new hotels to attract more tourists, creating more job opportunities for migrant workers, ultimately leading to an increase in demand for shopping centers and housing.
Even before the emergence of the coronavirus pandemic, Dubai appeared to be burdened with more construction than it can take, overwhelmingly so. The real estate market became congested, just as a real estate trading website posted on its web page over 19,000 apartments for sale and put up another 32,000 for rent.
You can find anything in Dubai, except for the elderly. The migrants running the Emirate's economy are left unwanted as soon as they "mature". Will they want to retire in Dubai and live the rest of their lives on a visa that can be revoked anytime?
According to estimates by the ValueStart Consultancy firm, the average real estate selling price has decreased to 896 AED per square foot, the lowest levels in more than a decade. These current rates tally less than the peak prices of the past 10 years by 35%, valued at 1,380 AED in 2014. Rental prices have taken a significant drop as well, with some tenants negotiating for reductions ranging between 20% and 25% on their leases at the downtown Financial Center, despite seeing the rise of new commercial and residential buildings just across the street.
The ongoing pandemic has reversed the country’s growth engine, for instance, both travel and tourism sectors crashed. The Dubai airport was forced to halt the use of two of its main terminal buildings, with passenger traffic reducing by 20% in the first quarter of the year before most countries were put under lockdown, and the percentage did not change in the second quarter. Normally at more than 80%, hotel occupancy rates registered at only 45% in September. Emirates Airlines, the official flag and air carrier of the United Arab Emirates, laid-off more than 10% of its workforce. More worker layoffs will extend throughout the country’s economy, lessening demand on everything from private schools to rest and recuperation cycles.
When economies begin to relapse, Gulf countries fall back on the saying: ‘There are no good news in all the news.’ Gulf countries are known to disclose economic data and indicators after months or years of their occurrence. An analyst recalls using old data on energy and water consumption to predict Dubai’s economic growth. Be that as it may, the Dubai emirate offered a rare glimpse of its general budget (balance sheet) through an introductory statement in September to issue state bonds for loans worth 2 billion dollars. The document listed the government’s debt at 124 billion AED (around 34 billion dollars), marking less than 30% of Dubai’s local GDP (gross domestic product).
If Dubai succeeds in attracting the "Elderly" who would have retired in Europe or Florida, the plan, which took 2 years to draft, will boost the ailing economy, predicted to shrink an estimated 11% this year
But the reported numbers do not mention the debt of various government-affiliated entities, even though these entities borrow commercially, but also enjoy the implicit support of the state. Dubai World, one of the largest companies in the emirate, needed a bailout in 2009 in order to avoid defaulting on the payment of 59 billion dollars of debt. The government did not intervene this year except to assist the Emirates Airlines with 7.3 billion AED in aid. Several of these companies are still greatly suffering from increasing debt when compared to the value of the companies’ assets, despite owning major investments in the real estate, transportation, and tourism sectors, all of which proved to be fragile industries when faced with the ongoing pandemic. The S & B Agency specialized in classifying world economies has estimated Dubai’s overall debt at 148% of the GDP (gross domestic product), also counting in the debt of government-affiliated organizations.
Retirees can consume the capacity of excess production in Dubai, but this only provides a short-term solution, especially if Dubai continues to depend on construction and new structures to propel growth. The past years have seen the economic model of “If you build, then consumers will appear” applied in the emirate; but it seems this slogan needs to retire too.