Maintaining Dubai's allure

While Dubai enjoyed an international reputation as the boom town of the past decade, favourable business conditions enabled financiers to make a quick fortune. Administrative hiccups, so common in emerging economies everywhere, were happily overlooked while the sun was shining and everyone was making hay.

A new era in global fin-ance cast Dubai - the international business hub - in a different role, however, and now the government sector must do everything in its power to make the skyscraper city as appealing as possible to investors.

The factors that brought moneyed men in droves still exist - Dubai's central location, global recognition of 'brand Dubai', a tax-free regime, low labour costs, limited regulation, an improving infrastructure, good healthcare and education, a multinational workforce, the image of a modern city and excellent telecommunications.

In the light of the credit crunch era, however, the other factors - the ones that people are prepared to work around while they are making money - now take on a new complexion.

Central to Dubai's current needs is what prospective investors might view as uncertain regulations and legal issues in key sectors such as real estate, development industries, banking and the commercial market.

High inflation means the local currency simply doesn't go as far as it used to. Purchasing and leasing property and associated maintenance fees are a big problem and the entertainment sector is becoming ever more expensive with prices in restaurants, hotels and bars, as well as recreational activities rivalling the most expensive in the world.

Economists say global inflation will fall this year - at a local level this should ease pressure on Dubai's workforce.

In the area of rental accommodation, however, while landlords ask for and receive extortionate single payments, the average wage is simply not going far enough and living in Dubai does not make the business sense it did a decade ago.

Highly anticipated updates from Rera (the Real Estate Regulatory Authority) next month concerning a revision of January's rental index in light of falling rents may aid cash-strapped residents, but the issue of landlords charging inflated 'maintenance' fees in lieu of a rent hike remains a problem and for those whose jobs have been swallowed by the credit crunch, it may be a case of too little, too late.

Banking is sometimes frustrating and requires an urgent overhaul to bring it in line with other international business centres. Tedious procedures for opening accounts and repaying loans, poor customer service and, crucially, no recourse when things go wrong may deter investors.

The crux of the matter is that people must feel good about living in Dubai and confident about the future of the city and their place in its development. It's a hard balance to strike in an emerging city and many longer-established hubs around the world also struggled with these issues.

For Dubai, it could mean clearer regulation of industry and a commitment to ensure labourers and lower-earning middle-management are given an acceptable quality of life.

Most importantly, it will mean the ability to hold organisations like banks, developers and even on a smaller scale, landlords and car dealerships, accountable when things do go wrong.

With its resilience and forward-thinking governance, Dubai will weather this storm.

Linda Mahoney is CEO of Better Homes LLC.