(Bloomberg Businessweek) -- Building by building, Sarah Al Amiri watched Dubai rise into the sky as she grew up in the city. She’s now a government minister overseeing the next stratospheric leap: a mission to Mars.
Much of the Arab world is mired in violence, poverty and unemployment, and yet in Dubai they’re busy working on sending a probe to the red planet within three years. It’s part of the latest package of eye-catching ambitions that include printing three-dimensional buildings, running the city on blockchain data technology and introducing hoverbikes and driverless drone taxis.
The quest for the next new thing, though, masks an uncomfortable truth as Dubai comes of age: The city has no choice but to reinvent itself again or risk a severe reversal of fortunes. Wealthier neighbors are trying to replicate its effort to move beyond oil, international banks are retrenching and it’s losing some of its allure for foreign workers.
The trick is to avoid the same kind of debt-fueled spending overdrive that brought the emirate to the brink of default in 2009. After pursuing the biggest, tallest and glitziest, it’s now all about the smartest. Dubai’s government wants to make technology, research and development the cornerstones of the economy.
“It’s something that’s enormously expensive to seed overnight and the chances that you’re going to generate something genuinely new are limited,” said Crispin Hawes, a managing director at Teneo Intelligence, a political risk consulting firm in London. “The ambition seems genuine and laudable, but the external restraints are formidable.”
The goal is to create an eco-friendly metropolis for the cashless, paperless, e-generation in the gasoline-guzzling emirates. As well as the engineers and builders that put up the towers, luxury hotels and shopping malls, it’s coveting scientists and code writers.
The World Expo 2020 exhibition will showcase what it can do, highlighting the technological achievements around the city and demonstrate it wants to compete with those in the U.S., western Europe and Asia that vie for the brightest and best minds.
“We’re not hesitant toward taking risks and we have an understanding of what risks are,” said Al Amiri, 31, who was appointed Dubai’s minister for advanced sciences in October. She gestured toward the Burj Khalifa, the world’s tallest building. It was completed in 2010 and is unsurpassed since then. “We don’t like stopping when it comes to development.”
Putting numbers on Dubai’s grand designs isn’t easy. The government says it set aside 25 billion dirhams ($6.8 billion) for the expo, but that’s just the tip of the iceberg.
Transformed into a flamboyant city state from an impoverished Gulf port in less than 50 years, Dubai defied geology to build skyscrapers and elaborately shaped islands in the sea. What it can’t do is defy geography, and Dubai suffers from the region’s enduring reliance on recycled oil revenue.
A slowdown in Gulf economies has hit Dubai’s real estate and retail industries. Saudi Arabia, whose citizens flocked to the city to enjoy the freedoms they don’t have at home, particularly is undergoing an unprecedented squeeze.
The cost of renting a Dubai apartment has come down, cushy jobs for foreigners are harder to come by and some schools are lowering fees to attract students.
One residential development was recently advertising one month rent free, something last seen when Dubai was trying to cope with the global financial crisis that led to a bailout by oil-rich neighboring emirate Abu Dhabi. Dubai is still burdened by debt that’s bigger than its entire economy.
DXB Entertainments PJSC is in talks with banks to restructure $1.15 billion in loans used to build a theme park after visitor numbers failed to meet expectations.
“Dubai now is maturing,” said Hussein Sajwani, the billionaire whose Damac Properties Dubai Co. is developing Donald Trump-branded golf courses and offering a Tesla car with each home it sells. “We will continue to grow, but it will be a more reasonable growth,” he said at his seafront residence on The Palm, a man-made island off Dubai’s coast.
The primary challenge is how to pay for the expensive technology, said Emily Hawthorne, a Middle East analyst at Texas-based firm Stratfor. Some of the projects, like running Dubai on blockchain, are meant to reduce the city’s costs eventually. Dubai, though, will initially rely on companies that are willing to put in some resources, she said.
It’s confounded the skeptics in the past. In the mid 1990s, a view from the sky showed mostly flat, open spaces. With much less oil than Abu Dhabi, Dubai sought to set up a diversified economy, putting in regulations that made it attractive to companies, albeit with labor abuses that would be criticized by Human Rights Watch.
Soaring glass and steel towers bloomed from the desert in an era of superlatives: the tallest building, biggest mall and largest man-made harbor to breaking records with the biggest caviar tin, longest handmade gold chain and highest sword throw.
It tackled oppressive summer heat and sandstorms, the population more than doubling in a decade to approach 3 million. Foreigners, who make up the vast majority of Dubai’s residents, flocked for work, banking and fun.
Now it’s about how to keep the party going, even one in a country where unmarried couples can’t legally live together and where free voice calls over the Internet and Apple’s FaceTime are blocked.
Few places reflect the challenge more than the site of the expo, without which the emirate could face a sharp economic slowdown. Dozens of cranes are busy working on the 438-hectare (1,080-acre) site south of Dubai’s center. The city is the first in the Middle East to be awarded the event in its 167-year history. The pressure is on to make it work beyond the short-term influx of visitors.
“The impact that it has in terms of generating opportunities for the economy is definitely big,” said Marjan Faraidooni, who’s in charge of the legacy impact and development for the expo. “If we don’t showcase things that are cool, then we’re not living up to our reputation.”
In Dubai’s financial center, there’s a cluster of interconnected oblong cement structures that claims to be the world’s first functioning 3-D printed building. Police hover-bikes, flying taxis and drones that help fight fires have been unveiled at exhibitions. Tesla cars pick up Uber riders from the airport after the company opened a showroom in Dubai last summer.
One of the effects of the technology push is that more students are thinking about science and math instead of finance and engineering, said Omran Anwar Sharaf, 34, the project manager of the Emirates Mars Mission.
“The U.A.E. decided to go to Mars, and we have not reached there yet,” he said. “By just one announcement we have students changing majors.”
At the Mohammed bin Rashid Space Center in a desert area outside downtown Dubai, the plan is for the Mars probe to launch in summer 2020 with help from three universities in the U.S. It’s being developed by a team of about 160 Emiratis—40 percent of them women—with an average age of 27.
Inside the space center, civil engineer Shaikha Ahmad Al Falasi, 24, gives a tour of a prototype of a smart house that lowers energy consumption by using solar energy only, an air conditioning system based on chilled water and thermal and air insulation techniques.
There’s a belief among Emiratis that “impossible isn’t a notion because we saw visual changes that happened right in front of us,” said Al Amiri, the minister. “It’s this understanding that people abroad don’t get.”
For more on Dubai’s transformation, check out the Daybreak podcast.
https://soundcloud.com/user-322211172/dubais-challenge-to-keeping-growing
--With assistance from Alaa Shahine Zainab Fattah Samuel Dodge and Patricia Suzara
To contact the author of this story: Donna Abu-Nasr in Dubai at dabunasr@bloomberg.net.
To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net.
©2018 Bloomberg L.P.
