Dubai real estate heavyweight DAMAC Properties isn’t worried about regional instability in the Middle East. In fact, its leadership sees it as a plus.
The United Arab Emirates’ (UAE) most populous city has long benefited from the seemingly constant turmoil in its wider orbit, DAMAC Properties chairman Hussain Sajwani told CNBC’s Hadley Gamble Monday.
This is thanks to its status as a regional transport and business hub, and its reputation for safety and stability, which has attracted those with means from other parts of the region when political or economic unrest has hit neighbors such as Egypt, Lebanon, Iraq, and Kuwait, to name a few.
“Dubai always benefited from the instability,” Sajwani said. “I remember eight years of Iraq-Iran war and Dubai benefit from that. The trade with Iran increased and then we saw the Iraqi invasion of Kuwait, and Dubai benefited from a lot of Kuwaitis (that) came here and stayed here.”
A history of witnessing conflict
The Iraqi invasion of Kuwait in August of 1990 led some 70,000 Kuwaitis to flee to the UAE, where then-leader Sheikh Zayed issued an order to provide all Kuwaitis with shelter and a monthly stipend. The friendship has endured between the two nations ever since, both politically and economically.
Sajwani also noted Dubai’s gains from the collapse of Somalia in the 1990s, during which the emirate attracted significant Somali business and trade. Most of the east African country’s influential business people and political leaders lived in the Gulf, and many preferred to live and run their companies in Dubai, taking advantage of its geographic position and modern infrastructure as a gateway for global trade
Recent estimates suggest some 35,000 Somalis live in the UAE, out of which 70 percent run businesses including commodities import-export operations from Dubai. Relations between the two countries have soured recently, however, following UAE investment and port construction in the breakaway Somaliland, and the Emirati government has in the past imposed restrictions on Somali immigration.
The UAE bolstered both its regional presence and its military partnership with the U.S. in the wake of September 11, which enabled in to establish lucrative links on the pretext of countering terrorism and piracy. But its alignment with Western forces dating back to the Persian Gulf War and the Somalia crisis cemented both its security partnership with Washington and its reputation as an oasis of stability for wealthy and influential Arabs and Africans seeking safer shores.
Among the world’s safest cities
Dubai has been ranked among the world’s safest cities for years, and was ranked the fifth safest in the world this year by the Global Smart City Performance Index, due in large part to highly restrictive laws and a capital punishment system that’s been criticized by many human rights groups.
It also benefits from investment and close security cooperation with its larger oil-rich Gulf neighbors, though the UAE’s involvement in the Saudi-led bombing campaign over Yemen has attracted criticism from some governments and several rights advocates. Still, its capacity to attract investment appears unblemished.
More recently, the crisis in Saudi Arabia surrounding the murder of Saudi journalist and U.S. resident Jamal Khashoggi has set off an international firestorm that’s rocked the markets of the world’s largest oil exporter. Foreigners dumped $1.1 billion in Saudi stock just last week, and the kingdom’s benchmark Tadawul index has been on a roller-coaster ride. Riyadh is a major investor in and partner of Dubai, leading UAE state ministers to issue warnings against “efforts to destabilize Saudi Arabia.”
But Sajwani remained unfazed, expressing confidence that Dubai would continue to ride out regional storms — including the one brewing between Saudi Arabia and its Shia rival Iran — in stride.
“Dubai always benefits from good and bad news of the region because it is a hub,” the chairman said. “It’s a free trade center. So I’m not worried, I’m not concerned about things. I wish the region can be better you know and lower risk, but the region has been volatile for the last 50 years since I’ve seen it.”
DAMAC, with an annual turnover of some $2 billion, was the first Middle Eastern real estate company to list on the London Stock Exchange. A lagging local property market has seen residential prices in Dubai fall 15 percent since 2014, and DAMAC reported its worst quarter of sales last April-June with a 46 percent fall in profits. Still, the company’s leadership predicts a rebound by late 2019 and has plans to continue expansion in the Middle East, Africa and “very aggressively” in Europe, Sajwani said.