From Beyoncé to Ronaldo…
Sports and music stars, tech billionaires and influencers are flocking to Dubai, with more than 30 charter flights landing there every day. The elite are served macarons and cappuccinos with their faces printed in the foam.
Cristiano Ronaldo is just one of the rich and famous who are flocking to Saudi Arabia and other Gulf states. Photo: Getty
They’re in a city where real estate is booming, Michelin-starred restaurants and luxury resorts are popping up. Beyoncé recently performed at the opening of Atlantis the Royal, a hotel that bills itself as the world’s “most luxurious” hotel, with rooms costing up to $37,000 a night.
Some 900 km away, soccer star Cristiano Ronaldo - who joined Saudi Arabia's Al-Nassr club in December for a reported $200 million a year - lives in the penthouse of the Kingdom Tower in Riyadh. The Portuguese superstar, his girlfriend and their children are learning Arabic.
Once considered a dry and unattractive desert, the Gulf has become a magnet for the world’s wealthy. European bankers, American fund managers, and Israeli tech founders are flocking to the Gulf, where there is no income tax and a thriving lifestyle of food, sports, and art.
The boom has largely been centered on the UAE and Saudi Arabia, but Qatar is also getting in on the action. Still glowing from hosting its first World Cup last year, Qatar has been receiving regular visits from delegations from Europe and Asia, cementing its status as an attractive destination for countries looking for new sources of natural gas.
“Technology people are moving to the Gulf. Finance people are moving to the Gulf. Fashion people are moving to the Gulf,” said Adel Mardini, CEO of Jetex, a private airline based in the UAE. “Celebrities, social media influencers, they all come here.”
The wise man is the one who knows the times.
Gulf economies have been able to seize a growth boost from the Russia-Ukraine conflict, which has sent crude oil prices soaring and diverted global flows of people, goods and capital.
The influx of Russian money and citizens has fueled Dubai's real estate market, and the city has also become an important transit point for bringing Western goods into Russia.
Saudi Crown Prince Mohammed bin Salman speaks with Armenian President Armen Sarkissian during the Future Investment Initiative forum in Riyadh in 2021. Photo: GI
In Dubai, rents have risen more than 25% over the past year and real estate transactions are at an all-time high, according to data from CBRE Group, a U.S. commercial real estate services and investment firm. Beachfront villas and skyscrapers have seen a surge of Russian investment thanks to continued commercial flights to Moscow and the limited enforcement of Western sanctions.
The Gulf region once enjoyed an oil boom, with crude prices rising above $100 a barrel. Flush with cash, many monarchs invested billions of dollars in “white elephant” projects that were prohibitively expensive to maintain, while handing out cash to citizens to rally support.
But the boom is very different now. With the 2015 Paris Agreement accelerating the West’s transition to renewable energy, the Gulf oil states are waking up to the realization that they need to invest fossil fuel profits now to diversify their economies.
Rather than simply park their oil wealth in Western bond and stock markets, Gulf countries are taking on more risk. Their sovereign wealth funds are investing tens of billions of dollars in a myriad of businesses around the world. According to the consultancy Global SWF, five of the world’s top 10 state-owned investors last year were from the Gulf.
The UAE and Saudi Arabia are liberalizing their economies with looser immigration policies and laws, less restrictive of strict Islamic rules, and have attracted tourists and foreign workers from around the world, despite significant restrictions.
Saudi Arabia posted the fastest GDP growth in the Gulf last year, at 8.7%, according to the International Monetary Fund (IMF). And 2023 is expected to be another lucrative year for the world's largest oil exporter. The UAE trails only Saudi Arabia, at 7.6%, while Qatar is expected to grow 4.8%, its fastest pace in nearly a decade.
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The economic boom of these countries is rebalancing the geopolitics of the Middle East. The Gulf monarchies have become Washington's most influential partners.
But they also know how to take advantage of the new context, when they are willing to pursue foreign policies and economic interests that conflict with the US, including favorable oil policies and undercut Western efforts to isolate Russia.
Palm Jumeirah, an artificial archipelago in the UAE, is being seen as a new symbol in the Gulf, instead of the image of oil barrels as before. Photo: Wiki
With strong investment flows in hand and a new approach to the times, Saudi Crown Prince Mohammed bin Salman and UAE President Sheikh Mohamed bin Zayed Al Nahyan are turning the Gulf into an independent power center.
Their efforts to make peace with rival Iran, end the war in Yemen and end Syria’s isolation are raising hopes for a more lasting period of prosperity for the region, though not in a way that necessarily aligns with American interests.
Meanwhile, traditional Arab capitals such as Cairo, Damascus and Baghdad are plagued by more than a decade of conflict, economic crisis and government mismanagement. “It all comes down to one thing: the new Gulf… Confidence is the name of the game here,” said Abdulkhaleq Abdulla, a prominent UAE political scientist at Emirates University.
The economic boom has also created some incentives for social liberalization. The UAE has cut taxes on alcohol, allowed unmarried couples to live together and introduced new visas to encourage people to stay longer. It has also legalized the import of cannabis products into the country and said casinos would be the next move.
Saudi Arabia is also expected to lift its alcohol ban. The notoriously conservative Muslim nation has allowed women to drive and unrelated men and women to mingle in public. Riyadh is also eyeing the launch of a powerful airline to compete with the region’s already successful Emirates and Qatar Airways.
To continue attracting people to the UAE, the country is considering accepting private pension funds like 401(k) plans, which are currently not available to foreigners, and options to reduce health insurance costs for those who want to retire here, according to UAE Minister of Foreign Trade Ahmed Al Zeyoudi.
All these moves show that the UAE and its Gulf neighbors are determined to pursue economic restructuring plans to ensure a prosperous life even without oil.
Khanh Nguyen
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