Abandoning Dubai

Commentary - Executive
By Paul Cochrane in Dubai

Dubai has been getting a lot of negative coverage in the media lately. One story stands out in particular, the frequently spouted ‘3,000 cars abandoned at Dubai airport,’ which has been used to suggest the emirate’s economy is sinking into the sand.
It is a story I’ve had recounted to me from barbers to businessmen, with figures metamorphosing like in a massive game of Chinese whispers, from hundreds of cars left a day to up to 30,000 having been abandoned.
India’s Daily News & Analysis broke the story, citing 3,000 cars had been abandoned over four months at the Dubai International Airport (DXB) and quoting the director general of airport security.
The story was soon picked up elsewhere, with websites firing off sensational headlines: ‘DXB clogged with cars abandoned by fleeing construction workers,’ and ‘Thousands of luxury cars abandoned at DXB as expats flee debts’.
The curious thing is that within a week of The Times of London carrying the 3,000 figure, and then a local newspaper quoting an anonymous airport security source that “every day more and more cars were found,” and “Christmas was the worst - we found more than two dozen on a single day,” the chief of Dubai’s police force came out with a different figure.
“Only 11 cars have been abandoned at Dubai airport in over a year,” said Lieutenant General Dhahi Khalfan Tamim, before lambasting the media for its reports on the decline of the economy as being “out of proportion.” He went on to say that Dubai still has “a smooth economy and the problems attributed to the emirate both in the local and international media were completely false.”
The original report and the government’s eventual response all happened in the first two months of the year, but I kept hearing stories about dumped cars at the airport when in Dubai in March. Either people had not read the clarification, or no one really believed the police chief’s claim.
So who to believe? We have the press reports on one hand and on the other a statement by a government spokesman that will presumably not be changed. Whether the abandoned cars story is an urban legend or not is now hard to ‘prove’.
But what the story does suggest is that if the government is not forthcoming about the gravity of the situation we are left with no choice but to fall back on what the police chief urged the media not to use: anecdotal evidence to gauge how healthy Dubai’s economy really is.
There are also economic indicators, but this requires a cross examination of numerous sectors, which is problematic given the nature and secrecy of many institutions and family businesses in Dubai, often unwilling to disclose to business journalists how their business is faring. This is compounded by a dearth of collaborative data amongst players as well as official statistics on economic sectors.
As one industrialist remarked when we talked about Dubai’s economy, “our clients don’t read the news about the sector, we get together to talk and see how we’re really doing.”
Ultimately, all we can do is piecemeal data and anecdotal indicators together. Judging from everything I’ve read, seen and heard, I’ll stick my neck out to say Dubai is in a downturn, despite the government’s spin.
In the first two months of the year the automobile sector declined 45% in the UAE, advertising is set to plunge 50% in 2009, and economic growth is projected to be between 2-4%, while real estate prices have dipped, construction projects have stopped, and banks are not lending like before.
All of this is evident from visibly fewer vehicles on the road – as observed by the head of GM Middle East – and from the huge blank billboards on Sheikh Zayed Road that previously advertised real estate projects.
Conversations with Dubai residents are a further indicator. A plywood distributor’s business was down 90% from 2008, from 100 containers a month to only nine; a taxi driver sent 35-40% less cash home than before; an import/export firm registered a 35% decline in orders; a colleague’s flat mate lost her job as a graphic designer.
I even heard of a friend’s relative abandoning his car at the airport. Given such anecdotal evidence, it would be no surprise that people are leaving their cars at DXB or in parking lots elsewhere as jobs are lost.
Denials of Dubai’s economic situation by the government are frankly disingenuous. Dubai needs to face up to this to be able to think hard about the direction it wants to take its economy. There are no easy answers, but short-term thinking has to be sidelined, as does the official reticence on the true state of the economy.
After all, stories like the abandoned cars at DXB can quickly get out of proportion and become believed, no matter claims to the contrary; it is a human fallibility we have seen time and again, yet also an understandable one given people’s desire to know what’s going on, especially during a crisis.

Photo by Paul Cochrane