The new Wall Street? Make a right turn and head for Saudi
BATHED in the glow of the skyline's glitter, the centrepiece of Dubai's financial hub seems equal to the thrusting ambitions of the foreign investment bankers rushing to set up shop here.
"This is the new Wall Street; it's the centre of gravity," said Fares Noujaim, Merrill Lynch's new president of the company's business in the Middle East and North Africa, pointing up at the Gate, the main building of the Dubai International Financial Centre that covers the sky above him.
The Dubai boom has been riding oil's ascent for years now. Its ultra-modern skyline has become a prominent symbol of the emergence of this once scrubby emirate on the western coast of the Persian Gulf as the Middle East's principal financial, trade and tourism centre.
But as the deepening bite of the credit crisis spreads from Wall Street, the Gate has recently become an even more powerful beacon for a swarm of deal makers looking to stake their claim in one of the world's last remaining bull markets.
Dubai's economic growth is running at roughly 11% a year and the government expects it to continue at that pace. Housing prices spiked 42% in the first three months of the year. Even though it has little oil of its own, Dubai's welcoming social and investment climate, along with special zones with independent laws, has turned it into a trading entrepôt on steroids, beyond Beirut in the 70s and Hong Kong in the 80s.
Economists warn of an unmanaged boom as high inflation, a weakening currency and rampant construction stoke fears of a severe reversal to come.
But for Noujaim, such concerns are for another day. "Bubble? What bubble?" he asked, pressing his case that demand for oil, despite the recent dip in prices, would push its value even higher. "This will be the next Singapore or Hong Kong."
The boom may be on, but it is by no means clear that the volume of deals and the opportunities in shallow and heavily regulated capital markets will be enough to sustain these aggressive expansions.
And for the corporate executives in the region, hit with a barrage of requests for meetings and proffered business cards, the question is this: will Merrill, Morgan and Goldman be here when the inevitable correction comes?
To listen to Georges Makhoul, the chief executive of Morgan Stanley's Middle East business, the answer is a resounding yes. Morgan Stanley arrived here in 2005 and became one of the first American banks to establish a presence.
"We have over 150 people in the region," he said. "That is an example of making the right bets."
When night falls, the deal making continues even as the action shifts from the board room to the many bars and nightclubs located in the city's hotels. Islam is the emirate's religion; accordingly, the sale of liquor is largely limited to hotels – but that is about as far as restrictions go.
At the Buddha Bar in the newly opened Grosvenor House, Arabs, resplendent in their flowing white robes, knock back glasses of whisky. At Sochos, a sushi bar that overlooks the Arabian Sea, the partying takes on a more relentless aspect.
"God, this place is so much fun," said a young banker from a major Wall Street house. It was close to 1am, and work beckoned a few hours later.
For most of the senior bankers sent to Dubai, the work schedule is so relentless that there is little time for such cavorting. Not only are they under pressure to produce fees for their revenue-starved firms, but the fact that Saudi Arabia starts its week on Saturday means there are in effect no weekends.
If oil prices stay well above $100 a barrel, there may indeed be enough business for all. The current price of energy means that nearly $2bn is moving every day from the pockets of consumers around the world to the oil producers in this region.
The full article contains 675 words and appears in Scotland On Sunday newspaper.
