DUBAI — There is a sense of déjà vu in Dubai. Three-and-a-half years after a major debt crisis, the city appears to be booming once again, as investors and tourists see it as a safe haven in a region fraught with instability.
Known for its man-made palm islands and having the world’s tallest building, Dubai was possibly one of the most visibly affected cities of the 2008-09 global recession. Not only did it witness an exodus of expatriate workers, but a number of major construction projects were also put on hold, leaving a landscape littered with half-completed structures.
Today, work on many sites has resumed and the sound of construction work is ubiquitous.
One of the latest developments underway is Mohamed bin Rashid City, named after Dubai’s ruler, which will eventually boast up to 100 hotels, five theme parks and the world’s largest shopping mall - outdoing the Dubai Mall, which is currently the biggest in the world.
Just this week, officials announced the creation of another district that will act as a hub for global luxury, fashion and design brands. And on Monday, the city added to its list of superlatives by opening the world’s tallest twisted tower.
While Dubai’s leaders say they never questioned the renaissance of their sheikhdom, one of seven that make up the United Arab Emirates, experts say the quick rebound would have been impossible without the unrest and bloodshed seen in neighboring nations.
"There is some real pickup in economic activity, which obviously is attributable to the status of the UAE as a safe haven. In a period of turmoil in the rest of the region, Dubai acts as a magnet to people and capital and the data reflect that," said Giyas Gokent, chief economist and head of research at the National Bank of Abu Dhabi.
Latest figures show Dubai’s economy grew by 4.4 percent last year, its best performance since 2009.
Real estate prices reflect the current optimism; they have been steadily increasing since dropping 50 percent after the financial crisis.
While analysts agree Dubai has benefited from turmoil in other Arab states, Stephane Garelli, director of the IMD World Competitiveness Center in Switzerland, says authorities in the emirate must also be credited for handling their internal issues in a way that pleased investors.
"Sometimes crises are very good because they test the robustness of the model, they test also the ability of governments to react quickly on events and I think this is what has happened with the United Arab Emirates. Two, three years ago there were a lot of question marks and I think the ability of the government to confront the facts, to react to them very quickly and to put in place a number of measures was very welcomed by the market," Garelli said.
But the grand scale of proposed projects in Dubai has led some to question whether officials have learned from past mistakes. Details on how many of the mega developments will be financed have not been released and sceptics doubt all of them will come to fruition.
Last month, developers planning to build a giant replica of the Taj Mahal in Dubai pushed back the launch date by a year.
There also are concerns for the laborers building the new projects. Rights groups say many workers, most of whom are from South Asia, are subjected to substandard living and working conditions. Some have even been described as virtual slaves.
Abdul Rahim Yousif al-Awadi, Assistant Foreign Minister for Legal Affairs says the country is committed to preventing the exploitation of its foreign laborers.
"We have the laws and we have the people trained to combat or discover these types of crimes and I think we are ready for whatever is coming," al-Awadi said.
As regional unrest continues, Dubai looks set to reap the rewards.
"What is clear is that the Arab Spring is a multi-year process unfolding and it means that much of this capital coming into the UAE is likely to stay long term rather than being put here for a short term basis," said Nick Tolchard, the head of Invesco Middle East.
Global index compiler MSCI on Tuesday upgraded the United Arab Emirates from a frontier market to an emerging market. U.K.-based HSBC says capital flows into the UAE could increase by $370 million per year after the decision comes into effect next May.