In Dubai, Services and Exports Drive a New Boom

Construction and finance aren’t the drivers: It’s services and exports

Jumeirah Beach in Dubai, with marina skyscrapers under construction in the backgroundPhotograph by Josef Hoflehner/Gallery Stock

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By Dana El Baltaji

January 25, 2013 at 3:06 AM UTC

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This article is part of the January 28, 2013 issue of businessweek.

Rewa Zeinati, a freelance writer in Dubai, has noticed more business cards with photos of scantily clad women offering massages piling up on her car windscreen lately. “Sometimes I’m away for 30 minutes and come back to find a stack of them,” says Zeinati. “I’ve definitely seen an increase this year.”

With Dubai’s economy posting its fastest growth since 2007, residents also say it’s harder to find taxis, book restaurants, and get places in private schools for their children. Residential rents climbed about 17 percent last year, while the volume of non-oil trade hit record highs. “Hotel occupancy is up quite significantly and the airport is crazy,” says Abdul Kadir Hussain, chief executive at Mashreq Capital (DIFC), which runs the region’s best-performing fixed-income funds. “If you go to Jebel Ali Free Zone, rents are up and it’s fully occupied. That part of the model is working very well.” The free zone is one of the world’s largest transshipment points for containerized cargo.