Bad news about Dubai has been greatly exaggerated lately. But there are other news about its fundamentals as a regional hub of shipping, services, people, trade and capital to tell.

The city got its share of obituaries suffering from a property bust and contagion from the global credit crisis. Headlines from London to New York via Cairo, laced with gloating, proclaim its demise.

Certainly, the emirate is stumbling. Many high-profile projects have wilted under dried out capital influx, over leveraged debtors and corruption. Many of its top officials, who once swaggered on the world stage, now skulk in denial.

Understanding Dubai’s value, asks for a look to its commercial and demographically geography. It is the regional hub that encompasses the growing markets Europe, of Asia, Russia with the Caucasus, the Gulf States, Iran and Africa. Because of the heavy infrastructure investment, it works largely. Dubai’s population is 90% based on expats, thus it’s way more than just an Arab state.

But Dubai’s business model predates modern financial markets and fits today’s globalization demands. Its success is not about lavish hotels, skyscrapers or man-made islands. It’s simply the model of Dubai’s late ruler Sheikh Rashid bin Said Al Maktoum: “What’s good for the merchants is good for Dubai.” And the creation of such a merchant’s hub has been a Maktoum family tradition for almost a century. And it’s the dreamers, entrepreneurs, merchants and migrants, who used this hub and created today’s Dubai. Its openness to foreign talents will support Dubai facing today’s crisis. Speculators leave but plenty professionals will ride out the tide, and regenerate Dubai as a place to achieve dreams.

Dubai remains as highly successful harbor in one of the richest and fastest-growing parts of the world.
Dubai companies, e.g., have substantially improved east Africa’s transport infrastructure. Despite Dubai’s US$70bn debt, much of that comes from massive infrastructure projects, is well positioned for the future. Infrastructure spending is an old hat in Dubai. Already in the late ‘50ies Sheikh Rashid chose to take on a big loan to dredge the Dubai creek to allow for larger ships, he was panned. It worked. The ships came, and so did the merchants, the pre-oil emirate grew and flourished. 1979, Sheikh Rashid built the Jebel Ali port and took high criticism. He won his bet! Today, Jebel Ali place Dubai among the 10 largest container terminal ports in the world.

The airports, airlines, telecommunications and broadband networks, metro system and expanded highways can tell the same stories. There is not even one challenging city in the whole region. Dubai as the region’s hub extends way beyond the Arab world up to 1.5bn people. Its airport is among the 10 busiest for international passenger traffic and among the world’s top 15 air cargo hubs.

After all we can conclude, Dubai’s property bubble popped, its hubris thankfully too, but not Dubai’s core business model. Property corrections and over-leveraged entities can be fixed. A poor commercial environment would be far more dangerous instead. When the world’s economic engine restarts, places such as Dubai will flourish and rise again.