Underpinning economic growth in Dubai at the moment is a vibrant real estate market, which is helping to fuel the construction of new apartments, offices and residential developments at a frenzied pace, while also presenting attractive investment opportunities for real estate and alternative investors. With the Emirate’s population set to almost double from 1.2 million to 2 million residents over the course of the next five years, it is probable that demand for ready constructed real estate, already at a premium in and around the city, is going to continue outstripping supply for the foreseeable future. Indeed, it is said that within the next five years there will be an estimated 40,000 unit shortfall due to a limited number of Free-Zones where developers are permitted to build freehold properties for non-nationals.
 
Financial
Most of the country’s wealth has been built on the back of vast mineral deposits. However, the rulers of this oil-rich emirate, one of seven in the United Arab Emirates, have been quick to realise that oil wealth will not last forever, and have set about putting in place a series of investor-friendly tax, regulatory and legal policies to attract companies, individual investors and wealthy retirees from all over the global to live, work and do business in the city.
 
Partly as a result of these policies, economic growth over the past decade has been experienced at rates that would be the envy of any pro-business western economy. Government figures have revealed that the gross domestic product of the UAE as a whole grew by 15% to AED337 billion (US$91.7 billion) in 2004, whilst the economy of Dubai grew at an even faster pace as its GDP expanded by 16.7% to a little under AED100 billion. Dubai’s economy has grown by an average of 10% per year since 1995 – the fastest growth rate in the world, according to Dubai’s Department of Economic Development.
 
Low tax policies
One major selling point for Dubai is that its enormous oil revenues mean that the government has no need to raise income through direct taxation. Accordingly, the emirate is characterized by an almost complete absence of taxes. This means that there are no withholding or capital taxes and, with the exception of banks and oil companies, no corporate income tax is payable by businesses in Dubai. (Oil companies pay up to 55% tax on UAE sourced taxable income whereas banks pay 20% tax on taxable income).
 
The government has also sought to encourage global firms with the establishment of free trade zones, such as the Jebel Ali Free Zone (JAFZ) and the more recent Dubai Internet City. Companies operating in the JAFZ can expect to benefit from zero duties on all import and export goods & machinery within the Free Zone, 100% foreign ownership, a renewable 50-year guarantee of exemption from corporate tax, no personal income tax and no restrictions on the repatriation of capital and profits.