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Record oil revenues fuel economic boom in Gulf

DUBAI — Record-high oil prices are fuelling an economic boom in the Gulf, and Arab governments are ploughing the windfall into tourism, construction and other ventures that are transforming the economies of the region.

New airports, hotels, gigantic theme parks and residential towers are emerging on plots that were desert wastelands not long ago, or on mammoth man-made islands that will be mini-cities when completed.

Revenues have multiplied manifold, as oil prices have skyrocketed from historic lows of less than 10 dollars a barrel five years ago to record highs of nearly 60 dollars per barrel. For the first time in history, the price of oil climbed past 59 dollars a barrel on Monday.

Last year, Saudi Arabia, Kuwait, Qatar, Oman, Bahrain and the UAE generated 180 billion dollars in oil sales, three times as much as in 1998, and revenues could be even greater this year, bankers say.Nowhere in the Gulf is the economic boom more evident than in tiny Qatar and Dubai, desert backwaters only decades ago that have been transformed into modern cities by oil wealth and savvy investments.

Dubai, one of the seven emirates of the UAE and already the biggest holiday destination in the region with 5 million visitors a year, is investing a whopping 30 billion dollars to double the number of visitors in a decade.

The centrepiece of the emirate’s ambition is Dubailand, a 5 billion dollar theme park twice as big as Disneyworld in Florida that will include an indoor ski slope, water rides, a dinosaur theme park and a glass-domed rain forest.

More than 100 billion dollars worth of real estate is under development or in planning, as well as a 4.2 billion dollar airport expansion and projects like the multi-billion dollar Dubai Festival City, Dubai Healthcare City, and Burj Dubai, the world’s tallest building that is expected to be completed in 2008.

Jumeirah International, which operates Dubai’s landmark Burj Al Arab hotel, recently announced a plan to build or manage 40 hotels worldwide in a bid to emerge as the world’s leading luxury hotel group. “Anyone who looks at these projects as separate ventures won’t realise that they form a chain of interlinked elements that are part of a clear strategic vision, nor will they realise that Dubai has the potential to be a destination that attracts millions of tourists,” according to Shaikh Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and UAE Defence Minister.

Tiny Qatar also wants to double the number of its visitors, from 700,000 last year to 1.4 million in 2010.

Oil revenues and natural gas reserves that are the third largest in the world are fuelling an economic boom that has transformed the capital, Doha, into one giant construction site. A 15 billion dollar master plan launched last year envisages 40 new hotels in three years, together with a variety of tourist attractions.

Another example of the construction boom is the Pearl project, a 2.5 billion land reclamation development of 8,000 upscale homes.

Also a new 5 billion dollar airport is being built in Doha by U.S. giant Bechtel, and will be one of the biggest in the world when completed in 2015.

Qatar Airways, the national carrier that bills itself as the world’s fastest growing airline, recently placed an order for 60 Airbus A350s, and said it plans to buy at least 20 Boeing 777s.

Qatar is hoping to raise its international profile when it hosts the Asian Games in December next year.

The construction boom in Dubai and Qatar followed a change in regulations that now allows foreigners to own property. The boom is palpable throughout the Gulf, where stock markets that did not exist two decades ago are registering record highs.

Saudi Arabia’s Tadawul All Share Index jumped over the past 12 months, and IPOs are routinely oversubscribed throughout the region. Corporate earnings in the Gulf grew 40 per cent in 2003 and 50 per cent last year, according to official figures.

Neighbouring Kuwait expects its budget surplus to double this year from the 2004-5 financial year, and it is estimated to have built currency reserves and overseas assets of about 100 billion dollar.

Oman recently announced it is investing 15 billion dollars in a massive tourist resort in the Arabian sea coast, and Bahrain is witnessing growth of over six per cent a year, helping attract multibillion-dollar investments in luxury real estate projects such as the reclaimed Amwaj and Lulu islands, and the 1.3 billion dollar Bahrain Financial Harbour.