With Dubai’s real estate boom over, the government is looking to the aviation and logistics sector to drive future economic growth.
For this to work, Dubai will have to overcome the same challenges that brought down the emirate’s beleaguered property sector. It will first need to secure financing for its outstanding airport developments.
To address the funding gap, Dubai’s Department of Civil Aviation (DCA) is in talks with a number of local banks to drum up financing for some of the more urgent airport projects. These include the expansion of Terminal 2 and the remaining contracts at Concourse 3, both of which are at Dubai International airport.
Another key project that needs financing is Aviation City, which is earmarked as the next part of Dubai World Central to be developed now that the first phase of Al-Maktoum International airport is open.
DCA should be able to secure funding for the planned work at Terminal 2 and the $1.3bn Concourse 3. But with the price tag for the rest of Dubai World Central currently at about $30bn, Dubai will find it a lot harder to finance this in one go.
Dubai needs to find the money. Its Gulf neighbours are developing more than $27bn-worth of airport projects between them. With Etihad Airways and Qatar Airways buying new aircraft and expanding their networks, Abu Dhabi and Doha could replace Dubai as the region’s premier aviation hub in the next five years.
The critical advantage Dubai has is time. Abu Dhabi has not yet prequalified contractors for its midfield terminal complex, while the completion date for the first phase of New Doha International airport has been delayed by two years to late 2011.
Already ahead of the competition, Dubai does not need to find the money immediately. If it secures the funding in the next two years it can start building a new generation of projects that will put it even further ahead of its neighbours.