An entire month and no special focus on the UAE…well, let’s make up for lost time:
Still clawing
Ahhh Dubai Dubai – or “Doobie” as some fondly call it – what an action-packed-boom-to-bust-epic-infused-roller-coaster-ride you have provided us in the last twelve months. The thrills and spills, bluffs and calls, highs and (very) lows entwined with such generous helpings of underlying personal and business scores (read: vendettas) being settled, worthy of a high-budget-mini-series lavished with luxury-fittings.
The important opening and even more significant renaming of Burj Khalifa at the turn of the year proved a watershed for the much-derided and clearly walking-injured-once-shining state. Plenty of misguided, overly-aggressive and almost venomously vengeful criticism encircled the stricken-city’s gleaming towers during those dark-publicity days. Copious amounts were written, reported and spun (much of it inaccurate) and the sooner much of it is forgotten - as only fickle mass-crowd-memories can swiftly manage – the better and fairer.
What of the lingering issues though? No, I’m not talking about the mountain-of-debt that must still be addressed and the will-they-won’t-they rename the DIFC (Dubai International Financial Centre) alongside a fried-chicken-retail-outlet – that’s KFC for those of you that couldn’t figure it out – yep, Khalifa Financial Centre..catchy no?...we’re not talking about the reduction in traffic and sense of slowdown apparent across once-buzzing construction sites and hyper-driven-marketing offices, that’s all old news and this piece is not interested in senselessly badmouthing Dubai, it’s intended to facilitate its rehabilitation. Sometimes the path to redemption starts with some hurtful truths.
Like the much-touted Internet 2.0 revolution taking place, Dubai is re-inventing itself as any good city that experiences and survives a boom-and-bust scenario must. Dubai 2.0 is only at the very early stage of incarnation and the general look-and-feel of what the city will be/offer/do is still to be decided and clarified. What is certain is that the magnitude of events witnessed since the last time we investigated a snapshot of relative cost-of-living across the city would be expected to result in a rather forceful re-shaping of Dubai’s ethos. Well…has it?
Some of you will recall an analysis of the relative cost-of-living looked at almost exactly a year ago through the Soft-Shell-Crab-Index a (cruder and simpler of course) equivalent to the Economist’s "Big Mac Index" - where PPP (Purchasing Power Parity) is calculated in US$-terms to determine whether a particular currency is under/overvalued based on the price of a Big Mac at every McDonald's in every capital city in the world where one is sold. The soft-shell-crab-index is inspired by the ever-growing presence (welcome to the Nobu-Zuma fray Okku and Nozomi – you’ve had it easy till now!) of Asian “con-faux-fusion” eateries, all struggling to attract the rather limited crowd of affluent(ish) diners capable and willing to fork-out the necessary spend for a decent night out.
Let’s get straight to the claw of the issue – last year, through the index and at the height of the global economic crisis that felled great cities from Hong Kong across to New York and ushered in a new-era of lower prices, Dubai was found to confusingly buck-the-trend and out-price similar establishments by a full 25%. Yep, that’s Dubai 25% more expensive than its illustrious peers. That was with only two restaurants at the time serving the dish in an up-market environment. There are now at least five all serving rather similar fare, and although with an increase in supply you would assume a case for lower prices through economies-of-scale (lower import costs etc.) guess what the reality is? Yep, almost too obvious to keep you waiting….Dubai is still in fact almost 25% more expensive than the average cost of Tokyo, Singapore (a new entrant), Hong Kong, Mykonos (welcome also), London, Miami (fun defined), New York, Las Vegas (no people, it’s not like Dubai) and Los Angeles in current US$ terms*.
How can that be I hear you scream?! After everything that has happened in this vibrant and resilient city, where real-estate bubbles have burst with a bubble-gum like twang splattering the faces of many a happy-go-lucky punter (back to Blighty boyz), prices remain significantly higher across the soft-shell-crab-loving board than some of the most historically over-priced and wealth-attracting-centres of business and entertainment. Again, indirect taxes set-aside, especially for the (so)overpriced drinks capable of inducing a headache long before the hang-over has even had a chance to kick-in ($45 for a double-premium-vodka-on the-rocks, wo-awww-ww), the discrepancy is quite simply ridiculous and frankly indecent. That many do not own-up-to-the-fact is not an acceptance of the over-priced regime they face, rather a strange collusion-of-silence brought on by the unwillingness of many here to be the first to admit as much. Last year, it was questioned how much longer this would continue. Now the question must be why is it being allowed to continue?
A nasty case of the crabs aside, the often painful-on-the-wallet price discrepancy continues throughout the very fabric of so-called “cost-of-living” barometers. Without looking at mundane baskets such as milk and eggs etc, average lifestyles in Dubai consist of shopping and luxury items after all (that’s the image the city strives for is it not? Not of people going shopping for a carton-of-semi-skimmed and a farmer’s dozen, but of finely attired night-owls looking to taste the gold-lined edge of the high-life) - but even here the “tax-free” myth of the city does not pull-through into competitive prices. With the Dubai Shopping Festival in full-swing at the moment, shops across the vast (and impressive) Dubai Mall advertise 50% discounts and “bargain prices’. A cursory check of items found throughout other chain-outlets and department stores in London and New York provided a rather worrying trend – even at “sales” prices, eight out of ten “luxury” items came in a staggering 30% more expensive.
Come on, that’s just ridiculous you franchise owners out there. How can you ask Dubai residents (ex-pats at least, not the lucky locals born on a field of literally-liquid-gold-dreams – just jealous I hear you say?... damn right.aren’t you?!) to put up with prices intended to capture a captive-tourist market and shopping-demographic that never even see (nor have to care about) the mightier-than-black-charge-card bill at the end of the month. Even a well-practiced rip-off city, through many years of perfecting itself as a slick-tourist-trap destination - like Venice - understands the price differential game; restaurants there have separate menus for tourists and residents, with residents having to present an ID card for the honour of being handed the vastly better-value-for-money (70% lower) price lists. Now that’s smart and progressive. Take note Dubai.
So where do we go from here? Well it’s the same old message which I’m afraid simply is not translating fast enough into action. Although hotel prices have reportedly been slashed and bargain package holidays are touted throughout the internet to visiting sun-seeking hordes, the average Dubai dweller is still having to pay a ridiculous premium on the perceived right to enjoy oneself by eating and drinking well. Of course, Dubai is part of an Islamic state and alcohol is technically illegal etc., but a 100% premium on a Vodka-Martini (always ordered “very dirty”) when compared to one of the most expensive bars in notoriously-expensive Vegas (again, no real comparison) is really stretching the home-advantage a little too far.
Dubai has plenty going for itself, its success as the number one viable-choice for those wanting to live and work across the region absolutely secured and unlikely to be rivalled given the critical-mass it has achieved. What about being fair to those making that choice though? The only policy that will ensure economic success on top of destination-of-choice-awards will be an honest pricing policy where paying for quality eating/dining/shopping does not have to feel as if one is unwittingly partaking in a heavily burdensome debt-repayment plan.
Soft-Shell-Crabs can be battered, deep-fried, sautéed or sometimes grilled. For all the positive aspects of residing here, pricing policy can sometimes make living in Dubai feel like all four methods of preparation in one.
* All pricing information attained from enquiries carried-out between 1st and 2nd February by contacting (or checking online) each represented establishment where soft-shell-crab is known to be served in the listed cities. Variances in size and quality may of course exist but calculations are based on the limitations of the information provided. The above is personal market commentary
Best Rgds,
Hani
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