Page 84 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

68 Dubai & Co.

a whole host of other assets. Emirates Airlines has ordered
$37 billion worth of new aircraft, including the largest order for the
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new Airbus A380 double-decker plane. In turn, the largest cus-
tomer for the wide-body Airbus A350 is Qatar Airways, with 80 air-
8
craft on order for a list price of $16 billion. Between 2004 and 2005,
GE reported an 80 percent increase in orders from the region, to
$8 billion, citing big-ticket items for the health care, power, and air-
9
craft industries. In fact, GE recently sold its plastics unit—where
Jack Welch began his career—for $11 billion to Saudi Arabia’s
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largest public company. The controversial acquisition of P&O by
Dubai Ports World was an illustration of a GCC acquisition made
not as a passive investment but by a port operator with world-class
capabilities looking for international growth.
Consumer prosperity and spending are at an all-time high in
the GCC. In a 2006 survey of consumer confidence, the UAE ranked
ahead of the UK, France, Germany, and Italy. Today, Dubai has four
times the per capita shopping area of the United States, and retail
11
space is expected to quadruple in Dubai from 2006 to 2010. Part of
this expansion is the massive Mall of Arabia project—a mall that, in
the course of two phases, expects to reach 10 million square feet of
retail space and over 1,000 retail outlets. This is more than twice the
size of the Mall of America (4.2 million square feet total, of which
2.8 million is leasable space), 12 which is itself in the midst of an
expansion. The world’s largest mall today, in terms of gross leasable
area, is the South China Mall near Hong Kong with 7.1 million
square feet. The Mall of Arabia has already booked tenants from all
over the world for 80 percent of its retail space; these tenants
include the Virgin Megastore, which will have its largest outlet any-
where in this new mall. 13
Conspicuous consumer spending in the GCC countries is evi-
dent in the growing presence of luxury cars, designer jewelry, high-
fashion clothing, and other signs of wealth. Consumerism has,
however, also introduced among many locals the bad habit of
acquiring excessive personal debt. As already mentioned, not
everyone in the GCC is rich— in fact, many are unemployed or sub-
sist on modest salaries. In Bahrain, for example, a third of the native
Bahraini (not expatriate) workforce earns less than $600 per
14
month. Banks (both international and local) and consumer finance
companies have been quick to tap into the region’s growing