Dubai, one of the richest cities in the world, is home to many billionaires, the tallest buildings, luxurious properties, the biggest malls, and the best international airlines, a city that welcomes millions of tourists every year, grown from the desert to where it is today.
How did they do it? Why is Dubai so rich? Many would think it is because of oil. This is not true. Dubai as a city doesn’t have much oil and it only contributes 1% to its GDP.
Let me mention that Dubai is not the richest Emirate of all seven Emirates. The richest is Abu Dhabi, the capital city of UAE, which is gaining its profit from oil.
However, Dubai profits from many sources, like tourism, infrastructure, foreign investment, technology, trade, and others. Would you like to know more details about why is Dubai rich? Let’s dive in.
Why Is Dubai So Rich?
How it all started
Between the 1770s and 1930s, the main source of income for today’s UAE was the pearl industry. In the 1950s Abu Dhabi discovered high oil reserves, however, Dubai didn’t and appear to have financial challenges.
During this time the leader of Dubai, Sheikh Rashid bin Saeed Al Maktoum started to invest in infrastructure. Building roads, seaport, and airport.
The airport in Dubai became one of the busiest airports in the world and thanks to its location a hub for many international flights. Not only the airport but its own airline, Emirates Airlines became one of the top airlines in the world.
Jebel Ali seaport became the ninth biggest seaport in the world and the biggest and busiest in the Middle East. Thanks to this port, trade became one of the main income for Dubai’s growing economy.
Free Zones in Dubai
Not only the infrastructure but also setting up free zones all over Dubai is a reason why Dubai is so rich. There are about 30 free zones in Dubai.
These Free zones attract foreign investors to set up their businesses in Dubai. In the Free zones, investors have several privileges, like tax cuts, custom duty benefits, low regulations, and many more.
The first free zone was established in 1985 and it is called Jafza, the Jebel Ali Free Zone. Today it is not only the largest free zone in the Middle East but in the world. Companies in Jafza compose 20% of foreign investment and several hundred thousand employees are generating 80 billion dollars, which is about 21% of the GDP.
Zero income tax
Dubai has zero income tax. Meaning that if you find a job in Dubai, you don’t pay any taxes. How great is that? This is a reason why Dubai attracts international people. There are about 80% of expats living in Dubai.
This is most convenient to wealthy people as in the Western world they would have to pay high taxes. As Dubai is so attractive to wealthy people, they tend to spend a lot of money on real estate, cars, restaurants, and other items that bring money back to the city’s economy.
Most recently with the crypto and metaverse starting to be so popular, Dubai is not staying behind and is constantly coming up with new ideas and opportunities in this field. Many whale crypto and NFT traders moved to Dubai due to the zero-income tax.
Not only there is no income tax but also no tax from buying, selling, or renting properties. This is very convenient mainly for the rich people who can buy luxurious properties without paying a tax.
Tourism in Dubai
All the points above are leading me to the last, but not least reason why Dubai is so rich and it is tourism. Thanks to the infrastructure, airport, free zones, and zero income tax, Dubai became one of the top tourist destinations.
Many luxurious hotels, malls, restaurants, bars, and cafes were built. A lot of attractions like the tallest building in the world, Miracle Garden, Museum of the Future, the deepest pool in the world, many water parks and amusement parks, and many more were created in order to attract millions of tourists every year. The tourism industry contributes about 20% to the city’s GDP.
The location of the UAE is a great advantage for tourism as most of the flights between Europe and Asia have stopovers in Dubai.
The Future of Dubai
Dubai is not sleeping. Dubai is growing and following the change of the world that is coming. They started to accept crypto as a currency and they are highly working on the metaverse.
For example, there are new virtual games places opening, and events regarding NFT and metaverse are organized. New projects like Moon Resort or Victory Building are already planned, which are just an example. The future belongs to Dubai.
Conclusion-Why is Dubai so rich?
Why is Dubai rich? Because they invested a lot of money to build infrastructure and a city attractive to tourists. Because they know how to attract wealthy people and bring the money back to the city. Because they are innovative and are not afraid of new things, and new opportunities.
They became a great example for middle eastern countries on how to use money to become wealthy cities. Saudi Arabia for example is following the Dubai approach and opening the country to tourism.
Is everyone in Dubai rich?
No, not everyone in Dubai is rich. There are also people who don’t earn a fortune every month but can live a good life there. However, there are also poor people who live on the minimum wage and can’t afford much as they send most of the money home to their families.
Is Dubai the richest city in the world?
No, it is not. Some sources claim it is New York, some say it is Tokyo.
Is UAE the richest country in the world?
No, UAE is not the richest country in the world, but it is in the first 10.
Why is Dubai so popular?
Dubai is a great tourist destination. Not only there is a beach to enjoy the vacation, but Dubai is also growing and developing rapidly and they don’t forget to attract attention.
Dubai must be the best, the biggest, the largest, the deepest, and the tallest in everything. They hold several Guinness records and there is always a new attraction or site built.
Due to zero income tax, Dubai attracts wealthy people who then invest money in the city. There are new luxury real estate projects starting every year.