By Simeon Kerr
Published: December 1 2008 18:07 | Last updated: December 1 2008 18:07
Until only a few months ago, many executives from developed economies viewed the Gulf as bolthole to ride out the global economic storm.
Now the axe is falling heavily on the staff of Dubai real estate companies as a six-year property bubble finally bursts, while similar cost-cutting measures are sweeping through the investment banking community.
Morgan Stanley, Credit Suisse and Goldman Sachs have already cut about 10 per cent of their regional staff as the prospects for next year’s fees dim with the oil price slump.
Elsewhere, big real estate companies are slashing up to 15 per cent of their workforces. Nakheel, the government-owned offshore developer, this week said it was paring back high-profile projects such as the Trump Tower on Palm Jumeirah, while also making 500 staff redundant.
The reality of corporate slimming-down sits uncomfortably with the perception of Dubai and the Gulf as havens of economic stability in the current global financial storm.
As job losses in developed economies increase, the number of applicants for regional positions is ballooning.
In November 2005, whenthe recruitment consultant Hays began operating in the Gulf, it was receiving about 500 applications a week from outside the region. That has risen to 3,000 a week as the global slowdown worsens.
“There are many unsolicited CVs coming though from people with no experience of the region,” says David Johnson of Whitehead Mann, the executive headhunters.
Recruiters, fearing stiff relocation costs, are now more likely to pick candidates who are already in the Middle East.
“Since it is fast becoming a buyers’ market, client companies are getting fussier about this experience so someone in region is likely to be preferred,” says Mr Johnson.
Hays, which has grown from four to 80 consultants over the past three years, says that three-quarters of the vacancies it was trying to fill for clients have been put on hold.
Jason Armes, Hays’ managing director in Dubai, says redundancies and the freeze on hiring could combine to see thousands of Dubai’s expatriates leave town.
“Over the next three months, 5,000 professionals could lose their jobs in Dubai. That’s very significant,” he says.
Mr Armes says that the advertising and media industries, which have expanded on the back of the real estate market, could also face swingeing cuts as companies reduce marketing budgets.
Yet, as Dubai loses its shine, other, less glamorous cities are beginning to look more attractive. Abu Dhabi and Doha are first in line to take advantage.
The capitals of Qatar and of the United Arab Emirates are among some of the richest cities in the world, thanks to their hydrocarbon reserves and overseas investments.
They are also diversifying their economies, with an emphasis on industry, culture and education.
Expatriates seeking the luxuries of Dubai’s champagne brunch lifestyle are also turning to perceived hardship postings, such as Saudi Arabia and Kuwait, which are seeing stronger demand for construction expertise.
“Dubai sold itself on a vision, but now it costs so much here that there is a sense that the good money in Dubai has already been made,” says Mr Armes.
“Property people especially are considering roles in Saudi Arabia and Kuwait that a year ago would never have had any applications,” he adds.
Nor is it all doom and gloom for Dubai, either.
Whitehead Mann’s Mr Johnson says that regional companies are still taking the replacement of senior staff very seriously, even if some lower-end hires are on hold.
Carolyn Hanson, regional director for International Compliance Training, says compliance officers remain in strong demand as these vital roles are the last to go, especially as Gulf states introduce stronger regulation.
And while investment banks are shedding staff, they also want to replace some dead wood with experienced regional experts to contribute to the restructuring and merger deals that will become their bread and butter over the next year.
“If you can find me a good Saudi investment banker, I will hire him now,” a banker says.