A Visit To Dubai Inc.

Steve Kroft Reports On A Success Story In The Middle East

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His people, the descendants of Bedouin tribesmen, pearl divers and traders, now make up a small fraction of the population in the emirate. They enjoy one of the highest standards of living in the world, with free healthcare and college tuition and no taxes.

The rest of the population are foreigners -- European, Indian, Russians, Iranian, and Saudi -- and they are coming at the rate of 25,000 per month. They are developers, architects, middle managers, domestics and bellboys, all united by a common goal: to make money.

"People can smell the opportunity. And they go for it," says Georges Makoul, vice president for Morgan Stanley in charge of its Middle East region.

He believes Dubai has the perfect business environment for multi-national corporations. It is strategically located halfway between the financial capitals of London and Singapore, a billion and a half people within a three hour plane flight, and it is the perfect jumping off point to tap the emerging markets of South Asia.

"So essentially what's happened is that Sheikh Mohammed and the Maktoum family were able to convince people to come in vest money there," Kroft asks Makhoul.

"Well they articulated a very good case or investing in Dubai. And I think they jump started it with some of their own investments," Makhoul explains.

The initial investment was made by Sheikh Mohammed's father, who decided to dredge a coastal waterway called "The Creek," which had been the center of Dubai's commercial activity for centuries. It was the beginning of what would become one of the largest ports in the world and a major transshipment point for goods headed to and from Asia.

Next, Sheikh Mohammed came up with the idea of turning Dubai into an international center for finance and media. He set up a series of free trade zones, promising no taxes, minimal regulation, and special incentive to corporations willing to locate to the emirate.

And he began building it all, convinced they would come. And they have.

"It's an amazing experiment," Dr. Omar Bin Sulaiman, the governor of Dubai's financial district, tells Kroft. "Everything is done with risks, but calculated risks."

Since it opened three years ago, the Dubai International Finance Center has attracted banks, investment firms, and capital from around the world. And according to Dr. Bin Sulaiman, this is just the beginning of what will eventually be a city within a city.

What is the financial district going to look like in five years?

"Five years from now you're gonna see towers on your right, towers on your left. You're gonna see a kilometer-and-a-half garden where you can exercise. And if you're bored of that, you can go underneath it for a kilo-and-a-half shopping mall," Bin Sulaiman explains.

"Kilo and a half, that's more than a mile?" Kroft asks.

"Yes. And it is not the largest shopping center in the world. Because that's next door," Bin Sulaiman tells Kroft, laughing.

Next door is the Burj Dubai development, where the largest shopping center in the world is under construction at the base what will become the world's tallest building.

It is being built by Emaar Properties, by some measures the world's largest real estate developer. It is one-third owned by Sheikh Mohammed and the Dubai government, which has a financial stake in almost all of the development in the emirate.

Emaar's chairman, Mohamed Alabbar, took 60 Minutes up to what was then the top of the building, past what will be the first Giorgio Armani hotel, and floor after floor of million dollar apartments. It was already nearly a mile high, and when it is finished it will be twice as tall as the Empire State Building.

But Alabbar isn't worried about finding tenants with deep pockets. "We are about 85 percent sold. We sold 1.1 billion U.S. in two nights, which is really amazing," Alabbar explains.

Alabbar, educated in the United States, is one of Sheikh Mohammed's young lions, protégés hand picked by the sheikh to run one of his largest enterprises.

Another is Sultan Ahmed bin Sulayem, the chairman of Dubai World, who also runs a significant part of Sheikh Mohammed's business empire. "I think he looks at Dubai. What does Dubai need? What is missing in Dubai? And when he thinks there's something missing, we're gonna do it," Sultan Bin Sulayem says.