Luxury at a Cost: Dubai’s Growth and the Cracks Beneath It

Just thirty minutes from Burj Khalifa, a global symbol of luxury, eight migrants share a small bedroom in overcrowded Al Quoz labour camp. This is Dubai’s paradox: a city of skyscrapers, artificial islands, and impressive growth, yet based on a fragile economic model labour exploitation, sustained by speculative capital, and external dependence. How long can this instability, rooted in inequality and unsustainable growth, last? This image of progress is no accident. Dubai has mastered the art of self-branding. The city has branded itself as a center for success and innovation with projects like Burj Khalifa and international events like Expo 2020, which attracted 24 million visitors and 192 nations. An EY report estimates Expo 2020 alone will contribute, between 2013 and 2040, $42.2 billion to the UAE’s economy. nbsp; Dubai emerged as a major global hub, given its strategic location, along with minimal taxation, Golden Visas, and investor-friendly regulations. In 2024, Dubai International Financial Centre produced over $480 million in revenue, while tourism hit a record 18.7 million visitors, accounting for about 12% of GDP. Together, these are powerful economic instruments that act as a true investment magnet and help diversification, but also reveal vulnerabilities and truths. Dubai’s success is a consequence of the people, not only money. nbsp; The population is expected to reach 5.8 million residents by 2040, compared to the 3.9 million observed nowadays, mostly driven by immigration. While most foreign workers work long hours under difficult conditions and earn only between $300 and $550 per month, in 2023, according to a Knight Frank report, 20% of homes were valued at over $1 million. Those contributing to prosperity are the very ones who are excluded from it. The kafala system plays a heavy role in this. The sponsorship ties workers’ visas to employers, granting them power over the mobility and pay of their employees, which often leading to passport confiscation and wage theft. The 2023 Global Slavery Index estimates that about 132,000 people live in modern slavery conditions in the United Arab Emirates. Without labour unions or collective representation, wages stagnate and domestic demand remains suppressed, representing a heavy barrier to inclusive, long-term growth. Today, 88% of the UAE’s population is migrants, mostly from South Asia and Africa, who make up over 90% of private-sector employees. Dubai follows a rich asset-driven growth model dependent on cheap foreign labor. Tourism and property appreciation sustain the prosperity illusion and luxury consumption, but, in reality, the true foundations are suppressed wages and weak domestic demand. It’s short-term efficiency at the cost of long-term inclusiveness. Dubai’s skyline keeps expanding, but true sustainability depends on depth, not height. Given its great reliance on foreign capital and tourism, the economy is left exposed to external shocks, such as oil price swings, geopolitical tensions or recessions. At the same time, oversupply of luxury housing risks creating a real estate bubble and a mismatch of supply and demand. In this case, a market correction could decrease real estate value and potentially damage the city’s finances and infamous reputation. nbsp; To fight these fragilities, the city launched ambitious sustainability initiatives like Expo City Dubai and the Clean Energy Strategy 2050. Nevertheless, issues like water scarcity and energy intensity still pose great threats not only to the environment, but also to investors’ confidence and future growth. This is not to minimize Dubais accomplishments. According to Bloomberg, the city was able to achieve an impressive diversification milestone - oil today accounts for less than 1% of its GDP, down from over 50% in the 1980s. The reality is, Dubai’s story is not unique. It’s a global growth model that hides the costs of progress - cheap labor, foreign capital and speculative assets - while celebrating it. Demographic pressures, property risks, and global fears threaten this tricky balance. nbsp; Therefore, the question is no longer whether Dubai can grow, it’s whether it can do it in a lasting way, for all its people, before the hidden cracks widen beyond repair.