Mother-of pearl dashboards and diamond-encrusted hood ornaments at the Dubai International Motor Show this week underlined how the safe-haven status of the United Arab Emirates is fuelling dramatic growth in sales of luxury cars.
The market was hit hard by the 2008-2009 global financial crisis and recovered only partially last year. But this year's political unrest in the Arab world boosted sales in the UAE, which was spared such turmoil. Companies and individuals from around the region looked for a safe haven in Dubai, a key Gulf business hub
"The uprisings...have provided confidence that Dubai is important from a security point of view," said Michel Ayat, chief executive of AW Rostamani Automotive, which sells Nissan's luxury Infiniti models.
With Brent oil prices above $100 a barrel, promising continued economic growth for the UAE, a debt crisis in Europe and financial stormclouds in the United States have also largely failed to deter wealthy consumers. The UAE economy is expected by analysts to grow about 3.8 percent this year.
"The crisis is everywhere. [But] even if the local has nothing to eat, that's no problem if he has a luxury car," joked Emirati businessman Salem Seif, 28, eyeing a new Porsche Cayenne sport utility vehicle at the motor show.
Porsche in Dubai sold 211 new cars in August, the best-ever performance for any Porsche showroom globally, with the Cayenne remaining the brand's top seller. Sales for the first eight months of this year are up 46 percent from a year earlier, said Vijay Rao, the showroom's general manager.
In the UAE, the Gulf's largest market for luxury cars, total sales are expected to jump 32 percent to 25,010 this year after a 16 percent rise in 2010, consultants IHS Automotive forecast.
That would be the fastest growth in the Gulf and exceed volumes seen in the oil-boom years before 2008, when access to credit was easier. Luxury cars account for 9 percent of the country's car sales.
And many of them are being bought by young customers just getting a taste for such vehicles; some 66 percent of all new car purchases in the UAE, which has the world's sixth highest per capita income at over $47,000, are made by customers between the ages of 18 and 29, according to Business Monitor International.
A moderate economic slowdown looks likely in the UAE next year if the global outlook worsens, and this could cool the luxury car market. Dubai's safe-haven effect may also fade as partial political stability returns to other Arab countries; in the last few months, rapid growth in deposits at UAE banks has slowed, central bank data shows, suggesting there are no longer big inflows of foreign money seeking a refuge from political turmoil.