Dubai International Financial Centre may have had its share of ups and downs over the past five years. But the new Chatham House study establishes the emirate as the financial centre in the world most likely to ‘become significantly more important over the next two to three years’. That is one big prize for any city.

Just as significantly, Dubai is ranked as number one financial hub where institutions are thinking of opening offices in the next few years.

Dubai’s rivals will be seething with their usual petty jealousy. Bahrain is ranked 39th while Qatar is ranked 47th in the study entitled ‘The Gulf as a Global Financial Centre: Growing Opportunities and International Influence’.

The study also noted to Dubai’s high ranking in the City of London’s Global Financial Centres Index in March, which ranked Dubai 24th, ahead of Shanghai, Stockholm, Brussels, Mumbai and Madrid; outside Europe and North America, Dubai was ranked fifth in the world in the London survey. Beirut, once a contender for the title of regional financial centre no longer even gets a mention.

When people ask how Dubai is going to fill all the real estate currently under construction, this is the answer: a regional financial centre has a huge demand for commercial and residential property. That is not to say there will not be periods of oversupply, or as at the present time, an undersupply of property.

However, financial institutions and their myriad of followers – lawyers, accountants and designer hairdressers – pay top dollar for rents. They can afford to at the prices they charge, and prestige real estate is part of their marketing image. Clients apparently feel more comfortable about paying high fees to a company that can afford prestige accommodation.

Therefore, to turn the worries about the Dubai real estate boom on its head: perhaps there will not be enough space to house every company that wants to come to Dubai; and almost certainly there will not be enough for several years, the very timeframe that many institutions are apparently aiming for if the Chatham survey is correct, and this is a very prestigious institution which will have done a very thorough study.

There is talk of a tripling of commercial space in Dubai over the next two years. If the track record of recent years is anything to go by, then four rather than two years is likely nearer the mark, as construction delays are endemic.

Of course, Dubai could not emerge as a regional financial hub if there was not a lot of money that now needs looking after. But thanks to the Third Great Oil Boom, the GCC economy has approximately tripled in size in just five years and the combined GDP will be well above $1 trillion (Dh3.67trn) in 2008, while external financial wealth in the form of sovereign wealth funds and foreign exchange reserves alone is more than $2trn.

Dubai is investing hugely to create an even stronger infrastructure to maximise its potential as a financial hub. One suggestion is that total state and quasi-state borrowing will top $32bn this year, up from $9bn for 2007. There are the A380s for Emirates Airline, the new airport terminal, the new Maktoum International Airport, the Dubai Metro, many new roads and interchanges, many new hotels and The Palm island trilogy.

Nothing succeeds like success, and Dubai is levering all its past experience in creating a trading hub and free zones to make a home fit for bankers and financiers from all over the world. But probably the biggest draw for these individuals will be the absence of personal and capital gains taxation. It is not only a question of earning tax-free income but having the facility to re-invest it for tax-free capital accumulation that is so attractive.

But not every resident of Dubai is going to win in this situation. It is already the case that the traditional middle classes of the city are finding life more expensive and housing cost in particular has increased greatly. With highly paid bankers and financial services professionals moving into the city, this is likely to become worse and not better, although if you can not beat them then the best solution is to join them.  

Those residents who have been patiently waiting for a market correction to buy real estate could also find their ambitions frustrated by a set of new residents with much higher spending power, and access to cheap housing finance from their well-capitalised employers.

But make no mistake about it; this is the future of Dubai and its ruler His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, is indeed seeing his personal vision spectacularly fulfilled.