IN THE Arab emirate, engaged in a frenetic attempt to become a heavy-weight financial centre, the talk is big. Investments are measured, for the most part, not in hundreds of millions of dollars but in billions. The government-controlled investment arm of nearby Abu Dhabi, thanks to its huge reserves of oil, has assets running into hundred of billions.

Only 40 years ago this place was little more than a fishing village surrounded by sand. Now skyscrapers stretch as far as the eye can see in every direction. And alongside the big-earning, big-spending sheikhs are suited nonArab hawkers as ubiquitous as in any traditional bazaar or souk. Little by little, however, the needs of the small investor are coming to the fore. Indeed, the Arabian man in the street is being courted as a potential investor in the largest privatisation the region has experienced. The state of Dubai is selling 20 per cent of DP World, a port operator that bought P&O, one of the oldest of old- established UK trading companies. To say that it is Dubai’s equivalent of a British Telecom or British Gas sell- off would be pushing the point too far, but the mood is reminiscent of the atmosphere surrounding the 1980s, when UK small investors clambered over one another to get a slice of the privatisation action.

The yelps of excitement from Dubai’s small investors are still being drowned by the booming voices of the Government and other institutional interests. But the little guys play a pivotal role in the creation of financial centres in this part of the world. Forward-thinking sheikhs, such as Mohammed Al Maktoum, the kingpin here in Dubai, have spent vast sums building the infrastructure required if the economies here are to reduce their dependence on oil and gas. Transport, property, tourism and financial services are being pursued especially aggressively. Expatriates of all sorts are being attracted and play a vital role in keeping the economy spinning.

If the development is to be sustained, however, it must be open to, and embraced by, shopkeepers, taxi drivers, construction managers and perhaps even labourers. As investors – and, more importantly, as wage earners and consumers – they hold the key. Unless these people are brought in, the multibillion-dollar investments by the sheikhs may do no more than create a goldrush town destined, eventually, to be reclaimed by the desert.

Dubai’s need for diversification is especially pressing, since its oil riches have already dwindled. But other places, notably Abu Dhabi and Qatar, which still have decades of hydrocarbon wealth to extract, are acutely aware of the need to do more than pump oil. The price of the black stuff – now within striking distance of $100 a barrel – is notoriously volatile. Just as the sensible small investor should preside over a diversified portfolio, so the oil-rich Middle East states know the dangers of keeping too many eggs in one basket.

Are the rapidly developing Gulf economies ones that UK investors should enter? The short answer is yes. There are numerous risks: currency movement, laissez faire regulation and the comparatively small equity markets are all dangers. The underlying strength of the companies, and their host economies, may be unable to withstand the pressures and problems created by growth. Construction workers, the majority of whom are migrants from the Indian sub-continent, vented frustration at low wages and poor working conditions in civil disturbances last week. Their legitimate complaints leave rulers with a tangible case to answer. But while the authorities can act with justification to quell violence, they may also need to address the underlying issues with greater generosity.

The largest risk for investors, however, is that they will miss out on a long and profitable growth story. For now, the best, if not only, way in will be through professionally managed funds. There is money to be made buying into British companies developing trade links here. Serco, the UK-listed support services company that operates the Docklands Light Railway in London, has won a similar contract to run the Dubai metro. Profitable possibilities also lurk in following, or anticipating, the strategies of Gulf-based investors. Shareholders in J Sainsbury, the UK supermarket, will be pleasantly and profitably aware of what it means to be targeted by Qatari wealth, for example.

One way or another, however, investors must be alive to the opportunities presented by the ambitious Gulf states.