Dubai does not have to resort to tax reductions or sales to keep the retail sector booming - it can simply rely on a culture of oneupmanship.

The city-state's elite families are notorious shoppers and upmarket retailers see many clients in their stores on a daily basis. To these shoppers, there is no credit crunch or economic downturn, merely a new season and new fashions to buy.

Boutique 1 is the sort of achingly hip and expensive store that Dubai has become famous for and not even an impending financial crisis has deterred the fashionistas from filling its cash registers. The retailer has just opened a new $10 million (£6.5 million), 30,000 sq ft store that includes a book department, art gallery and spa, in addition to designer fashion labels.

Ziad Matta, Boutique 1's owner, said: “The timing of our opening is the worst possible, given the economic conditions, but trading has been very good. It has been above expectations.” Mr Matta believes that sales of luxury goods have not been hit by negative sentiment about the economy because of the competitive nature of fashion in the Gulf. “There is big competition between the ladies here and they cannot just turn it off,” he said. “ Unfortunately for their husbands, shopping is something they cannot stop doing. The last thing a fashionista wants is to be seen in last year's dress. There will always be weddings and social functions to go to and these ladies cannot wear the same thing twice.”

Boutique 1 is one of numerous luxury retailers in Dubai and it has tried to distance itself from department stores, such as Harvey Nichols and Saks Fifth Avenue, which have recently opened in the Gulf. Mr Matta hopes that the addition of Italian furniture, French artists and onsite manicures will give Boutique 1 the edge needed to capture the business of Dubai's high-end shopaholics.

Dubai at a glance

Dubai covers 3,885 sq km, is the second-largest member of the United Arab Emirates and has the largest population

The emirate's revenues are derived from trade, property and financial services. Revenues from oil and natural gas account for less than 6 per cent of the economy

Tourism is becoming an important component of Dubai's economy. At 321 metres (1,053ft), the Burj al-Arab is the world's tallest building, used exclusively as a hotel

Dubai is the world's second-largest distributor of gold bullion. It imports 360 tonnes a year and re-exports almost all of it

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