Claim: Dubai is a capital.

Dubai -LRB- -LSB- duːˈbaɪ -RSB- ; دبي , Gulf pronunciation : -LSB- dʊˈbɑj -RSB- -RRB- is the largest and most populous city in the United Arab Emirates -LRB- UAE -RRB- . It is located on the southeast coast of the Persian Gulf and is the capital of the Emirate of Dubai , one of the seven emirates that make up the country . Abu Dhabi and Dubai are the only two emirates to have veto power over critical matters of national importance in the country 's legislature . The city of Dubai is located on the emirate 's northern coastline and heads the Dubai-Sharjah-Ajman metropolitan area . Dubai will host World Expo 2020 .   Dubai emerged as a global city and business hub of the Middle East . It is also a major transport hub for passengers and cargo . By the 1960s , Dubai 's economy was based on revenues from trade and , to a smaller extent , oil exploration concessions , but oil was not discovered until 1966 . Oil revenue first started to flow in 1969 . Dubai 's oil revenue helped accelerate the early development of the city , but its reserves are limited and production levels are low : today , less than 5 % of the emirate 's revenue comes from oil .   The emirate 's Western-style model of business drives its economy with the main revenues now coming from tourism , aviation , real estate , and financial services . Dubai was recently named the best destination for Muslim travellers by Salam Standard . Dubai has recently attracted world attention through many innovative large construction projects and sports events . The city has become iconic for its skyscrapers and high-rise buildings , in particular the world 's tallest building , the Burj Khalifa . Dubai has been criticised for human rights violations concerning the city 's largely South Asian and Filipino workforce . Dubai 's property market experienced a major deterioration in 2008 -- 09 following the financial crisis of 2007 -- 08 , but the emirate 's economy has made a return to growth , with a projected 2015 budget surplus .   , Dubai was the 22nd most expensive city in the world and the most expensive city in the Middle East . In 2014 , Dubai 's hotel rooms were rated as the second most expensive in the world , after Geneva . Dubai was rated as one of the best places to live in the Middle East by U.S. global consulting firm Mercer .