The Report: Dubai 2020
Although Dubai has traversed some challenging economic territory over recent years the economic stimulus of Expo 2020 preparation and more stable oil prices have eased this strain in 2019, and business sentiment has improved accordingly. With the long-anticipated expo event set to take place in 2020, attention has started to focus on the important question of sustaining the current economic momentum over the medium term.
Profile
Covering a total area of 83,600 sq km, the UAE borders Saudi Arabia to the west and south, and Oman to the east. Its coastline stretches from the south-eastern shore of the Gulf, nearly reaching the Strait of Hormuz in the north. By area, Dubai is the second largest of the emirates after Abu Dhabi, covering a total of around 4110 sq km. A series of land-reclamation projects beginning in the early 1990s increased the emirate’s geographic area by 200 sq km and also contributed to an expansion of its coastline. This chapter contains interviews with Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai; and Najeeb Mohammed Al-Ali, Executive Director, Expo 2020 Dubai Bureau.
Explore chapterEconomy
Dubai has traversed some challenging economic territory over recent years. Political tensions in the region, the 2007-08 global financial crisis and a prolonged decline in oil prices from late 2014 are together exerting downwards pressure on the emirate’s economic expansion. However, stable oil prices and the economic stimulus of Expo 2020 have eased this strain in 2019, and business sentiment has improved accordingly. With the long-anticipated Expo 2020 set to take place beginning on October 20 of that year, attention is already turning to the question of how the emirate will sustain its current economic momentum over the medium term. This chapter contains interviews with Hamad Buamim, President and CEO, Dubai Chamber of Commerce and Industry; and Sami Al Qamzi, Director-General, Department of Economic Development.
Explore chapterBanking
Home to nearly one-third of the GCC’s banking assets, the UAE’s banking industry is the biggest in the region. Dubai is one of the nation’s two financial centres, and through its vibrant onshore and offshore markets, the emirate has established itself as an integral component of the global financial services sphere. Despite the adverse effects of low oil prices in recent years, the domestic banking sector has remained both well capitalised and liquid, while its financial performance has been characterised by rising net profits and lower cost-to-income ratios. This chapter contains interviews with Bernd van Linder, CEO, Commercial Bank of Dubai; and Elissar Farah Antonios, Cluster Head UAE, Levant and Iraq, Citi.
Explore chapterCapital Markets
Dubai’s status as a financial centre rests to a large extent on its advanced capital markets. The city’s various trading floors have played a regionally important role as pioneers of new instruments and market processes, and succeeded in attracting investment from both home and abroad. Competition for scarce liquidity in the Gulf has, however, increased significantly over recent years. With other exchanges in the region overhauling their regulatory frameworks in order to harness investment flows, Dubai’s regulators and exchange authorities are working hard to maintain its position as a key financial centre. This chapter contains an interview with Hamed Ali, CEO, Nasdaq Dubai.
Explore chapterIslamic Financial Services
The status of Dubai as a global financial centre means that it plays a central role in the domestic Islamic financial services sector. Thanks in large part to an ambitious government strategy, the sharia-compliant financial industry has emerged as a globally significant player. The combined assets of the world’s Islamic finance market have surpassed $2trn, and the UAE is home to around $222bn of that total. This establishes the country as the fourth-largest Islamic finance arena in the world, behind Iran, Saudi Arabia and Malaysia. The government has intensified efforts to develop the segment in recent years, aiming to establish Dubai as the epicentre of the Islamic economy.
Explore chapterInsurance
The UAE’s insurance market is the largest in the GCC, and Dubai-based institutions, whether catering to the domestic sphere or serving the region from the emirate’s renowned financial free zone, play a central role in it. Dubai has a growing and multi-tiered insurance sector, with a conventional market as well as an offshore segment that features specialists and reinsurers that cover other markets in the region. A challenging economic environment sparked by low oil prices and an ongoing process of regulatory reform have slowed premium growth over the past year, but an increasingly efficient sector has succeeded in maintaining aggregate profitability levels. Both regulatory reform and market volatility remain factors that will significantly affect growth prospects in 2020.
Explore chapterTransport & Logistics
While Dubai’s reputation as an important maritime trade and air transport centre is already well established, the emirate is also rapidly emerging as a leader in transport and logistics innovation. Dubai’s transport and logistics sector experienced strong growth in 2019, continuing to underpin the emirate’s wider economy. Much of the current investment activity in the sector is being injected into transport infrastructure projects for Dubai Expo 2020, which is expected to attract over 25m visitors. However, the local government is also considering the long term, and there is a strong pipeline of transport infrastructure projects planned under the Traffic and Transportation Plan 2030, the emirate’s overarching long-term transport development programme, to expand roads, airport capacity and public transport routes.
Explore chapterMaritime
Despite slowing global economic growth and geopolitical tensions placing renewed pressure on international shipping, Dubai’s maritime sector has continued to strengthen. In 2019 the emirate moved up in the ranking of the world’s top-10 maritime capitals, securing the ninth spot, compared to its position of 10th in 2017. Today, the emirate is the leading maritime centre in the Middle East, India and Africa. Its rapid rise from a quiet fishing port in the 1970s to a regional and global shipping centre handling $354bn in non-oil trade comes down to careful planning, government investment and an attractive regulatory framework that is straightforward for logistics firms. This chapter contains an interview with Sultan Ahmed bin Sulayem, Group Chairman and CEO, DP World; Chairman, Dubai Maritime City Authority; and Chairman, Virgin Hyperloop One.
Explore chapterConstruction & Real Estate
Construction in Dubai was a major factor in the expansive economic growth seen in the early 2000s. However, the sector has witnessed a slowdown in recent years as lower oil prices depressed consumer demand. This was particularly the case for real estate, which slowed building activity. The investment prospects associated with Expo 2020 and a raft of regulatory reforms aimed at attracting foreign investors have helped to stabilise the real estate market, and many industry players are optimistic that the period of lower growth levels is coming to an end. The authorities are confident that Expo 2020 will not only stimulate real estate activity, but also the wider economy.
Explore chapterTourism
Attention in Dubai has already started to shift beyond Expo 2020 to the emirate’s long-term prospects as a tourism destination. Passenger numbers at its airport, one of the busiest in the world, have not been unaffected by regional economic headwinds. Nor have hotel occupancy rates and average daily rates emerged unscathed from the pre-expo supply boost. But the emirate remains a major draw, and by and large there is a sense among public and private sector stakeholders that the constant mining of new source markets, fine-tuning of regulation and willingness to adapt to changing visitor expectations will generate enough momentum to maintain growth both in the lead-up to Expo 2020 and beyond. This chapter contains an interview with Jose Silva, CEO, Jumeirah Group.
Explore chapterRetail
For many residents, tourists and developers, retail remains a core part of Dubai’s identity. The sector contributes just over one-quarter of the emirate’s GDP, and is set to continue expanding. However, optimism surrounding the influx of new supply is tempered by slower economic growth brought on by lower oil prices. In this context, sector stakeholders are looking to Dubai Expo 2020 to provide a welcome boost to the sector. At the same time the growth of e-commerce is being actively supported by the government, which sees an opportunity to create a regional e-commerce centre within the logistics district in Dubai World Central. This chapter contains interviews with Colm McLoughlin, Executive Vice-Chairman and CEO, Dubai Duty Free; and Patrick Chalhoub, CEO, Chalhoub Group.
Explore chapterEnergy
While upstream oil and gas revenue provided much of the financing for Dubai’s early development, the emirate’s road to modernisation has been built around economic diversification. Having historically relied upon natural gas imports for its electricity, Dubai is gradually reducing its dependence on hydrocarbons imports by investing in a range of power generation projects. This includes a number of plans to develop renewable energies, particularly solar power, as the emirate seeks to position itself as a regional and global centre for clean energy solutions. This chapter contains interviews with Saeed Mohammed Al Tayer, Managing Director and CEO, Dubai Electricity and Water Authority; and Ahmad bin Shafar, CEO, Empower Dubai.
Explore chapterHealth
Medical tourism, pharmaceutical production and changes to insurance billing are the chief talking points in Dubai’s health sector at present. The private sector has led rapid growth in recent years, and while high average health spend and a favourable regulatory environment continue to encourage new hospital operators to enter the market, a tilt in the supply-demand balance means providers must closely watch market needs. In the long term a growing population, supportive governance and a focus on non-communicable diseases are likely to continue to create opportunities for both international and local players.
Explore chapterEducation
In a short time Dubai has established a vibrant education sector with an increasing variety of choice at all levels. While the private segment continues to dominate, recent reforms have seen major improvements to public sector schooling, modernising it and bringing it in line with international best practices. Inevitably, high rates of growth in the number of international schools and higher-education institutions have led to consolidation, gradually slowing expansion and creating greater barriers to entry for prospective players. In general, however, there remain opportunities for investors with savvy value propositions attuned to ongoing shifts in market needs in Dubai and in the broader region.
Explore chapterICT & Innovation
Dubai is looking to place itself ahead of global trends by investing heavily in ICT and innovation. With an already highly developed market for ICT products and services, the emirate is seeking to harness the transformative potential of digitalisation to facilitate government-to-government and government-to-citizen transactions, and increase efficiency across a range of industries. While the public investment-driven nature of the sector’s momentum contrasts with the private sector model pioneered by Silicon Valley in the US, the approach is proving to have its own advantages. At the same time, the emirate is leveraging its free zone network to attract international investment, while pursuing policies aimed at developing the start-up ecosystem. This chapter contains an interview with Aisha bin Bishr, Director-General, Smart Dubai Office.
Explore chapterIndustry
Fuelled by public infrastructure investment and attractive incentives for foreign investors, Dubai’s industrial sector continues to be a major driver of the emirate’s economic growth. While industrial output has been historically built on low-tech but high-value-added segments such as base metals and chemicals production, the emirate is pursuing a diversification agenda under its Dubai Industrial Strategy 2030. This policy appears to be paying dividends, with 2019 seeing growth in priority areas including the food and beverage segment as well as emerging industries such as auto manufacturing. Furthermore, with the reform of foreign ownership laws and the reductions in fees for businesses operating in the emirate’s free zones in 2019, foreign direct investment inflows are expected to rise steadily over the coming years.
Explore chapterTax
The UAE currently has no system of federal income taxation. Instead, most of the emirates – including Dubai – enacted their own corporate tax decrees in the late 1960s. These emirate-level decrees are of general application and remain in force as amended. These corporate tax decrees are similar in nature and text, and deal in broad terms with the identities of taxable persons, rates, administration, taxable profits and loss relief. The decrees limit the scope of taxation to “bodies corporate” carrying out a trade or business in the respective emirates. This chapter contains a viewpoint from Mark Schofield, Partner, PwC Middle East Tax & Legal Services Leader.
Explore chapterThe Guide
The guide contains listings of some of the leading hotels and resorts in Dubai, and contacts for important government offices and services. It also contains useful tips and information for first-time or regular and business and leisure visitors alike.
Explore chapterTable of Contents
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