The Report: Dubai 2013
Over the past four decades, Dubai has become one of the most important economic centers in the Middle East and a key destination for investors, tourists and corporations from around the world. The emirate boasts a diversified economy, an open business environment, and a multinational population and workforce, all of which have contributed to its reputation as a leading investment destination. “THE REPORT: Dubai 2013” highlights the opportunities for growth and expansion in the emirate.
Country Profile
This chapter includes information about Dubai’s history, geography, climate, demographics, government and political organisation. It also includes interviews with Kim Sung-hwan, Minister of Foreign Affairs and Trade in the Republic of Korea; Mohamed Alabbar, Chairman, Emaar; and a viewpoint with David Cameron, the UK Prime Minister.
Explore chapterEconomy
After weathering the effects of the global financial crisis, Dubai is swinging back toward a more guarded optimism as it regains its status among regional and international economies. In 2012 GDP was expected to reach $386bn, and the IMF estimates that GDP will continue growing, reaching $450bn in 2017. However, Dubai’s economy is currently operating at about 15% of capacity, implying that economic gains can be made by increasing efficiency and productivity. While the emirate still faces challenges relating to its exposure to regional and global volatility, efforts to strengthen the regulatory framework and improve oversight of GREs should help it to better withstand future turmoil in the global economy. This chapter includes interviews with Ahmad bin Byat, CEO, Dubai Holding; Abdulaziz Al Ghurair, Chairman, Al Ghurair Group; Hamad Buamim, Director-General, Dubai Chamber of Commerce and Industry; and Anand Sharma, Indian Minister of Commerce & Industry.
Explore chapterBanking
After facing some tough challenges in recent years, Dubai’s banking sector now shows signs of having turned the corner. Stronger regulation and more robust financials are providing a healthier environment for expansion, and significant progress has been made in tackling the legacy of the global financial crisis. In the year ahead banks are likely to remain conservative in their strategies, managing margins carefully in a tight environment. Regulatory changes should help to boost transparency and prevent unbudgeted risks. It is also widely expected that the banking sector will attract more Asian banks, as Chinese lenders are showing particular interest, especially firms with significant investments in Africa. The chapter includes an interview with Rick Pudner, CEO, Emirates NBD.
Explore chapterCapital Markets
Since the global crisis in 2008-09, when Dubai’s indexes plummeted and international interest waned, there has been much recovery, and certain sections – such as the commodities and precious metals segments – have boomed. The lessons learnt in this financial test have left the emirate’s exchanges and players stronger, with the fundamentals of this vibrant economy returning to bring on a second wave of market activity. Recent times have been characterised by cautious recovery in Dubai’s equity markets, and debt and commodities have continued to do well. The renewed activity on the emirate’s sovereign bond market is likely to be given another boost by the realisation of plans to issue the UAE’s first federal bonds. The market is also benefitting from a global surge in demand for Islamic debt instruments, while encouraging small and medium-sized enterprises (SMEs) to list is hoped to broaden and deepen the capital markets.
Explore chapterIslamic Financial Services
With global Islamic financial assets worth some $1.2trn at the end of 2011 and growth of 150% over the previous five years, Dubai has long been eager to take a bigger share of this rapidly expanding market. Indeed, the emirate has long been home to some of the region’s stand-out Islamic banks and insurers, with its sukuk – Islamic bond – market also of highly prominent international standing. Broadly speaking, despite the troubles following the global financial crisis, the largest Islamic banks in Dubai have begun to post solid results. Assets and liabilities continue to improve. In 2012 Islamic banks saw annual growth rates for deposits of around 15%, compared to 5% for conventional banking in the region. The financial picture for Dubai’s takaful companies is one of narrow margins and opportunities for future consolidation, as with the insurance sector. This chapter includes an interview with Adnan Chilwan, Deputy CEO, Dubai Islamic Bank.
Explore chapterInsurance
The UAE is one of the largest insurance markets in the Gulf region, and Dubai takes an impressive share of the country’s total premiums. There is still plenty of room for growth in life and general, with the period ahead likely to see more of this potential realised. More specifically, Dubai is moving toward compulsory health insurance, and there are signs that the infrastructure and real estate project pipeline is coming back to life. Demographics are also playing their part, as the emirate’s population swells and awareness of insurance needs grows; the population of the UAE grew by 5.6% in 2011 and is expected to keep increasing as the economy expands, creating a range of new opportunities for insurance companies. Moreover, legislative changes – particularly over health – will likely have a major impact when they are finally implemented, with some fierce future competition for the health segment widely expected.
Explore chapterTransport
The combination of Dubai’s central location and advanced infrastructure have attracted trade operators from around the world, and the emirate continues its legacy as a shipping point between East and West. In 2011 transportation, along with logistics, tourism and trade, accounted for 60% of Dubai’s GDP, the result of a number of recent investments. Authorities have initiated a $523m plan to build a series of interchanges and bridges to help increase traffic flow on Al Khail Road, one of the emirate’s most congested highways, while plans to increase aviation capacity should have a number of positive knock-on effects for other projects, facilities and aviation-related service providers. With major developments such as these – and growing trade volumes to support it – Dubai’s transport sector is set to be on steady footing in coming years. This chapter includes interviews with Mattar Al Tayer, Chairman and Executive Director, Roads and Transport Authority; Mohammed Ahli, Director-General, Dubai Civil Aviation Authority; Tim Clark, President, Emirates; Paul Griffiths, CEO, Dubai Airports; and Jamal bin Thaniah, Vice-Chairman, DP World.
Explore chapterConstruction & Real Estate
Dubai’s real estate market is poised for improvement in 2013, as the emirate works to regain its reputation as a leading regional destination for investment. Recovering from the losses suffered in the aftermath of the 2008-09 global economic downturn - when property prices fell by as much as 50-60% - the residential real estate market is now forecast to greatly benefit from rapid population growth. One indication of a resurgence in activity is the price of building materials, including steel and cement, which has markedly increased in recent years. Additionally, market maturation has led to expansion in the residential segment in recent years. Local developers are steadily adopting a more long-term investment mentality, both as a result of straightforward market forces and a series of new government regulations aimed at improving transparency. The chapter includes interviews with Sultan bin Mejren, Director-General, Dubai Land Department; and Hussain Sajwani, Chairman, DAMAC.
Explore chapterTourism
Since 2008 Dubai’s tourism sector has once again become a major economic contributor, following a downturn in the global economic crisis. In 2011 the industry attracted more than 9.3m tourists – up about 10% from the previous year – and contributed some 31% of the emirate’s total GDP. In the last couple of years political upheaval in the region has seen visitor numbers to popular tourist destinations in Egypt and Tunisia fall, with tourists instead favouring more stable destinations such as Dubai. Moreover, key segments such as local malls and other retail destinations have performed well, seeing an estimated 10% jump in spending. Indeed, shoppers from outside the UAE accounted for nearly 40% of the revenues local retailers brought in during the 2011 Dubai Shopping Festival. While challenges remain – including increasing competition from a number of other cities and countries in the region – if Dubai can maintain its current momentum, the emirate is well positioned to continue its reign as one of the world’s most popular and profitable tourism destinations for years to come. This chapter includes interviews with Helal Almarri, CEO, Dubai World Trade Centre; and Gerald Lawless, President and Group CEO, Jumeirah Group.
Explore chapterRetail
With wholesale and retail trade making up 30.7% of the emirate’s GDP in 2011, Dubai has become the Middle East’s chief retail centre. The emirate is home to one of the largest malls in the world, has a massive domestic consumption of retail goods and boasts a reputation as a prime shopping destination among well-heeled tourists. Despite a hiccup in numbers after the 2008-09 global financial crisis, the sector bounced back quickly, and the emirate continues to work to promote its image as a shopping destination for visitors from both East Asia and the West. With rising incomes among locals and expats alike, record-breaking numbers at the DSF and DSS, and a steadily increasing supply of international brands, local retailers are optimistic about the future. This chapter includes interviews with Iyad Malas, CEO, Majid Al Futtaim Holding; and Colm McLoughlin, Executive Vice-Chairman, Dubai Duty Free.
Explore chapterEnergy
Developed in 2010 and initiated in 2011, the Dubai Integrated Energy Strategy 2030 aims to guide the emirate’s energy sector toward sustainability and enhanced efficiency. Like other energy importers, Dubai faces challenges, including potential price fluctuations. By investing wisely when domestic supplies were abundant, however, much has already been accomplished to solidify the emirate’s position even as oil and gas production decline. Ground was broken in 2011 on a four-unit nuclear power plant in Braka. The first of the 1400-MW reactors is expected to come on-line in 2017, and the three subsequent reactors in 2018, 2019 and 2020. Likewise, more investment in renewable energy, particularly solar, could bring about positive changes for the sector. Although the government enjoys secure gas supplies from neighbours and allies, it is already mapping steps to lead Dubai – and the region – to a more sustainable, post-fossil-fuel future. This chapter includes interviews with Saeed Mohammed Al Tayer, Vice-Chairman, Dubai Supreme Council of Energy, and Saeed Khoory, CEO, Emirates National Oil Company.
Explore chapterHealth & Education
Leveraging its tremendous economic growth and high per capita income, Dubai has developed a robust health care system that provides a high level of medical services to its citizens. The Dubai Health Authority, responsible for the regulatory and strategic oversight of health services in the emirate outside the health care free zone, is further strengthening the sector through strategic partnerships to develop health care-related education facilities. However, while UAE health care expenditures are significant, at around $1450 per capita in 2010, they still lag behind global averages for OECD countries. Indeed, although the UAE accounted for 20% of the total GCC health care expenditures in 2009, this represented only around 3% of GDP. More positively, free zones are attracting investments and have seen tremendous growth of private clinics and specialised service centres. This strategy has also opened up a strong potential for medical tourism. This chapter includes interviews with Princess Haya bint Al Hussein, Chairperson, Dubai Healthcare City Authority; and Abdulla Al Karam, Chairman and Director-General, Knowledge and Human Development Authority.
Explore chapterTelecoms & IT
Dubai is well placed to capitalise on emerging trends in the ICT sector to drive economic growth. Indeed, information and communications technology is central to the emirate’s strategy to develop further as a knowledge-based economy. As a result, IT expenditure is expected to continue to expand rapidly, with a compound annual growth rate exceeding 11% until 2016. Digital storage solutions, computer hardware and IT services will likely drive much of this growth. Meanwhile, Dubai’s telecoms sector is also well positioned to continue growing rapidly. Boasting almost 13m mobile telephone connections, 1.9m fixed telephone connections and nearly 1m internet users, the sector plays an important role in the economy, contributing almost 5% of GDP and employing more than 10,798 people in 2011. Going forward, the sector is now at a turning point where the focus looks likely to shift from building infrastructure to developing content and services to leverage the hardware segment. This chapter includes interviews with Osman Sultan, CEO, Emirates Integrated Telecommunications Company (du); and Ahmad bin Humaidan, Director-General, Dubai eGovernment.
Explore chapterIndustry
In line with the goals laid out in the Dubai Strategic Plan 2015, industrial growth has done much to lead economic development and diversification. Although significant challenges like debt refinancing and regional competition could arise in the future, both the government and the private sector have proven their resilience in recent years. In particular, the manufacturing sector has seen strong export numbers, with direct exports growing nearly nine-fold between 2005 and 2011, from $3.05bn to $26.7bn. Of this, aluminium continues to be among the emirate’s largest industrial activities, accounting for 15% of manufacturing’s contribution to GDP. Meanwhile, the development of both industrial areas and free zones is continuing to impact the economy in a number of positive ways.
Explore chapterMedia
Dubai has emerged as a regional centre for the media industry over the past decade. Indeed, the resilience of the media through the recent economic crisis points to strong fundamentals that will continue to support the sector as it moves forward. Overall, revenues for the first nine months of 2012 in the region amounted to some $12.7bn, a 22% increase over the same period in 2011. While in many parts of the world the print sector has been struggling, for example, newspapers and magazines account for almost 40% of total advertising expenditure in Dubai. Looking ahead, perhaps the biggest area of growth potential is the digital media sector, which has grown from just $15m in 2009 to almost $79m in 2012, and is expected to double again by 2015. Ongoing support from the government and an increasingly transparent industry are likely to help with continuing to attract foreign participation in the sector.
Explore chapterTax
With cooperation from MERALI’S, this chapter outlines Dubai’s tax rules and regulations, including the steps that need to be taken to meet the legal requirements for firms looking to set up in the emirate. The chapter includes a viewpoint with Mahmud Merali, Managing Partner, MERALI’S.
Explore chapterLegal Framework
With assistance from SNR Denton, this chapter explains the options for foreign business operations, including how to set up in Dubai and rules on representative branches and local agents. It also outlines employment regulations and the rights of employees. The chapter includes a viewpoint with Michael Kerr, Managing Partner, SNR Denton.
Explore chapterThe Guide
This chapter includes a listing of the country’s leading hotels and resorts, as well as useful telephone numbers and facts for visitors, including information about language, weather, visas, currency and more.
Explore chapterTable of Contents
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