Economic diversification to stir Dubai real estate sector
DUBAI – Dubai’s drive to diversify its economy is key to the growth of the real estate sector in the emirate, according to Khatija Haque, head of MENA research at local bank Emirates NBD.
Speaking at MEED’s Dubai Real Estate 2020 conference on Monday, Haque said the Dubai economy is much different today than it was in 2008, when the market suffered its crash. Six years ago, construction and real estate accounted for one-third of the economy, but that figure now stands at about 21 per cent. This is partly due to a strong tourism sector, which has grown from 12 per cent to 16 per cent of the economy and is poised to grow even faster in light of Dubai hosting the World Expo in 2020.
The rise of tourism and other sectors, such as trade and medical tourism, and Dubai’s emergence as a financial hub, will also help support the resurgence of the property market. In addition, the rebound in the global economy is serving as a key pillar of growth in Dubai’s property sector.
Another key factor supporting the sustainability of the property market during the current growth phase is that fewer investors are relying on bank loans to finance purchases, Haque said. As a result, bank lending is no longer a main driver of real estate prices, which means the banking sector is much less exposed and so is in a much stronger position.
Asked if there is a risk that investment could dry up in Dubai if the political situation in the wider Middle East were to drastically improve, Haque said such a scenario is unlikely in the near term. “While we hope that the (political climate) in the region will improve, it is likely to be gradual. The situation in the region is not likely to change suddenly, so there is little risk of an impact on investment,” she said.
The Dubai Real Estate 2020 conference continues today with panel discussions and presentations focusing on the hospitality, residential, retail, office, industrial and social infrastructure sectors. Property experts and stakeholders will engage in a though leadership discussion on the risks and rewards of investing in the Emirate’s real estate market.
Part of MEED’s Destination Dubai 2020 initiative, the Dubai Real Estate 2020 Conference is also supported by Mashreq Bank, Colliers International and Drake & Scull.
Foreign trade rises to $87.9 billion in Q1
Dubai’s foreign trade totaled AED323 billion ($87.9 billion) in the first quarter of 2014, with China named as the emirate’s top trading partner.
Officials did not give the year-earlier figure for comparison but did say trade was experiencing “the same momentum it had in 2013” when it saw foreign trade of AED1.32 trillion, a rise of AED94 billion on the previous year.
In Q1, AED201.4 billion of trade were imports, AED26.5 billion exports and AED94.4 billion re-exports, a statement said.
It added that direct trade contributed 61 percent of Dubai’s foreign trade, while free zones contributed 38 percent and the customs warehouses made up the remainder.
China topped the list of Dubai’s trading partners in the first quarter of 2014, with a trading value of AED38.5 billion, compared to AED30.3 billion in the first quarter of 2013, up 27 percent.
China-Dubai trade constitutes 12 percent of the emirate’s overall foreign trade, keeping pace with the salient boom in China’s trade.
India came in second with eight percent of Dubai’s total foreign trade, equivalent to AED26.3 billion, followed by the US, Saudi Arabia and Switzerland.
Ahmed Mahboob Musabih, director of Dubai Customs, said: “The recorded foreign trade during the first quarter of 2014 portrays Dubai’s capability of adapting to all changes within the international trade variables.
“Dubai has continued to maintain its capacity towards expansion and growth of the trade sector due to the current flexible commercial environment which boosts the position of Dubai as global and regional premier trading hub. Over the first quarter of 2014, the emirate has been a strong competitor with key world trade powers such as China, the European Union, the United Kingdom and Japan.”
He said Dubai-EU trade soared by 17.3 percent with AED51.5 billion of business during Q1, compared to AED43.5 billion in the same period of 2013.
With Dubai transforming into the smartest city in the globe, telecommunication and information technology supplies took a focal place in major commodities traded through the emirate’s borders in the first quarter of 2014.
Mobiles and telephone sets held the lead with a market share worth AED43 billion.