Dubai is well-established as the Gulf’s financial and trade hub, with a reported GDP of 390 billion DHS (110 billion USD) in 2017. The infrastructure is undisputed, with extensive connectivity, strong economic prospects, a low tax system and safe haven status. The fundamentals of real estate, health care and education are complemented by world-class amenities, while continually improving business legislations mean Dubai has long surpassed its regional peers. However, as the Gulf’s commercial landscape matures and other economies look to improve the ease of doing business, Dubai’s evolution must continue to cement its position as the location of choice for multinationals eyeing a Middle East headquarters.
We believe opportunity for future growth lies in the further development of Dubai’s soft infrastructure and aligned to the rapid improvements made on the hard infrastructure. To be a magnet for global corporations, Dubai needs to prove it has the foundations in place to attract the talent that will make these multinationals move.
Around 300 infrastructure projects have been completed since 2004, worth an estimated 42 billion Dirham (11.5 billion USD). A further 128 projects worth over 55 billion Dirham are in the planning or execution stages to be delivered by 2045, according to research from Knight Frank and MEED Projects. The commercial sector is transforming, with increasing accessibility via free zones having significant impact.
Let’s look at the numbers:
- Over 20 free zones and 39,000 active businesses (most SMEs) recorded in 2018;
- A 55.6% growth in Dubai’s domestic financial and business services sector in the last decade (second only to Shanghai);
- DIFC ranked among the top 10 global financial centres. 27.3 billion DH of foreign direct investment came in 2017, ranking it 10th globally, and flows of 17.76 billion in the first six months of the 2018.
The UAE climbed 10 spots to 11th place out of 190 in the World Bank’s annual ease of doing business rankings, in recognition of four reforms related to ease of starting business, getting electricity, registering real estate and gaining access to credit. These rankings reflect investor confidence in Dubai’s economy and reaffirm the diversity, competitiveness and attractiveness. What’s next?
How can Dubai best leverage its position as an entrepreneur hub and as a trading hub to be the destination of choice for entrepreneurs and global corporates seeking to start their business in the Middle East or seeking a base not just in the Gulf, but the wider region and beyond? The next era of development should revolve around investment in people and the youth via the soft infrastructure that makes Dubai one of the world’s most desirable places to live and work. We predict a conscious movement towards workspaces close to talent pools, which have the amenity, service and infrastructure to assist in the retention of that talent – either as entrepreneurs or to work for global corporates.
Corporates are settling in those locations where the talent concentrates rather than in those that simply provide financial incentives, have a historical connection with the company or meet with the locational preferences of the company’s leadership. Skilled staff determine the modern corporate location decision. As tech and creative talent gravitates towards locations that are urban, amenity rich, relatively affordable, and highly accessible with a solid transport infrastructure, companies follow.
This is where we see huge potential for Dubai. It has the transport, real estate, health care, and education infrastructure in place, lifestyles are among the best, and master planning for new communities, attractions and amenities continues.
So far, it is still behind the scenes, in the soft infrastructure, where there are great opportunities for further development to attract entrepreneurs and talent.
Financing and its availability is one of the most important elements for entrepreneurs, start-up companies and SMEs for running and starting a successful business. As financing is almost unavailable for entrepreneurs and SMEs in the UAE (Unite Arab Emirates) it is due to change course in the months to come. In our opinion non-bank or alternative lending options in the UAE should see an exponential rise, offering entrepreneurs and SMEs an opportunity to quicker – and secured – funds. Given that around 80% of small business loan applications are rejected, non-bank lending sources are due for a surge this year. One of the fastest-growing varieties of alternative finance schemes is peer-to-peer lending. In recent years, this new form of lending (crowd funding) has skyrocketed and in our opinion will further do so. While entrepreneurs and small businesses will have easier access to finance, it is imperative they focus on industry trends to stay ahead.
We expect to see more initiatives over the next and even this year as part of Smart Dubai 2021, the emirate’s critical vision to be the world’s smartest and happiest city. Its six pillars include smart economy, with innovative economic conditions fuelling entrepreneurship, smart living and smart people, based on a culture of conditional learning, innovation and participation in an inclusive society. Growth in these areas will help to bring talent to Dubai, making it more attractive for those global corporates eyeing the region and ensuring it maintains its pre-eminent position. Ultimately, in our opinion its people that will finally drive the next transformation in Dubai’s commercial sector.