V-shaped recovery in progress
31 August 2021, Khaleej Times – khaleejtimes.com
Dubai has been a shining light in an unpredictable year, showing signs of steady recovery and growth in the second half of 2021 onwards
The year 2020 was blemished by pandemic-driven volatility and halted progress all over the world. We were oscillating between uncertainty and loss. Yet, despite being in the midst of what can undoubtedly be called some of the worst of times, Dubai did anything but sit idle. As a city committed to global citizenship, 2020 presented an opportunity for the Emirate to embody this philosophy. It showed an excellent example through the extraordinary management of its health to contain and restrain the spread of Covid-19 and benefit the global society. Dubai’s resilience received global acclaim as the city refined its approach in real time, strictly safeguarding both visitors and residents, and the fruits of its labour were recognised when Dubai was the first city to welcome the world back.
Last year, the UAE saw a dip in the economy by 5.8 per cent in 2020 but there is a huge opportunity for turnaround now. The Central Bank reported that the country will see a 2.5 per cent growth this year and 3.6 per cent for non-oil sectors. Expo 2020 Dubai is expected to help in non-oil GDP growth through more fiscal spending, improvement in credit and employment and the relative stabilisation of real estate along with a lift of recovery in confidence.
Just earlier this month it was reported by Dubai Economy that there was a 63 per cent year-on-year (YoY) growth in trader licences during the first half of this year. The DED Trader Licence, launched by the Business Registration and Licensing (BRL) sector of Dubai Economy, supports freelancers and start-ups to handle their business operations online and on various social media accounts. This is a reflection of the city’s promotion of economic competitiveness through e-commerce and commitment to the government’s vision to drive digital transformation and e-platforms for commercial activities. Between January and June 2021, 3,243 trader licences were issued compared to 1,989 licences in the same period last year.
On this front Phil Malem, CEO of Serco Middle East commented, “The pandemic has given people more time to think about the experience side of services. Over the past few months, we have seen a strong drive to digitise government services to cater to the needs of citizens and residents. With digitisation comes a need for better service, which has never been more important and the need for it will only grow.”
With rapid and efficient vaccination and a recent an all-time country low of 990 new cases according to the UAE Department of Health as of Tuesday, August 24, the country is championing its way to an upward economic trajectory and readying to welcome the world before the start of the World Expo 2020 Dubai in October.
The UAE Central Bank expects to see a full economic recovery in 2022, with growth rising to a 3.5 per cent rate. Events such as the expo and the football World Cup in Qatar next year are foreseen to be boosting factors.
Construction and real estate
Real estate and the construction industry represent the essence of the country’s economy. For years, the health of real estate has determined the strength of our economy.
According to Mordor Intelligence, the UAE construction market was valued at $101.45 billion in 2020 and is expected to reach a value of $133.53 billion by 2026, registering a Compound Annual Growth Rate of 4.69 per cent from 2021 to 2026.
The government is also focusing on smart cities and has a similar front plan to digitise up to 1,000 government services and install 2,000 Wi-Fi hotspots across the country. Moreover, liberal trade policies in the country are attracting foreign investors, propelling the market.
As mentioned before, Expo 2020 Dubai is expected to boost the market especially in the hospitality segment — there are around 161 projects/45,753 rooms underway.
The outlook looks promising as the government continues with its infrastructure plans, given various government initiatives like the Energy Strategy 2050, the Sheikh Zayed Housing Programme, and the Dubai Tourism Strategy. The Abraham Accords with Israel has brought the development of a joint strategy to boost cooperation in the energy sector.
Dubai’s 2040 Urban Master Plan, which was recently launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai will dramatically transform the city. The plan maps out Dubai’s sustainable development for the next two decades, with an emphasis on enhancing the quality of life for residents and visitors to the city while reinforcing its reputation as a destination for investment, commerce, business and tourism.
In July Dubai’s Land Department reported 6,388 transactions worth Dh14.79 billion in June, the highest in value since 2014. This is 44.33 per cent higher in terms of volume and 33.2 per cent in value compared to May 2021.
Barry Lewis, Managing Director, ALEC noted that initially with the global supply chain being affected, shipping costs were higher, which spiked the prices of commodities and raw materials. “Industry players have adopted a ‘wait and see’ approach, with the consensus being that market recovery will accelerate through early 2022. The increase in oil prices bodes well for the economy and the surge in real estate transactions demonstrates the momentum of the residential market. We maintain an optimistic outlook — especially being situated in the UAE, which is proving to be an ideal destination.”
Hospitality and tourism
Dubai is already a fully-fledged, multi-faceted tourism hotspot and has been crowned as the fourth most-visited city according to the latest MasterCardGlobal Destination Cities Index (GDCI) report. During the most testing years for the global travel industry, Dubai continued to demonstrate why it is an established leisure hub.
Under the wise leadership of Sheikh Mohammed, the city’s hospitality and tourism industries implemented world-leading preventative measures. These initiatives, spearheaded by the ‘Dubai Assured Covid-19 Safety Compliance’ programme and three-phased, integrated marketing communications, allowed the country to successfully open and gave travellers the confidence to enter the city. These efforts were recognised by The World Travel and Tourism Council (WTTC), which awarded the city the ‘Safe Travels’ stamp.
With the exceptional cross-functional management of the situation, Dubai welcomed 5.51 million overnight visitors in 2020 compared to 2.66 million domestic hotel arrivals during the period July 2019 to May 2020, a staggering YoY growth of 106 per cent. Another achievement is that the city welcomed 1.44 per cent of all global travellers in 2020; an improvement of 0.3 per cent from 2019. Dubai’s Department of Tourism reported an astounding 3.7 million overnight visitors from July 2020 to May 2021. Its ‘Dubai Tourism Strategy’, aims to attract 21 to 23 million visitors by 2022 and 23 to 25 million visitors by 2025. For this cause, Hollywood A-listers Jessica Alba and Zac Efron recently filmed exhilarating ‘movie trailers’ to promote Dubai Tourism, featuring key spots in Dubai. The five-year Multiple Entry Tourist Visa also helped consolidate Dubai’s tourist position as it enables visitors to enter the UAE multiple times and remain in the country for an extendable 90 days.
“Since the beginning of March 2020, we saw a 900 per cent rise in content consumption and 1,700 per cent increase in mobile downloads. We foresee an exponential growth from 2022 onwards in this sector with a continuous demand and shift for higher quality entertainment.” Patrick Tillieux, CEO, OSN.
Without a doubt, the pandemic has accelerated the adoption of streamed video content and music in the region and boosted the popularity of online gaming even further. According to PwC’s MENA Entertainment & Media Outlook 2020-2024, “Digital entertainment led by OTT (‘over the top’ or streamed video services), gaming and digital music will grow at an accelerated pace towards 2024.” When national lockdowns were imposed in February last year, the report shows that in just two months, 50 per cent of OTT video subscribers increased the amount of time they spent watching television. Out of the total media revenue in the MENA, the same report forecasts that digital revenue will steadily reach 46 per cent of the revenues by 2024. Homegrown and international subscription services have added more local content as unique user numbers and hours spent watching increased. This is creating a ‘virtuous circle’ — OTT video revenues are expected to grow by 12.3 per cent CAGR between 2019 and 2024, spurred by greater choice on both regional and international OTT video platforms.
Over the last few years, Dubai’s authorities have developed visa initiatives to strengthen the emirate’s reputation as a leading business and investment destination.
Headlining is the 10-year renewable permanent residency Golden Visa programme awarded to individuals who have been integral to the UAE’s rapid development. Talented students, private investors and entrepreneurs can also avail themselves of the five-year renewable residency visa, which will encourage them to establish a strong foothold in Dubai, aiding the country’s economic growth. Another was the Virtual Working Programme in 2020, which enabled foreign working professionals and their families to relocate to Dubai while continuing to work remotely for their employers.
The new Al Quoz Creative Zone has been established as a dynamic hub for artists, designers, entrepreneurs and innovators to live, work and create. The integrated precinct will offer an array of facilities, services and incentives and encourages world-leading creative brands to open branches and shops in Al Quoz boosting and diversifying Dubai’s retail proposition. It will grant these entrepreneurs an exclusive ‘Al Quoz Creative Membership’. Its development reflects the main goals of the Dubai Creative Economy Strategy, which aims to double the creative industry’s contribution to Dubai’s GDP to five per cent within the next five years by increasing Dubai-based creative companies and creators from 8,300 to 15,000 and 70,000 to 140,000, by 2025, respectively.
Anass Boumediene, the co-founder and co-CEO, eyewa observed that the UAE’s young dynamic population, with a growing disposable income and high internet and smartphone penetration level, is reflected in the e-commerce demand. “Out of capitalistic necessity, all the retailers and service providers had to accelerate their digitalisation plans to survive. We expect to see the online penetration leapfrog over the next few years, across the MENA countries in all verticals.”