Dubai Economy 2017 – Economy of Dubai UAE. Economy in Dubai, Dubai Economy Fact, Statistics and Dubai Economy Trends. Dubai Economy Expects Stronger Growth in 2017 as Economy Diversifies. The economy is expected to expand 3.1 percent, following growth of 2.7 percent in real terms in 2016, Sheikh Ahmed Bin Saeed Al Maktoum, chairman of the emirate’s Economic Development Committee, said in Dubai on Tuesday. This year will be “challenging” but “diversification and opening new markets” including Islamic finance and developing the renewable energy industry will aid the economy, Sami Al Qamzi, director general of the Dubai Department of Economic Development, said separately.
Growth in the United Arab Emirates, which includes Dubai, has been slowing since oil prices plummeted to below $30 a barrel. Authorities in Abu Dhabi and Dubai delayed projects and cut spending amid the slump. With crude recovering to about $55 a barrel this year, Dubai plans to increase spending and create jobs, according to its 2017 budget announced in December.
Last year’s growth was “despite continued lower oil prices, slower growth in developed and many emerging economies and slow growth in world trade,” Sheikh Ahmed said. The emirate plans to provide updates on its economic outlook twice a year in January and October. Dubai set up an economic team spanning all the emirate’s 13 government departments in December, said Raed Safadi, chief economic adviser to the development department. The team will provide an “early warning system” to detect and respond to trouble in any sector of the economy.
Dubai city has changed dramatically over the last three decades, becoming a major business centre with a more dynamic and diversified economy. Dubai enjoys a strategic location and serves as the biggest re-exporting centre in the Middle East.
Its low logistical and operational costs and excellent infrastructure, international outlook and liberal government policies are attracting investors in a big way. Activities such as trade, transport, tourism, industry and finance have shown steady growth and helped the economy to achieve a high degree of expansion and diversification.
In order to assist those interested in obtaining further details about the Dubai economy , pages have been provided below with the latest data for key socio-economic indicators. They contain tables on Dubai Economic Statistics extracted from the “Dubai Socio-Economic Development Indicators” including a wide range of current data on the Dubai economy and society. Also, other pages contain the Quarterly Indicators as well as information about Investment in Dubai, industrial projects and commercial/ business centers.
Economy of Dubai, United Arab Emirates
Dubai city has established itself as a prominent regional hub for finance, trade, tourism, and shopping. Dubai’s gross domestic product as of 2008 was US $82.11 billion. The Great Recession slowed the construction boom.
The International Herald Tribune has described it as “centrally-planned free-market capitalism.” Although Dubai’s economy was initially built on revenues from the oil industry, revenue from petroleum and natural gas currently account for less than 20% of the emirate’s gross domestic product.
Dubai city became important ports of call for Western manufacturers. Most of the new city’s banking and financial centres were headquartered in the port area. Dubai maintained its importance as a trade route through the 1970s and 1980s. The city of Dubai has a free trade in gold and until the 1990s was the hub of a “brisk smuggling trade” of gold ingots to India, where gold import was restricted.
Today, Dubai has focused its economy on tourism by building hotels and developing real estate. Port Jebel Ali, constructed in the 1970s, has the largest man-made harbor in the world, but is also increasingly developing as a hub for service industries such as IT and finance, with the new Dubai International Financial Centre (DIFC). Emirates Airline was founded by the government in 1985 and is still state-owned; based at Dubai International Airport, it carried over 49.7 million passengers in 2015.
According to Healy Consultants, Dubai is the top business gateway for the Middle East and Africa. The government has set up industry-specific free zones throughout the city in hopes of giving a boost to Dubai property. Dubai Internet City, now combined with Dubai Media City as part of TECOM (Dubai Technology, Electronic Commerce and Media Free Zone Authority) is one such enclave whose members include IT firms such as EMC Corporation, Oracle Corporation, Microsoft, Sage Software and IBM, and media organisations such as MBC, CNN, Reuters and AP.
Dubai Knowledge Village (KV), an education and training hub, is also set up to complement the Free Zone’s other two clusters, Dubai Internet City and Dubai Media City, by providing the facilities to train the clusters’ future knowledge workers.
Dubai Outsourcing Zone is for companies who are involved in outsourcing activities can set up their offices with concessions provided by Dubai Government. Internet access is restricted in most areas of Dubai with a proxy server filtering out sites deemed to be against cultural and religious values of the UAE.
Jebel Ali Port
One of the world’s fastest growing economies, Dubai’s gross domestic product is projected at US$107.1 billion, with a growth rate of 6.1% in 2014. Although a number of core elements of Dubai’s trading infrastructure were built on the back of the oil industry, revenues from oil and natural gas account for less than 5% of the emirate’s revenues. It is estimated that Dubai produces 50,000 to 70,000 barrels (7,900 to 11,100 m3) of oil a day and substantial quantities of gas from offshore fields.
The Dubai’s share in the UAE’s total gas revenues is about 2%. Dubai’s oil reserves have diminished significantly and are expected to be exhausted in 20 years. Real estate and construction (22.6%), trade (16%), entrepôt (15%) and financial services (11%) are the largest contributors to Dubai’s economy.
Dubai’s non-oil foreign trade stood at $362 billion in 2014. Of the overall trade volumes, imports had the biggest share with a value of $230 billion while exports and re-exports to the emirate stood at $31 billion and $101 billion respectively.
By 2014, China had emerged as Dubai’s largest international trading partner, with a total of $47.7 billion in trade flows, up 29% from 2013. India was second among Dubai’s key trading partners with a trade of $29.7 billion, followed by the United States at $22.62 billion. The Kingdom of Saudi Arabia was Dubai’s fourth trading partner globally and first in the GCC and Arab world with a total trade value of $14.2 billion. Trade with Germany in 2014 totalled $12.3, Switzerland and Japan both at $11.72 billion and UK trade totalled $10.9 billion.
Historically, Dubai and its twin across Dubai Creek, Deira (independent of Dubai City at that time), were important ports of call for Western manufacturers. Most of the new city’s banking and financial centres were headquartered in the port area. Dubai maintained its importance as a trade route through the 1970s and 1980s.
Dubai has a free trade in gold and, until the 1990s, was the hub of a “brisk smuggling trade” of gold ingots to India, where gold import was restricted. Dubai’s Jebel Ali port, constructed in the 1970s, has the largest man-made harbour in the world and was ranked seventh globally for the volume of container traffic it supports.
Dubai is also a hub for service industries such as information technology and finance, with industry-specific free zones throughout the city. Dubai Internet City, combined with Dubai Media City as part of TECOM (Dubai Technology, Electronic Commerce and Media Free Zone Authority), is one such enclave, whose members include IT firms such as Hewlett-Packard, EMC Corporation, Oracle Corporation, Microsoft, Dell and IBM, and media organisations such as MBC, CNN, BBC, Reuters, Sky News and AP.
The government’s decision to diversify from a trade-based, oil-reliant economy to one that is service- and tourism-oriented made property more valuable, resulting in the property appreciation from 2004 to 2006. A longer-term assessment of Dubai’s property market, however, showed depreciation; some properties lost as much as 64% of their value from 2001 to November 2008.
The large-scale real estate development projects have led to the construction of some of the tallest skyscrapers and largest projects in the world such as the Emirates Towers, the Burj Khalifa, the Palm Islands and the most expensive hotel, the Burj Al Arab. Dubai’s property market experienced a major downturn in 2008 and 2009 as a result of the slowing economic climate.
By early 2009, the situation had worsened with the Great Recession taking a heavy toll on property values, construction and employment. This has had a major impact on property investors in the region, some of whom were unable to release funds from investments made in property developments.
As of February 2009, Dubai’s foreign debt was estimated at approximately $80 billion, although this is a tiny fraction of the sovereign debt worldwide. Dubai real estate and UAE property experts believe that by avoiding the mistakes of the past, Dubai’s realty market can achieve stability in the future.
The Dubai Financial Market (DFM) was established in March 2000 as a secondary market for trading securities and bonds, both local and foreign. As of fourth quarter 2006, its trading volume stood at about 400 billion shares, worth $95 billion in total. The DFM had a market capitalisation of about $87 billion.
The other Dubai-based stock exchange is NASDAQ Dubai, which is the international stock exchange in the Middle East. It enables a range of companies, including UAE and regional small and medium-sized enterprises, to trade on an exchange with an international brand name, with access by both regional and international investors.
Dubai is also known as the City of Gold, because a major part of the economy is based on gold trades, with Dubai’s total gold trading volumes in H1 2011 reaching 580 tonnes, with an average price of US$1,455 per troy ounce.
A City Mayors survey ranked Dubai 44th among the world’s best financial cities in 2007, while another report by City Mayors indicated that Dubai was the world’s 27th richest city in 2012, in terms of purchasing power parity (PPP).
Dubai is also an international financial centre (IFC) and has been ranked 37th within the top 50 global financial cities as surveyed by the MasterCard Worldwide Centres of Commerce Index and 1st within the Middle East.
Since it opened in September 2004, the Dubai IFC has attracted, as a regional hub, leading international firms and set-up the NASDAQ Dubai which lists equity, derivatives, structured products, Islamic bonds (sukuk) and other bonds. The Dubai IFC model is an independent risk-based regulator with a legislative system consistent with English common law.
In 2012, the Global City Competitiveness Index by the Economist Intelligence Unit ranked Dubai at No. 40 with a total score of 55.9. According to its 2013 research report on the future competitiveness of cities, in 2025, Dubai will have moved up to 23rd place overall in the Index. Indians, followed by Britons and Pakistanis are the top foreign investors in Dubai realty.
Dubai has launched several major projects to support its economy and develop different sectors. These include Dubai Fashion 2020, and Dubai Design District, expected to become a home to leading local and international designers. The AED 4 billion first phase of the project will be complete by January 2015.
Real estate and property Developments in Dubai
The government’s decision to diversify from a trade-based but oil-reliant economy to one that is service- and tourism-oriented resulted in the property boom from 2004–2008. Construction on a large scale has turned Dubai into one of the fastest-growing cities in the world.
Expatriates of various nationalities brought capital into Dubai in the early 2000s. Iranian expatriates were estimated to have invested up to $200 billion in Dubai. From 2005 to 2009, trade between Dubai and Iran tripled to $12 billion.
The property boom is largely driven by megaprojects such as the off-shore Palm Islands and The World, and the inland Dubai Marina, Burj Khalifa complex, Dubai Waterfront, Business Bay, Dubailand and Jumeirah Village.
Dubai is home to skyscrapers such as Emirates Towers, which are the 12th and 24th tallest buildings in the world, and the Burj-al-Arab hotel, located on its own artificial island and currently the world’s fifth tallest and most expensive hotel.
Emaar Properties constructed world’s current tallest structure, the Burj Khalifa. The height of the skyscraper is 828 m (2,717 ft) tall, with 160 floors. Adjacent to Burj Khalifa is the Dubai Mall, which at the time of construction was the world’s largest shopping mall.
Also under construction is what is planned to become Dubai’s new central business district, named Business Bay. The project, when completed, will feature 500 skyscrapers built around an artificial extension of the existing Dubai Creek.
In February 2005, the construction of Dubai Waterfront was announced, it will be 2½ times the size of Washington, D.C., roughly seven times the size of the island of Manhattan. Dubai Waterfront will be a mix of canals and islands full of hotels and residential areas that will add 800 km (500 mi) of man-made waterfront. It will also contain Al Burj, another one of the tallest buildings in the world.
Dubai has also launched Dubai Science Park (previously DuBiotech and merged with EnPark). This is a new business park to be targeted at biotechnology companies working in pharmaceuticals, medical fields, genetic research and biodefense.
One of Dubai’s plans in 2006 was for a 30-story, 200 apartment skyscraper that will slowly rotate at its base, making a 360 degree revolution once a week. The world’s first rotating skyscraper was to be in the center of the Dubailand complex.
The International Media Production Zone is a project targeted at creating a hub for printers, publishers, media production companies, and related industry segments. Launched in 2003, the project was scheduled to be completed in 2006.
In May 2006 the Bawadi was announced, with a planned 27 billion US-dollar investment intended to increase Dubai’s number of hotel rooms by 29,000, doubling it from the current figure offers now. The largest complex was to be called “Asia, Asia” and was planned to be the largest hotel in the world with more than 6,500 rooms.
The first villa freehold properties that were occupied by non-UAE nationals were The Meadows, The Springs, and The Lakes (high-end neighbourhoods designed by Emaar Properties, collectively called Emirates Hills).
Expatriates of various nationalities brought capital into Dubai in the early 2000s. Iranian expatriates were estimated to have invested up to $200 billion in Dubai. From 2005 to 2009, trade between Dubai and Iran tripled to $12 billion.
Dubai nationals have also purchased real estate in New York City and London. Purchases in 2005 included New York’s 230 Park Avenue (formerly known as the New York Central Building or the Helmsley Building) and Essex House on Central Park South.
The Dubai property boom of the mid-2000s peaked in 2008 and plummeted in a wave of activity which saw large scale projects, including partially completed properties, abandoned. Many developers failed, while others, including those with government backing, entered into debt-restructuring deals with their lenders.
By 2012 the market began picking up steam again. 2013 was a stellar year with prices accelerating significantly, however the government and industry players began putting in place measures that would safeguard against another bubble developing. One notable difference is the number of cash buyers compared to those in previous years that borrowed heavily. Part of the reason for the current cash surge is the influx of investment from troubled countries.
In September 2013, the Dubai Land Department increased property transfer fees from 2 to 4%. In early 2014 the government regulator imposed restrictions on outside-companies acquiring real estate in the emirate, insisting such companies had to have a presence in Dubai, and had to be owned by a natural person or persons, and not by another company. The measures were largely seen as a means to dampen speculation in property prices.
Dubai Construction Developments
Since 2000, Dubai’s municipality has initiated construction phases in the city, predominantly in the Mina Seyahi area, located further from Jumeirah, towards Jebel Ali. This has come at a cost however. Dubai construction companies employ low-wage labourers from Asia for up to 12 hours a day, six or seven days a week. These workers often have their passports withheld and are threatened if they speak to media. During the 1990s and 2000s, many workers staged protests and those who were expats were deported.
In 2002 a change was made to the law allowing non-nationals of the UAE to own property (not land) in Dubai as fee simple, and 99-year leases are sold to people with ownership remaining with private companies. Property companies include Nakheel Properties and Emaar Properties. Rent rises were capped at 7% per annum up to 2007 under a directive from Mohammed bin Rashid Al Maktoum. Legislation in this area is still developing as the property market for foreigners is relatively new.
Dubai Diamond Trading
Dubai has become the world’s third largest diamond trading hub, with trade of rough and cut diamonds increasing since 2001. The emirate’s diamond trade was virtually nonexistent at the beginning of the 2000s, but was worth nearly $35 billion in 2013 and 2014.
The emirate has been able to leverage off its geographical position between major supplies of mined diamonds in Africa, to the main cutting centres in India and further east in China. There is also a perception of Dubai as a buying hub for consumers of diamonds jewellery, due to the large number of jewellers in the emirate and the tax-free business regime.
The diamond trading takes on an exchange managed by the Dubai Multi Commodities Centre, with many of the industry participants housed in office space in the Almas Tower in the JLT business cluster. Facilities there include Kimberley Process Certification offices and access to secure transportation agencies such as Brinks and Transguard, in addition to networking and meeting rooms.
Dubai Gold Trading
Trade in gold grew during the 1940s due to Dubai’s free trade policies that encouraged entrepreneurs from India and Iran to set up stores in the Dubai Gold Souk. Despite a general slump in the global gold market, Dubai’s share of value of trade in gold and diamonds to its total non-oil direct trade increased from 18% in 2003, to 24% in 2004. In 2003, the value of trade in gold in Dubai was approximately Dh. 21 billion (US$5.8 billion), while trade in diamonds was approximately Dh. 25 billion (US$7 billion) in 2005. India is Dubai’s largest buyer of gold, accounting for approximately 23% of the emirate’s total gold trade in 2005. Switzerland was Dubai’s largest supplier of gold ingots, wastes and scrap. Similarly, India accounted for approximately 68% of all diamond-related trade in Dubai; Belgium’s share in Dubai’s diamond trade was about 13% (2005).
Dubai Industry and manufacturing
Dubai is also home to some significant industrial ventures in energy production through DEWA, although this is primarily water and power production for Dubai. In the alumninium industry Emirates Global Alumninium produces 2.4 million tonnes of aluminium per year (~$3.8B USD in revenue). There is also investment in car manufacturing with Zarooq Motors; the start of UAE car industry. Production and sales are due to begin in 2016. Dubai Ports is also an example of industrialization in Dubai.
Why Choose Dubai As An Investment Location?
The Dubai economy enjoys a competitive combination of cost, market and environmental advantages that create an ideal and attractive investment climate for local and expatriate businesses alike. In fact, these advantages not only rank Dubai as the Arabian Gulf’s leading multi-purpose business center and regional hub city, but they place it at the forefront of the globe’s, dynamic and emerging market economies.
Dubai, with its ancient commercial and seafaring traditions, has long been recognized as the Middle East region’s leading trading hub and has emerged as its key re-export center. In more recent years, the Emirate has become a major venue for a number of growing, profitable industries and activities:
• Meetings, conferences, exhibitions
• Corporate regional headquarters
• Regional transport, distribution and logistics center
• Banking, finance and insurance
• Business and industrial consulting
• Information and Communications Technology
• Light and medium manufacturing
This all became possible due to Dubai’s warm, welcoming people, world class facilities and infrastructure and farsighted, open and liberal economic policies. Finally, committed to a progressive vision of itself, keen to diversify its economy and diminish its reliance upon shrinking oil revenues, Dubai has begun to develop into the Arabian Gulf’s premier international business center. Consider the factors that contribute to this ongoing success story.
Dubai’s Key Advantages
Dubai is a time zone bridge between the Far East and Europe on the East-West axis and the CIS and Africa on the north-south axis. It is a gateway to a market that can be characterized as:
- Large – well established trading links exist with the greater than 1.5 billion people in the neighboring region covering the Gulf, Middle East/Eastern Mediterranean, CIS, Central Asia, Africa and the Asian sub-continent;
- Growing – Dubai’s total international trade has grown on average by over 11% per year since 1988 and regional economic growth and liberalization should boost demand further;
- Prosperous – a buoyant local economy strategically located in the midst of one of the world’s richest regions and well endowed with ample supplies of cheap energy and primary aluminum; also adjacent to major regional suppliers of vital agro-export commodities;
- Diversified – varied and significant import requirements generate opportunities for product suppliers and re-exporters;
- Accessible – served by over 120 shipping lines and linked via 85 airlines to over 130 global destinations;
Open – no exchange controls, quotas or trade barriers.
Political And Economic Stability
Dubai is part of the UAE which is a low-crime and politically-stable country. Also, the UAE enjoys financial and monetary stability. Its well-developed, sophisticated banking system features extensive credit facilities and ample liquidity. The Emirate’s emerging capital markets are built on a basis of leading-edge technologies and sound regulatory systems. The government has a long, consistent commitment to pro-business, liberal economic policies including the protection of intellectual property rights. The UAE benefits from stable and harmonious industrial relations. Finally, there is a well defined, sound legal framework for business and a clear set of ownership rules. Foreigners are permitted ownership rights of up to 49% for limited liability companies established within the Emirate of Dubai and up to 100% for professional companies, branches and representative offices of foreign companies and free zones enterprises. All of these factors reflect positively in Dubai’s being assigned an investment grade rating for fixed income investment by Moody’s Investors Service.
Open And Free Economic System
Dubai’s economy has been kept open and free to attract investors and business. Government control and regulation of private sector activities has been kept to a minimum. There are no direct taxes on corporate profits or personal income (except for oil companies that pay a flat rate of 55% and branches of foreign banks that pay a flat rate of 20% on net profit generated within Dubai). Customs duties are low at 4% with many exemptions, 100% repatriation of capital and profits is permitted, there are no foreign exchange controls, trade quotas or barriers and a stable exchange rate exists between the US Dollar and the UAE Dirham (US$1.00=AED 3.678). Liberal visa policies permit easy importation of expatriate labor of various skill levels from almost all over the world.
World Class Infrastructure and Service Sector
Dubai’s deliberate policy of investing heavily in transport, telecommunications, energy and industrial infrastructure has enabled it to have one of the best infrastructure facilities in the world; it also contributed significantly both to its ongoing prosperity and attractiveness to international business. The Emirate features a network of seven industrial areas, one business park and three highly successful, specialized free zones of international distinction, two world class seaports, a major international airport and cargo village, a modern highway network, state-of-the-art telecommunications and reliable power and utilities all of which deliver efficiency, flexibility, reliability, reasonable cost and size.Complementing its world class infrastructure is a sophisticated service sector that features leading regional and international freight forwarders, shipping companies, insurers plus major international hotels, banks and financial service firms, lawyers, accounting firms, consultants, advertising agencies, top international exhibition and conference facilities, high quality office and residential accommodation, first class hospitals, schools, shopping centers and recreational facilities. Free Zones Websites: Dubai Airport Free Zone Jebel Ali Free Zone Dubai Media City Dubai Internet City
Competitive Cost Structure
International companies setting up in Dubai can obtain significant cost advantages not generally available internationally. The major factors are:
- No foreign exchange controls,
- No trade barriers or quotas,
- Competitive import duties (4% with many exemptions),
- Competitive labor costs – labor force is multi-lingual and skilled,
- Competitive energy costs,
- Competitive real estate costs,
- Competitive financing costs and high levels of liquidity,
- No corporate profit or personal income taxes (except for oil companies and branches of foreign banks). You can refer to the tables under the “Cost of Doing Business” section.
High Quality of Life, Excellent Living Conditions
Dubai’s private sector has invested heavily in real estate such as hotels, residential and commercial properties, recreational and leisure facilities. In addition, a number of factors have contributed to the Emirate’s high quality of life and superior living conditions making it a model location for many to emulate. Those factors include excellent infrastructural facilities, low crime, clean environment, tolerance and cultural diversity, cosmopolitan life style, modern public administration, availability of a wide range of consumer goods and services, mild winters and clean, palm fringed beaches.
Strong Local Commercial Tradition and Wide Choice of Potential Business Partners
The local business class has a long tradition of trading activity and wide exposure to international business practices and state-of-the-art technologies. Local entrepreneurs have already gained successful experience with international partnerships in franchising, licensing, joint ventures, etc, in various sectors of the economy.
Extensive Foreign Trade Network & Major Achievements in Export and Re-Export Performance
Dubai boasts an extensive foreign trade network extending to 179 states thus offering the investor an extensive choice of potential global marketing outlets for a diverse portfolio of goods and services. As a member of the UAE federation, Dubai is also part of the world’s third-largest export and re-export center after Hong Kong and Singapore.
Rapidly Developing Manufacturing Sector Producing a Wide Range of High Quality, Competitive Export Products
Major gains have already been made in the profitable manufacture and export of aluminum ingots, fabricated metal products, textiles and ready-made garments, gold and jewelry, prepared foodstuffs, consumer electronics, refined petroleum, chemical and non-metallic mineral products. Supportive commercial, industrial, political and economic factors are currently in place that make possible the extension of these gains to other manufacturing sub-sectors.