Dubai - vision, ambition, or both?
"When leaving Dubai airport aboard a KLM Dreamliner, I counted the number of Emirates aircraft preparing to leave. Among more than the 50 I counted, 16 A380s were ready for take-off that night! Dubai’s airport, as well as the other regional airports, are busy 24/7 and have surpassed Heathrow as the busiest in the world. Run by Asian immigrant workers, it is a shopper’s paradise and has restaurants open around the clock. And while you are waiting for your connecting flight you can even try your luck at winning a Maserati."
A blog by Jeroen Plag, head of Client Coverage Americas, Asia & UK, ING, on a business trip in the Middle East.
Travelling across the region, we met with Middle Eastern clients as well as subsidiaries of American clients in Kuwait, Abu Dhabi and Dubai. While most international banks have substantially reduced their local and regional presence, new entrants from China have arrived with more than 100 people to set up local operations due to the recent relaxation of the sanctions on Iran. This development means increasing investment opportunities and a further need for financial support for many Asian companies.
Despite the geopolitical situation and low oil prices, grand plans in Dubai continue. After the financial crisis hit Dubai, real estate developments continued to be announced unabated. The most recent are, for example, the seahorse development and floating villas with a whole floor below sea level: a real life aquarium. A new USD 1 billion skyscraper, just slightly taller than the tallest building in the world, the Burj Khalifa, should be ready in 2020, when Dubai aims to attract 20 million visitors annually.
In Kuwait and Abu Dhabi, we spoke about ongoing oil and gas investment projects across the region and globally; and setting up further infrastructure to support the Emirate's growing importance as a trade hub remains key as it hosts the 2020 Expo. On the way to Abu Dhabi, three major theme parks are being developed, further cementing its regional pull on tourists from India, the Middle Eastern region as well as overseas. Bollywood, targeting Indian travelers, and Legoland, a Hollywood inspired movie park with hotels and a water park, combining more than a 100 rides, are opening in October 2016. For the average European tourist, a ride in any of the roller coasters in the summer will seem unbearable, with local temperatures of 30-40 C and above.
When meeting with a US corporate in Dubai, its business card indicated responsibility for covering the IMEA region instead of EMEA. Typically European markets coverage is combined with ME and Africa, but the 'I' on their business card stood for India. It clearly highlights the ever growing importance of the connection between the Indian sub-continent, Dubai as a trading hub, and the African markets as ultimate destinations.
Meanwhile in Saudi Arabia, the impact of lower prices are increasingly being felt as the Saudi government starts to address its first ever fiscal budget deficit. Maybe hiking prices at the retail gas stations is an option as apparently the price for 1 litre is still about 10 cents! Also, India is a prime focus with Prime Minister Modi announcing the country being the number one investment destination for Saudi oil and gas development. With the recent announced USD2 trillion (!) sovereign wealth fund, no shortage of funds is expected.
Back to Dubai’s growth plans. Some feel that the ambition is still very strong and focused while previously the vision was a bit vague, as real estate projects popped up everywhere with few being finished. Being the region’s key destination to lay back and party, and given that alcohol is mostly prohibited across the Middle East, their “glass-is-half-full” approach to growth did leave me with a very upbeat feeling as I left for Amsterdam.
Follow me: @jeroenplag