region and the forward-thinking policies of its
leaders freed Dubai from oil dependence from
25% in the early 1990s to 4% in 2015. This was
a major achievement and accelerated the rise
of other sectors to create a buffer that is much
necessary to absorb a shock that could arise
from uncertainty in the global oil market.
Leveraging the potential of other sectors like
tourism, construction, trade, and aviation
sectors, Dubai achieved remarkable growth
and became the most viable place for investors
in the region. Dubai is now a regional hub in
trade, finance and several other sectors. Dubai
has built a modern infrastructure and shaped a
business-friendly environment, and regulations
that attract international businesses. Dubai’s
airport, which already served more than 70
million travelers in 2015, is being beefed up to
serve over 200 million in the coming years.
The Jabel Ali port is the largest in the world
and the busiest in the gulf region is expected
to become the biggest container port in the
world by 2030. It was the inception of the “free
zone” concept in the UAE, and the model was
replicated within the country and the region.
There are currently 22 operational free zones
in the UAE catering to specific industries,
including technology, media, healthcare,
finance and communication. UAE is the
ranked as number one for quality of seaports
infrastructure regionally, third globally, and is
ranked sixth globally for seaports structure,
according to the Global Competitiveness Index
2014-2015. The free zones are playing a positive
role in the economic growth of the country and
in 2015; companies within Dubai free zones
accounted for approximately 50 % of foreign
direct investment in the emirate.
Impact of low oil price on the economy
Global oil price plummeted sharply since H2
of 2014 and reached the lowest level in 2015,
this raised concerns about stability across
economies. As the UAE had already advanced
in its economic diversification during the high
oil price period; this had a relatively small
impact on growth. The Real Estate sector
has been a major contributor to Dubai’s GDP
and an important component of growth and
employment creation. After a significant
fall in global oil prices and other external
factors such as a slowing Chinese economy,
slow growth in the Euro-zone economies, a
strong US Dollar that makes real estate more
expensive for international investors holding
non-USD liquidities led to a decline in property
transactions and drop in sales prices. However
this impact on property is more psychological
than economic. UAE is well positioned to sustain
the low oil price for a very long time. As per the
IMF, UAE has adequate fiscal buffers to endure
low oil price oil for nearly 30 years and shield
the economy and real estate from any negative
impact. Real estate prices have not seen a major
decline in the Q1 2016 and remained stagnant
during the month of April, which is a sign of the
market being bottomed out. As the real estate
sector is cyclical in nature, sales price recovery
is what we should see in H2 of 2016. Investors
are returning to Dubai as property prices are at
its bottom and this is possibly the best time to
buy and expect high capital appreciation in the
long term. The British, Indians and Pakistanis
have invested majorly in Dubai Real estate and
now the Chinese wave of investors is likely to
hit the UAE as the local Chinese market is not
lucrative enough due to severe changes in the
past few years.
Dubai has emerged as the most preferred