What's at Stake this week?
March 19, 2023
Dubai’s Burj Khalifa has been crowned the number one bucket list location in the world, according to a recent poll ranking the 72 most popular global landmarks! It is followed by the Eiffel Tower, Times Square, and Niagra Falls in the top 4 spots. Did you know that Burj Khalifa registers the highest average global search volume at 2.24M searches per month? Let’s have a look at some other takeaways from this week 👇
Market Zoom: Dubai
Dubai’s non-oil sector is thriving
Dubai’s non-oil private sector economy has shown continued improvement in February 2023, according to the latest S&P Global purchasing managers’ index reading for the month. While the figure slipped slightly to 54.1 from January’s 54.5, it remains above the “neutral” 50 mark that separates expansion from contraction, as reported by The National.
The output expanded the sharpest in the 4 months prior, indicating that the non-oil sector is keeping up its robust performance thanks to the inflow of new clientele and continuing projects. The construction sector, in particular, had its “strongest upturn” in output since June 2019, while wholesale and retail and travel and tourism registered faster increases in activity compared to January.
Did you know? Dubai’s economy grew by 4.6% annually in the first nine months of 2022. Emirates NBD estimates that Dubai’s GDP will grow by 3.5% in 2023.
Consumers and businesses alike are optimistic about Dubai’s future activity, as they expect global market conditions to improve and have lesser of a disruptive impact on the emirate’s economy. This is evident in the current exodus of affluent individuals from cities like Hong Kong and New York, deemed once a beacon of cultural vibrancy and a hub for the wealthy, to hubs like Dubai, Singapore, and Miami. Why? There are many reasons why these destinations have been appealing more to millionaire migrants, one of the factors being that they are among the top three luxury property markets where prices are expected to rise the fastest this year, presenting a great investment opportunity.
According to the latest research from Savills, a British real estate services company, Singapore and Dubai will lead the global price charts this year, with prime residential properties in both cities forecast to increase by 6% to 7.9% YoY. More to this point, Alarabiya has reported that property prices have yet to peak in Dubai, as analysts at S&P Global expect prices to stabilize further throughout the year ahead.
Dubai’s Golden Visa initiative has also facilitated an influx of property buyers who plan to purchase and stay in the country for an extended period of time. This program is drawing in migrants not only from Russia but from across South Asia and the Middle East with a true real estate boom in full swing.
The bottom line? Overall, the data suggests that Dubai’s non-oil private sector economy is performing well, with improvements in output and activity across several sectors. The rebound in Dubai’s tourism sector and real estate market is also contributing to the emirate’s growth significantly, while businesses are confident about future activity despite rising costs.
Dubai is a top city of choice in latest BCG study
A recent study titled, “Cities of Choice”, from Boston Consulting Group surveyed over 50K people from 79 cities to assess more than 150 economic, social, and political metrics across 5 dimensions: economic opportunities, quality of life, social capital, interactions with authorities, and speed of change as reported by Consultancy ME.
Of the 5 Middle East-based cities included in the study, Dubai and Abu Dhabi ranked in the top 10 in their respective categories. Based on their current socioeconomic profiles, Dubai was named a ‘cruiser weight’ city and Abu Dhabi a ‘middleweight’ city.
Let’s break down the scores… Dubai scored a 71/100 on the ‘Economic Opportunities’ dimension, indicating that the city provides a highly conducive environment for businesses and entrepreneurs to thrive. Its diversified economy, coupled with a strong built environment and digital infrastructure, positions it as one of the fastest-growing cities in the world.
However, in the ‘Quality of Life’ dimension, Dubai scored 51/100, indicating that there is room for improvement, particularly in the housing sector which is deemed unaffordable for low-income residents. CNBC recently reported that while demand for property in the UAE’s commercial capital hit a record high in only the first 2 months of 2023, some Dubai residents have already seen their rents increase by more than 50%. In the ‘Social Capital’ dimension, Dubai received a score of 74/100, implying that residents have strong social connections and a sense of belonging to their city.
Additionally, Dubai scored well in the ‘Interactions with Authorities’ dimension, surpassing cities like Sydney and Barcelona, which highlights Dubai’s growing digital government capabilities and demonstrates that policies and measures have been implemented to encourage citizen participation in governance.
The bottom line? Dubai has performed exceptionally well in the study particularly on the economic and governance fronts while there are recommendations to enhance the quality of life, particularly in the affordable housing sector. Nonetheless, Dubai’s strong social capital and growing digital government capabilities bode well for its future growth and development.