Dubai is the business hub of the Middle East and very much a global city. With a tax free economy, ongoing major construction projects, a strategic location, a healthy property market and strong basic infrastructure, the seventh most visited city in the world is proving a magnet for investors.
Basic economy
While oil revenue helped fund the city’s early growth and development after it started to flow in earnest at the end of the 1960s, revenues are now derived from real estate, financial services, aviation and tourism. Oil now actually accounts for less than 5% of the total revenue.
Headline construction projects attract attention to the city. Following the construction of the world’s tallest building with the BurjKhalifa, ambitious plans are afoot to build the world’s highest residential building, the highest Ferris wheel, and the largest water canal amongst other ambitious projects. This is not somewhere that is standing still.
Dubai is the most expensive city in the Middle East and the 22nd most expensive in the world, but with very low (4%) employment and a generally high wealth population, there’s plenty of money circulating which is good news for business and investment.
Investing
If it’s stocks, as opposed to real estate investment, that you’re interested in, then knowing what sectors and what specific companies to invest in will obviously be key, so keeping abreast of Dubai-related activity will be important. The chance to research and buy stock through experts such as IG is a sound start. Knowledge is power, and certainly so when it comes to the stock market.
Some reasons why Dubai is a strong investment option:
Real estate and construction
Real estate and construction are the largest contributors to the city’s economy. There are no shortage of construction projects; along with the particularly ambitious ones, there are any number of malls, residential structures and others being added to the city’s infrastructure.
This offers good opportunities to investors as there are either entire developments, a share in them, or a stake in a business on offer as the city continues its expansion.
The property market is considered to be in a good state for investing; prices and rents dipped from the peak of 2014 leaving them ripe for recovery from late 2016 or early 2017. The predictions for the Dubai property market is that it will follow this cyclical pattern for the time being, so timing is everything.
Expo 2020
Fireworks lit up the BurjKhalifa when the news was announced that Dubai had been awarded the right to host Expo 2020. This six-month long exhibition of trade, innovation and products from around the world will be an extravagant showcase for the UAE and will be held on a specially constructed site on the perimeter of the city.
There will be huge investment in the infrastructure by the government, to the tune of some $7 billion, benefiting the stock of companies involved in providing it. Analysts expect it to provide a significant boost to the property market which is already on an upward curve since the lows of 2007-8, and some 277,000 jobs – some 20% of the current workforce figure – will be created.
Tourism – already high in Dubai – should surge during the time of Expo 2020 and it’s all-round very good for business in the short, medium and long terms.
Dubai: a good investment?
Overall, Dubai has a lot going for it and more so with the exciting growth that events like Expo 2020 will provide. Wirth this in mind it’s crucial to carry out thorough research on the specific opportunities such fertile ground will provide in the next five years and beyond.
