How the UAE econ­omy is on the up­swing

Real es­tate has long been a key eco­nomic driver for the UAE and will con­tinue to be in this year

Arabian Business English - - 2019 PREDICTIONS REAL ESTATE - By Ahmed Alkhoshaibi, CEO, ARADA

LET’S BE HON­EST; 2018 WAS a year of mixed for­tunes for a raft of dif­fer­ent sec­tors in the UAE and that has af­fected mar­ket sen­ti­ment, no mat­ter which way you want to slice it. That be­ing said, there are fun­da­men­tal rea­sons to have op­ti­mism go­ing into 2019, re­gard­less of sub­dued and, in some cases, de­pressed sen­ti­ment. Firstly, it’s im­por­tant to re­mem­ber that the In­ter­na­tional Mon­e­tary Fund thinks that UAE’s GDP will in­crease by 3.7 per­cent this year, a healthy and sus­tain­able pace of growth that is the envy of many of the world’s most ad­vanced economies. The bank­ing sec­tor is in good shape, with ris­ing profitabil­ity and strong cap­i­tal lev­els ex­pected to trans­late into a pick-up in credit growth. I’ve picked five fur­ther ar­eas that I think will be key to boost­ing growth and con­fi­dence as we en­ter an im­por­tant year for the UAE.

One of the great at­tributes of the UAE’s lo­cal gov­ern­ments is their will­ing­ness to make quick changes to reg­u­la­tions when needed. We’ve seen some key changes in laws over the past year, the most prom­i­nent of which has been to pro­vide 10-year visas to cer­tain sec­tions of the ex­pa­tri­ate pop­u­la­tion. This will not only en­cour­age en­trepreneurs and stu­dents al­ready in the UAE to stay, but it will also en­cour­age top-tier work­ers and in­vestors from over­seas to come to the coun­try too. Over the course of 2018, we’ve also seen an AED50bn stim­u­lus pack­age from the Abu Dhabi gov­ern­ment, an­other law to al­low 100 per­cent for­eign own­er­ship of non-free­zone firms, a re­lax­ation on prop­erty lend­ing reg­u­la­tions for banks from the UAE Cen­tral Bank and more. While all of these were an­nounced last year, I ex­pect the im­pact from these changes to be felt in 2019, and I’m sure that we can look for­ward to more amend­ments in the fu­ture as well.

It doesn’t nec­es­sar­ily make the head­lines, but for­eign di­rect in­vest­ment (FDI) into the UAE has re­mained im­pres­sively strong in re­cent years. FDI in­flows to the coun­try were up by 7.8 per­cent on the pre­vi­ous year to AED37.8bn in 2018, and the UAE alone makes up for al­most a quar­ter of all in­flows into the MENA re­gion. That fig­ure is only set to grow fol­low­ing the in­tro­duc­tion of the new law con­cern­ing for­eign own­er­ship of on­shore companies, which could see FDI grow by up to 20 per­cent this year.

Af­ter a dif­fi­cult cou­ple of years thanks to the low oil price and gov­ern­mentim­posed aus­ter­ity, the Saudi econ­omy came out of its first re­ces­sion since 2009 in the first quar­ter of this year. Jadwa In­vest­ment thinks Saudi GDP will reach 2.2 per­cent in 2018, be­fore dip­ping slightly to 2.0 per­cent this year. That’s a marked im­prove­ment on the 0.9 per­cent decline the Saudi econ­omy saw in 2016. In line with the re­turn to growth has come an­other ex­panded gov­ern­ment bud­get for 2019, an im­proved fis­cal deficit, in­creased consumer spend­ing and higher for­eign re­serves, which rose for the sev­enth straight month in Oc­to­ber.

Why is this im­por­tant for the UAE? As the Arab world’s

big­gest econ­omy, Saudi Ara­bia is an im­por­tant source mar­ket for its neigh­bour, with Saudi na­tion­als in­vest­ing heav­ily in busi­nesses and prop­erty across the UAE, as well as vis­it­ing the coun­try fre­quently for tourism and work. This year prom­ises to be even more spec­tac­u­lar for Sharjah, one of the re­gion’s most di­ver­si­fied economies. Not only has UNESCO named Sharjah World Book Cap­i­tal for 2019, but it is also an­other Bi­en­nial year, with the city show­cas­ing its sta­tus as the Mid­dle East’s top cul­tural hub.

On top of that, the gov­ern­ment of Sharjah has just an­nounced yet an­other record bud­get, which will see al­most AED26bn spent on in­fra­struc­ture, eco­nomic and so­cial de­vel­op­ment over the course of 2019. That’s a 10 per­cent rise on the year be­fore, and is an im­pres­sive ex­am­ple of the gov­ern­ment’s de­sire to in­vest even dur­ing what some see as a chal­leng­ing eco­nomic en­vi­ron­ment.

I still see Sharjah as the ‘hid­den gem’ of the UAE real es­tate mar­ket. Ever since the gov­ern­ment in­tro­duced a law al­low­ing the sale of prop­erty to all na­tion­al­i­ties in 2014, the Emi­rate has wit­nessed ex­cep­tional growth, thanks to strong de­mand for in­te­grated, well-de­signed com­mu­ni­ties that are rea­son­ably priced. To­tal real es­tate transactions rose by 20 per­cent in 2017 on the pre­vi­ous year, and we’re hope­ful that there will be a sim­i­lar pattern of growth in 2018.

No out­look on the UAE econ­omy this year would be com­plete with­out a men­tion of Expo 2020. It seems like a long time since Dubai won the right to host Expo, but I believe 2019 will be the year in which the wider econ­omy will re­ally start to ben­e­fit.

While con­struc­tion of the Expo 2020 site is on track and on sched­ule, there are a host of ten­ders that re­main to be is­sued for in­ter­na­tional pavil­ions, roads and in­fra­struc­ture, and per­ma­nent of­fices that will re­main af­ter Expo. We should see a host of con­tracts at the Expo site be­ing handed out in early 2019, which will get the year off to a pos­i­tive start.

For Arada, 2019 prom­ises to be an­other land­mark year. We are about to be­gin the process of hand­ing over our first ever homes, as units in Phase 1 of Nasma Res­i­dences move to­wards com­ple­tion. The en­tire com­mu­nity will be com­pleted in the first quar­ter of 2020, and we’ll also be launch­ing the first phase of Al­jada’s Cen­tral Hub, a new leisure and en­ter­tain­ment des­ti­na­tion for the UAE, which has been de­signed by Zaha Ha­did Ar­chi­tects, in Q2. As a new com­pany, it’s time for us to de­liver on our prom­ises to our buy­ers and to the

Sharjah com­mu­nity.


Launch­ing in 2019 the busi­ness park in Arada’s Al­jada de­vel­op­ment

Al­most com­pleted The first phase of Arada’s Nasma De­vel­op­ment

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