Power Letters: Top business leaders give their predictions for 2019
FOR EMIRATES, 2018 has been about making flying ‘ better’ for our customers. This continual drive for improvement has always been a part of our DNA, and underpins our current and future success – whether in terms of delivering ever better customer experiences or enhancing the way we operate across the business.
Over the course of 2018 we introduced a number of product and service enhancements on our Boeing 777s and A380s, and continued to deliver a full customer journey that is comfortable and enjoyable in every cabin class. This builds on our history of setting benchmarks that today have become the customer experience blueprint for the industry. There will be more to come in the next two years, as we introduce Boeing 777Xs to our fleet and receive the newest generation of the A380s that were ordered earlier this year.
We also announced internal trials for an advanced ‘ biometrics path’ at Emirates Terminal 3 in Dubai, among other innovations. When launched, this will hugely improve our customers’ experience on the ground, allowing them to simply walk from curb to gate while biometric technology automatically scans, verifies, and clears them through check-in, immigration and other airport check-points.
On the network front, we offered better connectivity to our customers through expanding our menu of destinations.As we received delivery of new aircraft, we launched four new routes, added frequencies to 20 destinations and upgraded capacity to eight cities. We expanded our UK footprint with London Stansted and Edinburgh, and launched Santiago in Chile, opening more corridors for increased long-haul connectivity to South America. Our partnership with flydubai continues to grow as we expand access to our combined network of over 200 unique points. Over the next 12 months, we will continue to ensure that we structure our capacity and leverage our competitive advantage to unlock further growth opportunities on even more routes, as well as further enhance inter-terminal transfers for our customers in Dubai.
Our Dubai hub’s attraction as a ‘must visit’ destination has grown even further and this is demonstrated by Emirates carrying 9 per cent more customers to Dubai in 2018, a testament to the city’s appeal to both firsttime and repeat visitors from around the world. As we inch closer to Expo 2020, we will see a boost in tourism and infrastructure development, and the benefits will trickle down to other industries. Emirates’ plans for Expo 2020 are starting to take shape and pick up momentum, and we look forward to being part of exciting times ahead.
Emirates hit two fleet milestones in 2018. We celebrated 10 years of A380 operations this summer, carrying over 115 million passengers since our first A380 flight. We also took delivery of our last Boeing 777300ER, and in the coming months we will begin preparing for deliveries from the Boeing 777X and 787 programmes.
Business in 2018 was not without headwinds, and there were a few key wild-cards at play. Oil price pressures and currency volatility in key markets eroded our profits, with trade tensions between the major economies and ongoing geo-political tensions in our backyard adding to the challenge. Luckily, overall passenger demand continues to be on the rise, presenting opportunities to push our revenues higher and partially offset our yield pressures.
The oil market is in a current state of suspense and no one will be surprised if 2019 proves to be another volatile year with signs that major economies may be in for a rough ride.
As always, the Emirates business model allows us to be flexible and agile when responding to change and disruptions, especially as Dubai’s open economy and our own global footprint means we have no respite from the impact of macroeconomic trends.
In 2019, one of the runways at our Dubai hub will shut for 45 days for renovation. The necessary capacity reduction will impact our revenues during that period. As we did in 2014, we are working strategically to slim down our operations, and are collaborating closely with stakeholders to ensure we continue to deliver a superior customer experience. The infrastructural investment will pay off and we will be ready to ramp up our operations again during the summer travel season.
We continue to be watchful of the escalation in protectionist rhetoric, on both the aviation and geopolitical fronts. But aviation has a unique selling point and has always been a force for good – it shrinks distances and satisfies the world’s thirst for connectivity, it links businesses and ultimately creates jobs and opportunities. Raising barriers will benefit no one.
In spite of the challenges, I am forever an optimist. We will buckle down and navigate through the difficulties that lie ahead, and will also continue to explore opportunities that make commercial sense for us.
Our strategy will remain as it always has, focusing on our organic growth, growing linkages between cities, while delivering a superior experience for our customers.
AS WE INCH CLOSER TO EXPO 2020, WE WILL SEE A BOOST IN TOURISM AND INFRASTRUCTURE DEVELOPMENT, AND THE BENEFITS WILL TRICKLE DOWN TO OTHER INDUSTRIES
SHIFTING alliances and technological advances were among the key trends that impacted global trade in 2018. Despite traces of protectionism surfacing in some developed markets, the UAE emerged resilient as ever in the face of rapid change, thanks to its well-diversified economy and forwardlooking policies.
The introduction of value added tax ( VAT) in the UAE was a natural and necessary step for a maturing economy like ours to maintain its stability. Trade, tourism and infrastructure continue to fuel economic growth, especially within Dubai as Expo-related projects progressed. Dubai’s non-oil foreign trade grew to Dhs645bn ($175.6bn) in the first half of 2018, while 8.1 million international visitors were hosted in the emirate over the same period.
Economic stimulus plans unveiled earlier this year by the Dubai government can be best described as significant improvements to ease of doing business. Advocating on behalf of the private sector, Dubai Chamber made important policy recommendations on reducing cost of business and enhancing successful publicprivate partnerships in line with the goals of the stimulus package. For Dubai Chamber, 2018 was a very productive year as we expanded our global presence with the opening of two new representative offices in Panama and India. These offices complement our global network and greatly support our efforts to strengthen our relationships with key public and private sector stakeholders in Latin America and Asia.
During the Year of Zayed, we reflected as a nation on our past, evaluated the present, and worked towards a future that meets the aspirations of younger generations, while we also supported the release of a new book celebrating the lasting legacy of the UAE’s Founding Father.
The late Sheikh Zayed bin Sultan Al Nahyan’s strong focus on economic diversification serves as a driving force for us, as we strive to create a favourable business environment that attracts capital, enterprises and talent in equal measure.
Dubai’s winning bid to host the World Chambers Congress 2021 was another major success that we celebrated in 2018. We look forward to working with the ICC World Chambers Federation over the next year to organise and deliver a Congress like no other.
Looking ahead, we expect 2019 to be a pivotal year for Dubai with preparations for Expo 2020 in full swing. The tourism, hospitality, logistics, transportation and retail sectors are already feeling the Expo effect with infrastructure and expansion projects transforming the city.
The adoption of disruptive technologies such as blockchain, artificial intelligence, and 3D printing will accelerate Dubai’s transformation into one of the world’s smartest cities. Dubai Chamber will roll out new innovative services and solutions to our members and the business community that will further improve ease of doing business in the emirate.
We are always on the lookout for new and innovative business ideas that support Dubai’s transition to become a global innovation hub. The Mohammed Bin Rashid Al Maktoum Business Innovation Award, Dubai Innovation Index, Dubai Smartpreneur Competition and Market Access are key Dubai Chamber initiatives to watch in 2019 as they serve as barometers for innovation activity within business communities in the UAE and abroad. Dubai Chamber plans to step up its efforts to promote Dubai on an international level through its Global Business Forum series. For the first time ever, the Global Business Forum on Latin America will be held outside of Dubai as we take the high-level event to Panama City in 2019. This premier forum will complement our international outreach efforts, build bridges with key stakeholders in the region, and explore new avenues of economic cooperation. At the same time, GBF Latin America 2019 supports our strategy of exploring promising markets around the world and identifying business opportunities for our members, while the forum is an ideal platform to position Dubai as a global gateway for Latin American companies.
All of these strategies and plans have been developed with the aim of supporting the strategic objectives outlined in the Dubai Plan 2021. With the valuable support of public and private sector players in Dubai, I am confident that we can fast track the emirate’s progress and cement its reputation as a global business hub offering endless potential and possibilities.
ETISALAT has laid a solid foundation in futuristic solutions and next generation technologies over the last year to deliver the best-inclass services while maintaining our focus on digital transformation and the overall customer experience.
We have demonstrated a strong commitment to sustaining technological leadership by investing in emerging and next generation technologies such as 5G, which is a major enabler for the next generation of broadband services and the Internet of Things.
With its implementation, 5G will provide opportunities for economic growth and massive development in the areas of ICT infrastructure, education, employment, transportation and more.
Last year, Etisalat successfully launched the first 5G fixed broadband experience in the region, with a commercial 5G network deployed in certain locations within the UAE. Our main objectives are to generate incremental 5G revenue via new use cases, adding value to shareholders and delivering world-class customer experience. Our work with Expo 2020 is a testimony to these efforts, with the event site becoming the first major commercial customer for 5G in the Middle East, Africa and South Asia. Such an implementation is a declaration of a new era of digital connectivity and an acknowledgement of 5G’s rich anticipated potential.
The fifth generation network will deliver faster speeds and lower latency and become a critical building block in the economic competitiveness of the UAE. 5G data rates will far exceed the current 4G, providing unlimited access to all kinds of applications and services while driving innovation, efficiency and productivity to a wide range of business and industrial sectors in the country.
Elsewhere, our results in the first half of 2018 showcased our ability to lead and innovate, amounting to a 6 per cent increase in net profit year over year (Dhs4.3bn).
Etisalat has always believed in innovation and technology transformation through a backbone encompassing the most advanced, fastest and widest network in the region. Infrastructure investments have been key to this growth and leadership in the market; in 2018 we have continued investing in the modernisation of mobile and fibre-optic networks and infrastructure development, as well as technologies such as IoT and artificial intelligence.
Our continuous investments over the years have led to major achievements including 3G network coverage reaching 99.98 per cent of the UAE population and 4G LTE covering 98.98 per cent. Fibre-tothe-home (FTTH) coverage now reaches 94.3 per cent of homes across the country, thus maintaining the UAE’s position as a global leader in FTTH, according to the latest report from the FTTH council.
Etisalat’s network cloudification is considered one of the key innovation projects in the coming year. This will bring in efficiency, as we will be able to deliver services in a more cost efficient manner compared to the current model.
In the past few years, we have evolved into an ICT service provider by enabling an ecosystem with an advanced network and futuristic solutions like artificial intelligence and robotics. The UAE ranks number one in digital adoption among Middle Eastern countries having implemented core digitisation initiatives.
As a company our vision ‘Driving the Digital Future to Empower Societies’ is focused on making this digital future a reality by facilitating innovation, creativity and bringing new technologies to our customers across our markets.
In turn, our infrastructure plays a key supporting role in the country’s ambitions to get digitally competitive and bring in digital transformation. The UAE today leads in global ICT competitive indexes mainly due to the continued development and increased adoption of digital strategies in various projects and initiatives implemented.
As part of our digital journey and strategy, we believe in investing in a future that will lay a foundation of ideas. Our partnership with government-supported accelerator programmes and the launch of the innovation programme ‘Future Now’ is a testimony to the company’s belief and philosophy of working hand in hand with the next generation by providing them the building blocks to create and innovate to make the digital future a reality.
We are also working with entrepreneurs to increase customer adoption of digital selfcare channels thereby enhancing customer experience and cutting calls to Etisalat customer care by 50 per cent through AI, analytics and insights and machine learning.
Artificial Intelligence is going to be the game changer in business, contributing $96bn to the UAE economy by 2030 - nearly 13.6 per cent of its gross domestic product (GDP).
We also believe that automated transport will become the norm in the future, and people will no longer differentiate between a ‘cloud’ and a ‘local’. As for play and leisure, the use of robots will become commonplace as will human augmentation.
THE UAE TODAY LEADS IN THE GLOBAL ICT COMPETITIVE INDEX MAINLY DUE TO THE CONTINUED DEVELOPMENT AND INCREASED ADOPTION OF DIGITAL STRATEGIES
THE DEMAND for energy and water is at an all-time high, and the trajectory is only heading upwards. Increased population growth, industrialisation and urbanisation are driving unprecedented need for reliable power and clean drinking water while contributing to an ever-widening gap between the supply and demand of these two commodities.
It is now glaringly obvious to even the most privileged of communities that immediate action must be taken to secure power and water supplies for the generations to come.
Collaborating with governments and public entities under public-private partnerships, ACWA Power is right at the heart of energy transition and in seeking to redefine the way water and power is produced.
Our strongest prediction for 2019
The swing to renewable energy will be faster than any one expects and what can be reasonably forecasted, with an increasing pace of activity in parts of the region. In 2019 we will see a marked acceleration in the deployment of renewable energy. Not only will ambitious targets keep getting announced, but we will also see more significant construction activity underway. We will also witness some firm foundations laid on the development of a renewable energy related component in manufacturing capacity across the region.
As the MENA region is quite reliant on desalinated water, the energy water nexus has always been understood. Thus, there has been some discussion around the development of ‘solar desalination’, which links a reverse osmosis desalination plant with solar energy to produce part of the electricity being generated by the plant. All in all, 2019 will keep the sector of power generation and desalinated water production ‘energised’ but now with renewable energy.
Why is this so important?
With 30-40 per cent of MENA’s population below the age of 15, the demand for electricity and water will dramatically soar over the next decade as more and more people move into the employable and economically active demographic bracket, thus fuelling the need for social services, industrialisation, and economic expansion.
Nevertheless, there are multiple factors that will aid in accommodating the upsurge of demand. Technology is granting us the tools to deliver truly cost competitive solutions, and at the same time governments are recognising the need to eliminate subsidy and utilising renewable energy at a faster pace.
The lower cost of generation and elimination of fuel subsidies will lead to an overall reduction in the provision cost of electricity. And the stabilisation of that cost due to the reduction of the marketpriced linked fossil fuels in the energy mix will also deliver significant economic value to all countries in the region, regardless of whether they are fuel exporters or importers.
What else can we expect?
In the quest to increase efficiency and move capital expenditure from sovereign balance sheets, governments will continue to seek investment from the private sector to match the exponential growth in water and power.
Demand can be catered for with a steady pipeline of projects, but in order to sustain these projects countries in the region need to capitalise on their strong renewable energy potential, well-established contracts of PPP models and well-structured procurement policies and processes which have already delivered lower tariff levels to set new global benchmarks.
Saudi Arabia’s Vision 2030 is a good example. Beyond diversifying the economy from reliance on hydrocarbons and increasing levels of private sector participation in the electricity and water sectors, it incorporates specific ambition on the establishment of a renewable energy sector that will account for 9.5GW and an addition of over 3 million cubic metres per day of desalinated water production capacity.
We believe that desalination efficiently integrated with renewable energy through concentrated solar power (CSP) and molten salt storage capacities will become a particular focus in the region for the years ahead. In the case of CSP with molten salt storage, the combination affords an intermediary storage solution to eliminate the intermittency issue of PV and wind generated electricity. CSP is already gaining attention in the region with its storage capabilities that enable it to dispatch electricity to meet the fluctuating daily demand profile throughout the day and night. ACWA Power and the Dubai Electricity and Water Authority (DEWA) are leading the development of the 950 MW Noor Energy 1 plant, which will generate 700 MW through CSP and 250MW PV and is considered the largest single-site concentrated solar power plant in the world. ACWA Power remains committed to reliably delivering electricity and desalinated water at the lowest cost while striving to increase local content and maximising local employment for a healthier, wealthier and happier 2019 and beyond.
THE SWING TO RENEWABLE ENERGY WILL BE FASTER THAN EXPECTED AND WHAT CAN BE FORECASTED, WITH AN INCREASING PACE OF ACTIVITY IN PARTS OF THE REGION
MICROSOFT GULF has had a busy 2018, forging key partnerships in the government and private sectors. Our mission is to empower every individual and organisation to achieve more, and right now that means stepping up and enabling them to overcome the challenges presented by the Fourth Industrial Revolution.
But this is only possible for organisations that embrace what we call a ‘tech intensity’ culture, which reflects a company’s ability to develop digital capabilities and drive tech adoption.
Digital transformation has the potential to engage citizens and customers, empower public servants and employees, optimise operations and reinvent products, services and business models. In response to overwhelming demand for the trusted Microsoft Cloud, in March we announced the building of data centres in Dubai and Abu Dhabi, which will serve our customers in the Middle East.
There are many examples from 2018 of regional organisations that have placed their trust in the Microsoft Cloud. Dubai Airports announced its migration to Microsoft Azure. Telecoms giant du recently partnered with us on an AI programme that will include assessment of technologies such as cognitive services and facial text speech for intelligent customer care and predictive maintenance. And ENOC teamed up with Microsoft to develop the Service Station of the Future, leveraging mobile apps and AI to personalise the customer experience.
In Saudi Arabia, Microsoft signed the first Azure transformation engagement with Ithra – a world culture centre developed by Aramco – to perform an Azure Cloud readiness assessment. Also, THIQAH Business Services, owned by the Saudi Authority for Accredited Valuers ( TAQEEM), adopted our modern workplace solutions to enhance security, mobility and collaboration. Additionally, the Saudi Ministry of Housing joined with Microsoft to empower their employees and better engage with citizens.
As we enter 2019, and prepare to say goodbye to another decade, we stand on the brink of many breakthroughs, but also many challenges. Private citizens will see a lot more benefits in their everyday lives because of AI. From healthcare to retail experiences, from travel to public safety, we will all see the future in front of us.
But the region’s citizens, residents, governments, businesses and non-profits must face up to the fact that we all bear responsibility for surmounting the challenges that accompany the benefits. First, we must safeguard the livelihoods of those displaced by automation. Microsoft is committed to this goal, through lifelong learning programmes and the steady creation of jobs. An IDC study shows that cloud computing, including the Microsoft ecosystem, will create more than 520,000 jobs across key markets in the MEA region in the coming five years. Our data centres (set to open this year) will play a large part in this. But critically, the World Bank tells us that for every technology job created, 4.3 more are generated across industries and income groups.
The coming years could also see a widening skills gap in the region, and this is something Microsoft has taken very seriously. Our initiatives – including the Microsoft Cloud Society, and partnerships with entities such as Dubai Future Foundation (on AI Summer Camps and the One Million Arab Coders programme in the UAE) and the MiSK foundation and Ministry of Education in Saudi Arabia – are aimed at upskilling and reskilling the region’s people to fill the jobs that have yet to be created.
Further into the New Year, as the next wave of intelligent cloud and intelligent edge computing continues to take centre stage, quantum computing will also gain traction across the world. These next-generation machines will be able to solve in hours problems that the entire world’s supercomputers running in parallel would take the lifetime of the universe to crack. We could finally take on climate change, create new superconducting materials and take massive leaps forward in AI.
Microsoft also believes we will see a continuation of the mainstream adoption of mixed-reality solutions. While we continue to guard the digital estates of our customers, enabling them to innovate free from boundaries, we will also see a swell in the number of devices and volume of data. This will lead to a more sinister cyber-threat landscape, even as the need for compliance with privacy and protection regulations escalates.
The future is bright, but it will take bold policy-making to keep us on the right track. We look forward to playing our part in empowering the region’s governments, businesses and individuals to embrace their ‘tech intensity’ and achieve more each day.
PRIVATE CITIZENS WILL SEE A LOT MORE BENEFITS IN THEIR EVERYDAY LIVES BECAUSE OF AI. FROM HEALTHCARE TO RETAIL EXPERIENCES, FROM TRAVEL TO PUBLIC SAFETY, WE WILL ALL SEE THE FUTURE IN FRONT OF US
I HAVE OFTEN been asked what the one differentiating strength of a developer is. My answer in one word is ‘trust.’ Developers gain trust by delivering on their promise.
And there are no short cuts in achieving customer trust. The market will always have its challenges; there are going to be periods of lows and highs, as is natural in any economic cycle; and there are going to be roadblocks in any project management.
It is when developers focus on being agile and flexible in their development strategy that they can overcome the odds and achieve the milestones they have set. Managing efficient work processes does not mean cutting corners: It means identifying opportunities that can help maximise value.
At Nshama, we have been diligent in our planning and execution. As the pioneer of elegant and thoughtfully designed homes in trendy neighbourhoods, our priority from our inception has been to focus on resource optimisation.
We have seen our flagship community – Town Square Dubai – come to life and thrive as a preferred neighbourhood for families by delivering on our promise of helping people shift from rental living to an owned-home lifestyle. But we have also revisited our strategy to address relevant industry white space – for example the demand for co-living and co-working spaces that are soughtafter by the millennial generation. We can shift our development approach – and diversify our offering – because we operate with flexibility. As the modern adage goes, build and they will come. But from our proven example, it is when you build for them, that they will stay with you.
The need for the real estate industry today is to innovate and think beyond conventions. Of course, no winning idea will be exclusive: Every development approach will find its emulators, but many tend to forget that beyond price considerations if there is one factor that will help win repeat business – which is important for any developer here for the long-term – it is the trust you build among customers.
One of the driving forces of Dubai’s development strategy for the property sector has been the addition of new geographies. A new high-growth corridor is evolving through the Al Qudra and Al Maktoum International Airport perimeter, where investors can record strong return on investment and rental yields. And with affordable homes being given priority by the government, to meet the needs of the community, there will be even more development activity in this zone.
We are witnessing the evolution of a new skyline that stands diametrically opposite to the cityscape formed along Sheikh Zayed Road. The hectic pace of activity is often construed as leading to oversupply and concerns about price. This has also led to developers tending to focus on being pricesensitive than quality conscious, which, in the long run is detrimental to their interests as well as to the market.
While factoring in price for the end-user is important it must not be at the expense of their wellbeing. Cutting corners on space planning, including the size and layout of the houses, and undermining the need to deliver the right amenities – with just price serving as the benchmark – is not healthy.
For customers, it is not just a house that developers offer: It is also the experience that awaits them. It is the sense of place and belonging that communities must strive to offer. By designing, developing and maintaining elegant neighbourhoods with relevant amenities that enhance the lifestyle of residents, you earn customer confidence, which sustains your business and enables developers to grow. For us at Nshama, trust is about keeping our promise to our customers through integrated developments that promote wellbeing and community spirit. From carefully selecting locations in high-growth centres of the future to designing homes that add to the wellness of our residents, and showcasing amenities that enhance their lifestyle, we prioritise the fundamentals that are crucial for long-term success.
And that is what we will continue to focus on. We have ambitious new developments planned for 2019, and new concepts being finalised that will define our communities as trend-setting destinations delivering sustained value.
We also know that with trust comes accountability and greater responsibility – and that is why every brick we lay to build our communities is backed by a commitment to creating sustained value for our customers.
ONE OF THE DRIVING FORCES OF DUBAI’S DEVELOPMENT STRATEGY FOR THE PROPERTY SECTOR HAS BEEN THE ADDITION OF NEW GEOGRAPHIES
LAST YEAR followed on from a series of milestone moments for the Middle Eastern art scene, highlighted by the landmark opening of the Louvre Abu Dhabi in 2017, and, closer to home, Sotheby’s gallery space and inaugural auction in Dubai.
Today the UAE is recognised as a hub for art, spanning classical to contemporary, with the fundamental message that the very best from all cultures should be shared to promote cultural exchange and inspire new dialogues.
Setting the stage for the coming year are two recent transformative developments – one international and the other homegrown.
The first is the magnificent Albukhary Foundation Gallery of the Islamic World in the British Museum in London. Islamic art is now placed in the run of main galleries and into the heart of the British Museum’s story, a revelation that presents Islamic art as a living tradition.
The second is the opening of the Jameel Arts Centre in Dubai, a space for serious curatorial explorations and a welcome foray into working from the ground up. The celebrated internationalism of the Dubai art scene may have occasionally overlooked a focus on local developments and this is exactly what the Jameel Arts Centre will remedy. Launching in the same week as the 10th anniversary of the Abu Dhabi Art Fair, it feeds into the exceptional art ecosystem in the UAE – a mix of commercial, institutional and governmental initiatives alongside international brands, including Sotheby’s auction house and its storied 275-year history.
Since Sotheby’s opened its gallery in Dubai in 2017, we have been continuously looking to expand what we offer clients and the wider public in the region, and to bring the expertise of our international specialists directly to their doorsteps.
One of the high-points of the year was undoubtedly bringing to Dubai the impressive pearls and diamonds that adorned the ill-fated Queen Marie-Antoinette, an exhibition that sparked a sensation amongst jewellery lovers and history buffs alike. In November, once its world-tour had ended, the BourbonParma collection sold in Geneva to set a new record for a sale of Royal Jewels at $53.1m, led by a world auction record for that colossal natural pearl at $36.2m. At the same time, one wall across from the jewellery, we unveiled a rediscovered masterpiece by master of the Dutch Golden Age, Rembrandt, inaugurated by guest of honour HE Noura Al Kaabi, UAE minister for culture and knowledge development.
This year also marked Sotheby’s firstever watches auction in the Middle East, which took place in November and was a fantastic opportunity to share yet another passion with both established and first-time collectors. The auction hammered down $2.6m in a packed saleroom, with 25 per cent of the participants completely new to our auctions. We will be hosting our second Dubai Watches sale in March this year.
One of my personal highlights – also a career highlight – was Sotheby’s sale of the indescribably rare inky-blue Iznik ‘Debanne’ Charger, which broke the auction record for an Islamic object at $6.9m. Fiercely competitive bidding started at GBP300,000 ($378,000), and continued for over 20 minutes with nine collectors and institutions from all over the world participating in the room, on the telephones and even online. The piece encapsulates the four key things that collectors are always looking for – rarity, beauty, condition and provenance.
Last but not least, it has been a great year and a buoyant market for modern and contemporary masters from the Middle East, and we have achieved 16 artist records including new benchmark prices for GCC artists Hassan Sharif, Mohammed Kazem, Maha Malluh and Abdulrahman Al Soliman. These are artists that have received a tremendous amount of attention in the region recently, and we felt that it was important that they get the recognition they deserve internationally, in the context of a London auction.
Institutionally, there is more exciting news for these names, as the incredible Sharif exhibition that was at Sharjah is set to travel to Italy and Germany in 2019 and potentially to New York. From now until March, hanging in Sotheby’s Dubai for public view is a selection of works by Modern Arab and Iranian masters, which are for private sale – including pieces by Mahmoud Saïd, Ayman Baalbaki and Nabil Nahas.
Over the last four years, Sotheby’s has sold over $152.9m worth of Islamic and Middle Eastern Art, with thousands of clients from around the world bidding in these sales. What was particularly exciting about 2018 is that a quarter of these bidders were new to Sotheby’s. Broadening this out to our global sales, but focusing on clients from the UAE, we saw a 20 per cent increase in buyers and bidders from the region last year.
What has not changed is the ethos that underpins our exhibitions and sales – our desire to speak to the universal nature and timeless appeal of great works of art. The past two years have been just the beginning of many initiatives Sotheby’s is planning to launch in the UAE, and so we look forward to what 2019 has to bring – from the extraordinary objects still out there waiting to be discovered to our evolving calendar of events.
OVER THE LAST FOUR YEARS, SOTHEBY’S HAS SOLD OVER $ 152.9M WORTH OF ISLAMIC AND MIDDLE EASTERN ART, WITH THOUSANDS OF CLIENTS FROM AROUND THE WORLD BIDDING.
REFLECTING on the past 12 months, there is no doubt that in the business world, there has been one word on everyone’s lips across the UAE –VAT.
When a country undertakes such a dramatic change in its taxation policy, there is bound to be some degree of apprehension about its potential impact from an operational perspective, and also what implementation may mean for the wider economy.
A year on, I think it is safe to say that the arrival of VAT has become widely accepted and is seen by many as helping to provide the UAE with a source of revenue that will play an important role in improving infrastructure and public services and enhance its global competitiveness.
Arguably, the introduction of a robust, modern taxation system reflects the growing maturity of the nation and strengthens its place as a global economic player.
Underscoring the positive effects of VAT implementation, a report published by Moody’s in September shows that the inflationary impact has in fact been modest. Any major sway on household purchasing power has been mitigated by zero-rated and exempt items, as well as trends in the real estate market. Meanwhile, the IMF has recently increased its forecast for the UAE’s 2019 GDP growth to 3 per cent – another positive indicator for the country’s economic outlook. The UAE government announced a number of new business-friendly stimuli in 2018, including 100 per cent foreign ownership of onshore entities and a 10-year visa for professionals and investors. This has the potential to drive increased confidence in the market. It has also announced a reduction in municipality fees and waived a number of fees related to the aviation industry, in order to attract foreign investment.
The introduction of new foreign direct investment (FDI) laws also aims to promote the country’s investment environment in line with national development policies.
But all this optimism must be tempered with some realism, given International Monetary Fund forecasts of slowing growth among several major world economies in 2019. This means that organisations may have to re-examine their business models and find new ways to manage operational costs to maintain profitability over the next 12 months.
Looking at the UAE, technology is increasingly emerging as a major disruptor, challenging the way businesses operate. KPMG’s 2018 CEO Outlook report found that the prospect of driving growth from new digital business models and revenue streams, particularly as they replace historical ones, is one of the biggest challenges facing executives today.
Digital innovation has the potential to create significant value across business models, customer experience and operations, but with greater connectivity comes increasing cyber vulnerability. Regional CEOs feel a cyber attack is a case of ‘when’ not ‘if ’. Investing in robust cyber defences and a strong cyber strategy will therefore be critical for businesses to secure trust with their stakeholders.
To drive long-term growth, organisations will also need to appeal to consumer markets of the future and millennials, who have spending power but are engaging with organisations and brands in new ways including digital channels.
But while digital is becoming integral to business success, the real test will be to create business value while complementing, not replacing, human interaction.
In this regard, the efficiency of the labour market cannot be stressed enough, as a skilled and productive workforce is the pillar of any economic vision. Fortunately, the UAE continues to attract global talent, seeking to live in a world-class city with exciting career opportunities and favourable working conditions.
Equally, it is imperative to harness the enormous potential of the local workforce. According to the UAE National Agenda, the country plans to increase Emiratisation in the private sector tenfold in the years ahead. A local workforce committed to taking its country to the next stage of growth and evolution is pivotal in fulfilling the national vision.
So what can we expect for 2019? I believe the next year will be one of renewed optimism, as the broader economy starts to witness the impact of these growth stimuli. Some of the initiatives that will set the stage for a digitally inclusive society are the UAE Strategy for Artificial Intelligence, Smart Dubai 2021 and the Emirates Blockchain Strategy 2021.
And as the countdown begins in earnest to Expo 2020, both the public and private sector will likely be re-energised. This is the right time for organisations to embrace change and technological innovation as we enter a new period of national development.
LOOKING AT THE UAE, TECHNOLOGY IS INCREASINGLY EMERGING AS A MAJOR DISRUPTOR, CHALLENGING THE WAY BUSINESSES OPERATE.
Edward Gibbs Chairman for the Middle East at Sotheby’s
Nader Haffar Senior partner and CEO at KPMG Lower Gulf