Spring-Fed Optimism

The Arab spring and global economic turbulence have
dealt the Middle East a mixed hand of fortune. Winners, however, were
easy to predict: Look no further than stable regimes, untroubled by
uprisings, where good infrastructure and a skilled labor pool are
already in place.
Yet even old hands with a finger on the local pulse
failed to anticipate the bounce in Dubai, badly shaken after the
property speculation bubble burst in 2009. “It took me by surprise,”
admitted John Martin St. Valery, CEO of Links Group, specialists in
on-shore company formation and operating in Dubai since 2002, in an
interview last fall.
This table from the report “12 Trends for 2012” from CB Richard Ellis, issued in January, buttresses the argument that the UAE is benefiting from a flight to stability.

This table from the report “12 Trends for 2012” from CB Richard Ellis, issued in
January, buttresses the argument that the UAE is benefiting from a
flight to stability.

In the first three quarters of 2011, Links Group recorded a 75-percent increase in issuing onshore
business licenses in Dubai and Abu Dhabi compared to the same period
last year. Inevitably the Arab Spring was a factor — “people seeing
troubles in Bahrain and having concern about the safety of the business
environment,” said Martin St. Valery.

The World Bank’s “Doing Business 2012” report, released in October, ranks the UAE 33rd out of 183
economies for ease of doing business, up two notches from its 2011
ranking. Its biggest sub-topic rankings improvement was three spots, to
No. 33, in “starting a business,” while its highest ranking overall was
No. 5 in “trading across borders.”

“Saudi Arabia remained the regional leader with a global ease of doing business ranking of 12,”
said a World Bank press release. “Qatar implemented its first reforms
since 2005 and climbed to 36 on the global scorecard by improving its
credit information system.” Over the past six years, said the Bank, 17
economies in the Middle East and North Africa have made their regulatory
environment more business-friendly.

The Arab World Competitiveness Report 2011-2012 issued last year by the World Economic Forum (WEF)
notes that youth unemployment (15-24 years) averages 25 percent across
the MENA region (compared with 17 percent in the OECD), and reaches 30
percent in countries such as Saudi Arabia and Tunisia. “Moreover, the
most educated segments of the population are not finding enough jobs,”
said the report. “Over 40 percent in Saudi Arabia and above 20 percent
in Morocco and the United Arab Emirates are unemployed.”

At the same time, IBM-PLI’s “Global Location Trends 2011” report found that the UAE ranked ninth in
2010 in project-related job creation per 100,000 inhabitants, after
ranking fifth the year before.

FDI and Trade Keep Things Moving Links Group is “a bit of
barometer of what’s going on.” But it isn’t only concerns over civil
disorder causing businesses to flock to Dubai; it is, said Martin St.
Valery, safety with regard to corporate governance. “There’s a way to go
but measures are being put in place to protect stakeholders and
shareholders, and we see that trend continuing. If it doesn’t, there’s
the risk to the objective of continuing to secure FDI, on which Dubai is
extremely dependent.”

On-shore licensing is only part of the story. Dubai, undeterred by its property crash of 2009, continues
to think as big as before, as shown by the creation of Dubai World
Central, a vast logistics hub built around what is expected to become
one of the world’s busiest airports.

The man charged with selling this “aerotropolis” is Nick Maclean, Middle East
managing director of the giant real estate consultancy CB Richard Ellis
(CBRE). He has 2.3 million sq. ft. (213,670 sq. m.) of leasable area to
let in lots starting at 1,000 sq. ft. (93 sq. m.). “To kick-start
demand, high quality offices have been built speculatively to attract
people who require offices besides warehousing or manufacturing
accommodation,” Maclean said in the fall.

“Flight operations have started. The other international airport in Dubai has been very
successful and will reach maximum capacity; and so flying operations
will naturally migrate to Dubai World Central. Its geographical location
between Europe and Asia Pac gives it a natural hosting advantage.”

Moreover DWC is near to Jebel Ali Sea Port, the sixth-largest container terminal in the world; and has links to all the UAE’s main motorways. “The office business park development can be offered on a free-zone basis or not, depending on the client’s specific needs,” said Maclean. “It will offer a one-stop shop for companies looking for licensing and registration of their business. We’ve seen strong interest from a variety of companies attracted by the facilities — and not all are in the logistics sector.”

Martin St. Valery agreed about DWC’s potential and thinks it will reinforce Dubai’s recovery.
“Transport links here are second to none — you can fly direct to the
west coast of America and to Brazil,” he said.

As for the complex at Jebel Ali, global marine terminal operator DP World announced on Jan. 31 another
record year for container handling, with over 54.7 million TEU (20-ft.
equivalent container units) handled across its global portfolio in 2011.
The increase of 10 percent against the prior year was driven by
12-percent growth in the UAE, handling 13 million TEU for the year. The
UAE region saw 16-percent volume growth in the final quarter of 2011. In
December, DP World announced plans to expand capacity at Jebel Ali by a
further 4 million TEU to reach capacity of 19 million TEU by 2014.

“Our flagship terminal in the UAE has yet again exceeded all expectations delivering another record
year as it continues to position itself as the gateway port of choice to
handle cargo destined for the Middle East, India and Africa regions,”
said DP World Chairman Sultan Ahmed Bin Sulayem.

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Article by Links Group on Feb 28th 2012

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