About a decade ago, at the World Economic Forum, three scenarios were presented on “how GCC countries can use their wealth to expand in affluence while overcoming the internal and external pressures that could shift them from the path of sustainable prosperity”.
Referred to as the Davos Scenarios to 2025, the document presented three metaphors to project the future of the region: Oasis, Sandstorm, and Fertile Gulf. Despite global financial challenges and the conflicts that have marred the Middle East growth narrative, the GCC, and especially the UAE, has been admirably resilient to the “Sandstorms” — a depiction of a pessimistic scenario where the Middle East’s political chaos spills over and regional unrest sweeps the GCC, effectively ending any hope for social and economic development.
For long it has been the “Fertile Gulf”, integrating itself with the global economy and ethos, and now, as all indicators point, the region is heading to be the “Oasis” where future technologies, governance reforms, and strong economic models are transforming economies. The bold ambitions of regional development road maps, such as UAE Vision 2021 and Saudi Vision 2030, underline the focus of the leadership to create new ‘oases of opportunity’ for people and businesses.
A vision that defines the road map
The impact of the progressive vision — especially the focus on economic diversification — is profound in the UAE growth narrative. Today, bucking global trends, the country is set to grow 2.8 per cent this year and 3.3 per cent in 2020, according to the IMF’s Regional Economic Outlook.
The economy is augmenting the growth of the real estate sector, and I can unequivocally state that we are witnessing a real estate resurgence in the region that will inject incremental value back into the regional financial system.
Take the successful model of growth that the UAE has outlined for the sector. His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, envisioned a bold strategy. In addition to creating a robust economic environment for businesses to thrive, Shaikh Mohammad announced a slew of initiatives, such as 100 per cent business ownership in non-free zones, long-term visas for experts and professionals, extended visas for retirees investing in property, and new regulations to accelerate tourism growth.
Getting investors to be full-time residents
By cultivating a sense of belonging through initiatives such as the 10-year visa and the Gold Card, the nation is encouraging investments in real estate. This not only adds substantial value to investors in terms of long-term returns and strong rental yields, but also fosters the prospect of professionals stepping up their lifestyles from rental living to home ownership.
These measures, which are backed by a robust focus on infrastructure development, are key to the sustainable high-growth economy that the UAE can proudly boast.
The ongoing preparations for Expo 2020 Dubai represent another considerable catalyst for growth, welcoming talented professionals from across the world. The expected 25 million visitors to the event will help with forming and nurturing business relationships and will add to the economic vigour of the nation, with the GDP expected to grow accordingly.
It will also consolidate Dubai’s reputation as a global tourism and business hub, setting strong fundamentals for long-term growth.
The road map for prosperity and stability is further underpinned by the eight principles of governance and the 50-Year Charter, which highlight the clear commitment of the leadership to ensure the prosperity of the people through efficient governance.
These positive indicators that boost investor sentiment are reflected in the real estate sector with Gita Gopinath, IMF’s chief economist for the region, stating that the market displays indications of an uptick. The Dubai Land Department reports that real estate transactions in Dubai rose 33 per cent to Dh34 billion in the first five months of 2019.
The Deloitte Middle East Real Estate Predictions 2019 report for Dubai says long-term prospects beyond 2019 remain positive with continued population growth.
Similarly, in Saudi Arabia, Knight Frank reports that the REIT (real estate investment trust) market has continued to expand while in other parts of the region, we also see clear indicators of a positive surge. This is good news for investors who will find in the GCC a stable “Oasis” and abundant opportunities for long-term investment growth.
Farhad Azizi is CEO of Azizi Developments.