Dubai financial hub sees growth from Asia links

Updated 14 February 2013
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Dubai financial hub sees growth from Asia links

DUBAI: The Dubai International Financial Center, a business zone, says it aims to double the number of companies there over five years by serving as a base for business with China, south Asia and Africa, not merely the Gulf.
With political unrest plaguing parts of the Middle East and Western financial firms still retrenching because of debt problems in their home markets, the business environment is challenging for Dubai.
But Jeffrey Singer, chief executive of the DIFC Authority, which manages the business zone, said Dubai could keep expanding rapidly as the Gulf’s main financial center by becoming a conduit for trade and investment with a larger region.
“Increasingly institutions are using Dubai not just as a base for business in the Gulf, but as a base to access a much wider area,” he said.
The DIFC, opened in 2004, is one of the United Arab Emirates’ “free zones,” offering foreign investors 100 percent ownership of their ventures and business-friendly regulation.
The number of registered firms operating in the DIFC rose 7 percent last year to 912, while workers at those firms jumped 16 percent to 14,000. The DIFC has declared it wants to double its size in the five years from 2011, when it had 848 companies.
The DIFC has had to contend over the past year with the shrinkage of some of its top US and European clients. Citigroup Inc. this week began laying off investment bankers across its Europe, Middle East and Africa division, with 50 positions to be eliminated in the near term.
But Singer said that overall, cutbacks of investment bankers and back-office staff at Western institutions in the DIFC had been more than offset by their expansion in other areas, as foreign firms tried to capture part of the Gulf’s infrastructure spending boom.
In some cases, retrenchment by foreign firms in the Gulf has prompted them to bring staff back from other parts of the region to Dubai, actually boosting their presence in the DIFC.
“The European presence has grown every year in terms of both employment and the number of firms here,” said Singer, an American who took his job last July after heading the NASDAQ Dubai exchange.
Much of the DIFC’s future growth is expected to come from Chinese institutions. Assets at Industrial & Commercial Bank of China’s (ICBC) Middle East unit, which operates from Dubai, soared 128 percent from a year earlier to $ 6.1 billion in the first half of 2012.
Four Chinese institutions — ICBC, Bank of China, Agricultural Bank of China and Petrochina — now have presences in the DIFC. Singer said the DIFC was discussing the possibility of others coming, but declined to elaborate.
Trade in the Chinese yuan by banks in Dubai has been increasing; ICBC said it conducted $ 2.1 billion of yuan transactions in the interbank money market in the first half of 2012, up 58 percent. Last week Emirates NBD, Dubai’s largest bank, said it had started offering yuan accounts.
Dubai may struggle to become a major market for trading the yuan, however, if it does not arrange for clearing of trades to be done locally.
Yuan clearing is conducted in Hong Kong and Taipei, and last week China named ICBC as the clearing bank for yuan business in Singapore, but Singer said any similar arrangement for Dubai would depend on discussions between UAE and Chinese authorities.
“Banks in the DIFC would like to have yuan settlement occur here but that is an issue for the UAE central bank to handle,” he said, without predicting when that might happen.
Risks for the DIFC include political instability in other Arab countries, which Singer said could deter foreign investment throughout the region, and any major slowdown in the Gulf’s infrastructure spending.
The DIFC also faces competition from nearby financial centers, particularly Qatar, but it has maintained its lead over them in recent years. The Qatar Financial Center Authority’s register lists about 140 active, licensed firms.
Bahrain’s status as a financial center has been hurt by political unrest that erupted there two years ago. Some financial operations moved to Dubai from Bahrain for that reason, though Bahrain has been successful in preventing a mass exodus of financial firms, Singer said.
Some fund managers complain that new UAE investment fund rules introduced late last year could hurt the DIFC by placing a bigger burden of regulation on it and making it harder for funds to market themselves in the wider country outside the free zone.
The DIFC is continuing to hold discussions with the UAE Securities and Commodities Authority on how to apply the rules to the DIFC, Singer said.


Damac chief confident of Dubai property market recovery by 2021

Updated 12 November 2018
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Damac chief confident of Dubai property market recovery by 2021

DUBAI: One of the UAE’s leading property developers believes that the property market will pick up again by 2021.
Hussain Sajwani, the billionaire founder and chairman of Dubai-based Damac Properties, told a World Economic Forum meeting in the UAE that it could take “a few years” before the current phase of the property cycle reversed, boosted by foreign buyers, especially those from China.
“As you appreciate the property market is cyclical everywhere in the world — and you see a few years up, and a few years down.

“We had our chance of a (bull) market from 2012 to 2015 … Then in 2016 we started seeing some slowdown with the oil prices coming down,” he said at the WEF’s Global Future Councils gathering in Dubai.
“This year has been a difficult year and I think next year will be another difficult year. I don’t see it’s going to be better than this year. We’re in that cycle of slowdown and it will take a few years. I hope that by 2020 with the Expo coming in, more people will be coming to Dubai,” he added.
Some real estate experts have forecast a recovery to the Dubai property market next year, as the expected “Expo 2020 effect” boosts the economy.
Sajwani was confident of the long-term attractions of Dubai.

“I genuinely believe Dubai is still a hidden jewel and a lot of people around the world still want to come to Dubai and they love it,” he said.
“If we just take one country, like China, if we can attract another few million tourists from China we can get more people to come here, spend time, buy property… and retail … I would hope by the end of 2020 or 2021 we start coming out of this slowdown.”