Dubai: Dubai’s economy has been on an upswing in the last year, driven by services, transportation, logistics, retail and tourism sectors, Simon Williams, chief economist for Middle East and North Africa at HSBC told Gulf News.
The emirate has recovered from the corporate debt crisis and real estate slump which it faced in 2009 and 2010 by enhancing its position as a major destination for travel and investment from the Middle East and Europe.
Dubai’s real gross domestic product (GDP) is projected to climb 4.7 per cent in 2013, and by 4.5 per cent in 2014, according to estimates by Dubai’s Department of Economic Development (DED).
The growth rate of Dubai’s GDP stood at 4.7 per cent for the second quarter of 2013, compared to the same period a year ago, according to the Dubai Economic Outlook (DEO), Quarter 2/2013 report, issued by the Secretariat General of the Dubai Economic Council (DEC). The growth was driven by the wholesale and retail, transportation, manufacturing and real estate sectors.
Housing prices have increased as a result of an improvement in the economic environment and strong demand. Giyas Gokkent, chief economist at National Bank of Abu Dhabi (NBAD), pointed out that “as of September 2013, average residential property prices in Dubai were up 34 per cent, over September 2012.”
Although house prices in Dubai have climbed by more than 20 per cent in the last year, analysts told Gulf News previously that prices do not point to a property bubble.
The International Monetary Fund (IMF) estimated that Dubai’s current debts, including the debt outstanding of government-related entities (GREs), stand at 100 per cent of its GDP.
Meanwhile, the tourism sector has benefited from the economic upturn. Dubai hotels registered an occupancy rate of 86 per cent in the first half of the year, a HostStats survey showed.
Gokkent estimates that UAE’s economy will grow by 4.5 per cent this year, compared to 4.4 per cent last year. Next year, however, he estimates the figure to reach 4.1 per cent “due to slow oil sector growth.”
The UAE is becoming an important hub for foreign capital flow. The annual Invesco Middle East Asset Management Study, which examines the asset management industry in the GCC (Gulf Cooperation Council) countries, showed that 43 per cent of funds entering into the UAE come from emerging markets, including India, China and Russia. The study indicated that, alongside investment opportunities, the UAE’s political stability is driving the capital flow.