Dubai set for next cycle of growth: 5 sectors will drive economy

Backed by five major sectors, Dubai is set for steady growth this year and the next as the emirate is heading for a next growth cycle with the PPP model and putting public infrastructure online attracting investor interest in the next phase, according to a new study.

Released by the Oxford Business Group (OBG) on Sunday, The Report: Dubai 2015 study claimed that the capital markets, maritime, transport, real estate and retail sectors will attract major investments to drive emirate’s next phase of growth.

The Report: Dubai 2015 said index provider MSCI's decision to upgrade the UAE from frontier to emerging market status in 2014 underscores Dubai’s role as a regional financial centre. The upgrade is boosting liquidity levels and generating new interest among companies considering listing.

Similarly, maritime industry is witnessing volumes increase because the emirate’s role as a regional hub has been increasing over the past few years.

Another sector that OBG believes will drive the next phase growth is transport sector. “Dubai is well placed to capitalise on recent trends in short-and-long-haul travel, with Dubai International Airport at the centre of this effort.”

Dubai International overthrew London Heathrow as the world’s busiest airport by international travellers last year. Passenger numbers increased 6.1 per cent to more than 70.47 million last year.

In addition to laying claim to being the world’s busiest international airport, Dubai International was also the world’s leading hub for Airbus A380 operations in 2014.

OBG believes that the real estate will continue to be the driving sector – too – for the emirate’s economy in the next phase of growth. “Dubai’s real estate market has bounced back and residential supply is once again on the rise.” Residential units supply was up 10 per cent from 2011 to 2014, reaching 377,000.

Retail is the fifth sector that will attract investors’ interest as all indicators point to solid growth in the emirate’s retail and wholesale sector – the single biggest driver of its economy.

OBG's Managing Editor for the Middle East Oliver Cornock said the latest data on Dubai suggested the emirate was heading for a new growth cycle.

"While infrastructure and Islamic finance are two of the talking points amongst investors eyeing Dubai, other aspects of its development could give the emirate an edge when it comes to attracting new capital inflows," he said.

"We expect initiatives such as Dubai's plans to introduce the PPP (public private partnership) model and get public infrastructure online to be instrumental in boosting investor interest, bringing an opportunity to broaden the emirate's tourism industry and other related sectors."

Andrew Jeffreys, OBG's CEO, said: "While the 2020 Expo is making headline news, it remains just one of many exciting initiatives planned for Dubai which will serve the emirate well as it continues to develop its economy."

The report said that the latest developments such as the hosting of the Expo 2020 and recovery from the global financial crisis of late 2000s have put Dubai's “economy on course to notch up GDP growth of around 4.5 per cent this year and in 2016.”

This is in line with the estimates announced by some of senior Dubai officials over the last few months.

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