Statistical and anecdotal evidence is mounting that Dubai is heading for what could be a blockbuster year for the economy.
After a handful of years that saw the emirate’s growth slow down from the impact of the global financial crisis, the economic engine seems to be roaring on full throttle, firing on all six cylinders that are considered its growth drivers.
The year 2012 is just a quarter old, but Dubai has shown some very promising signs already, including positive numbers on corporate income, trade and tourism front, as well as a huge improvement in investor sentiment, as evidenced from the stock market index and property prices in the emirate.
For all practical purposes, Dubai’s economy, diversified as it is, is powered by a number of sectors, including (in no particular order) real estate, logistics, trade, tourism, manufacturing and the financial services sector.
Let’s look at the sure signs that some of these sectors have displayed of late, particularly in Q1 2012, which point towards broader economic growth and hold the promise of a bumper year ahead.
SURE SIGN #1: TOURISM IS BOOMING
Although consolidated numbers for the first quarter of this year haven’t been made public yet, according the latest available data from the Dubai Department of Tourism and Commerce Marketing (DTCM), Dubai topped the world in terms of hotel occupancy levels and average revenue per available room (RevPAR) for January 2012.
The emirate’s tourism regulatory body said Dubai hotels’ 86.2 per cent occupancy level in the first month of 2012 places it on top on the list of 15 top performance destinations, up from 75.4 per cent occupancy levels that Dubai hotels recorded in 2011.
In terms of RevPAR, data from STR Global shows that Dubai topped again in February 2012, with the emirate’s hotels earning $252.98 in the month for every room that they have, up from the fifth position that the emirate enjoyed last year with a RevPAR of $169.
Dubai ranks above global tourism heavyweights such as Hong Kong, Sydney, London, Tokyo, Paris, Los Angeles, New York, Buenos Aires, Toronto, Madrid, Berlin, Beijing and Rome.
“We have been successful in boosting the number of tourists to Dubai due to our initiatives to enhance our position in established markets and tap new and emerging tourism source markets. The substantial gains by hotels and hotel apartments reflect, once again, the vibrancy and dynamism of the tourism industry in the emirate,” said DTCM Director-General Khalid A bin Sulayem.
While the Arab Spring in certain countries of the Middle East added to regional risk perception, the consequent increase in tourism and investor interest that Dubai and the UAE in general have seen on account of being a political and financial safe haven, have led Dubai’s economy to benefit.
“As the UAE does not share the political and economic characteristics of regional countries under turmoil, no contagious unrest scenario was reported towards the Emirati landscape,” Bank Audi said in a report on the country. “On the contrary, Emirates are seemingly profiting from the indirect spillover effects of the redirection of business, trade and touristic flows from other countries in the Arab MENA region,” it said.
SURE SIGN #2: PROPERTY PRICES ARE FIRMING UP
You don’t really need statistical proof to figure that one out. Everyone in Dubai is either a landlord or a tenant – at times both – and, therefore, a majority of the emirate’s residents track the health of the property sector like they would track the stock market index or gold prices – on a daily basis.
And most of us are well aware that the Dubai property market is becoming buoyant once again. Asking prices for prime properties – villas and apartments in sought-after locations like the Emirates Hills area, the Greens, Jumeirah Beach Residence and Dubai Marina – are up, with rentals for such units inching up as well.
For the statistically inclined, here’s the proof in numbers: According to data from the Dubai Land Department (DLD), property sales in Dubai soared 54 per cent as value rose 32 per cent in the first quarter of 2012 compared with the same period last year. You can find more on the perking-up property prices here and here.
DLD data shows that a total of 654 residential property transactions, comprising apartments, villas and townhouses, were registered in Q1 2012 compared with 426 in Q1 2011. In value terms, a 32 per cent increase to Dh5.24 billion was registered against Dh3.96 billion in Q1 2011. That’s a sure sign of investor interest and sentiment in the emirate’s property market moving northwards.
With real estate considered a strong pillar of the Dubai economy, a buoyant property market reflects the underlying commercial strength and fundamentally strong economic growth in the emirate, which is in turn boosting demand and prices in Dubai.
SURE SIGN #3: TRADE IS THRIVING
Data for trade is generally lagging, but available data (until Q3 2011) shows a huge improvement in trade numbers over the previous period. According to official numbers, Dubai’s non-oil total trade exceeded Dh814 billion at the end of third quarter of 2011, an increase of 23 per cent compared with the same period of 2010, when it reached Dh661 billion.
Ahmed Butti Ahmed, the Executive Chairman of Ports, Customs and Free Zone Corporation, and Director-General of Dubai Customs, said that these numbers reflect the UAE’s strong and dynamic economy.
“There are certain factors that stood behind this growth. The UAE market accessibility to international markets, and the growing purchasing power have all contributed to the increase in the imports volume while the distinctive higher quality of UAE product together with the support to the national industry and facilities given to exporters have played a prominent role in increasing exports and opening new markets,” he said.
“Dubai’s sophisticated modern infrastructure, the advanced services at sea and air ports together with the customs facilitations available to all land, sea and air customs ports have contributed considerably to achieve such positive results in Dubai foreign trade,” Butti added.
Last week, Dubai-based ports operator DP World announced an 18 per cent increase in its profits for 2011, from $450 million in 2010 to $532 million last year, underlining the growth that the UAE is witnessing as a country, particularly through Dubai, which is a regional and international trade hub.
SURE SIGN #4: CORPORATE EARNINGS ARE GROWING
The UAE’s listed corporates had a remarkable year in 2011, with corporate earnings registering a three-digit growth in the year compared to the previous year, according to a study by Kuwait Financial Centre (Markaz).
According to the report, UAE corporate earnings in 2011 surged a massive 104 per cent over 2010. This is after a massive slump of 51 per cent in earnings that the country’s corporates reported in 2010 over 2009.
Not surprisingly, then, the Dubai Financial Market (DFM) General Index is the best performing Gulf market this year so far, surging by 22.77 per cent in the first quarter of 2012. Reflecting the buoyancy and a general improvement in investor sentiment, share prices of more than 20 listed firms shot up by more than 10 per cent in the three-month period, with 13 firms registering stock price movement of more than 50 per cent, and four of them jumping by more than 100 per cent.
It isn’t just the share prices that are up – reflecting a surge of liquidity on the bourse is the average daily turnover on the DFM, which shot up to Dh317.13 million in Q1 2012, an increase of a massive 331 per cent from Dh73.52m in the last quarter of 2011. That’s a sure sign of rising investor interest and sentiment.
SURE SIGN #5: JOBS ARE BACK
A whole host of large Dubai companies are looking to fill a growing number of vacancies in their fold. From the world’s largest airline, the Dubai-based Emirates airline (which is looking to recruit 4,500 staff members this year) to utility firm Dubai Electricity and Water Authority (Dewa), real estate major Emaar Properties, aluminium manufacturer Dubal and many more are all on the lookout.
With a rise in demand for skilled personnel comes the accompanying rise in pay packages of existing employees. Not surprisingly, then, according to recruitment experts at Robert Half UAE, local employers are upping the ante and are increasingly using counteroffers in order to retain their top performers.
“Our research shows that there is buoyant hiring activity through the first half of 2012 and companies are starting to realise that they need to recognise their top performers or risk losing them to other organisations,” says James Sayer, associate director, Robert Half UAE.
The figures suggest that with increased hiring activity from competing organisations, companies are increasingly ardent about keeping high performance professionals on board.
“In order to keep their best employees, companies need to ensure that they are paying competitively with an appropriate salary and bonus structure,” Sayer added. “Top performers who feel they’ve made concessions during the recession will expect to be rewarded for their loyalty,” he said. Time to have a chat with the boss, eh?
SURE SIGN #6: …AND SO IS ADVERTISING, AND THE TRAFFIC
Okay this one is completely anecdotal, but can you miss the proverbial writing on the wall? From wafer-thin magazines and on-diet news dailies, print publications are once again gaining weight.
A number of publications that had reduced their page-counts over the last couple of years have managed to return to their original size thanks to a slew of advertising by banks, automobile companies and even property majors. Same is the case with outdoor advertising, with once-unoccupied billboards and signboards brandishing new colours and adverts.
Not just that, a quick glance around Dubai’s numerous restaurants and cafés shows that the buzz is back, with food and beverage outlets brimming once again with customers who are voting in an economic resurgence with their wallets.
Add to that the fact that traffic on Dubai’s main artery – the Sheikh Zayed Road – is once again getting a wee bit tight to negotiate during peak hours, and you know that an economic recovery is well underway.
Do you have an indicator of your own that shows Dubai's economic recovery, or perhaps a counter-indicator to show that all's still not well on track? Please do let us know in comments below.