The View from Dubai

TLME serves the whole of the Middle East from its HQ in Dubai, and we’ve long felt the developments in this city are key to developments in the sector, so this piece offers an insight into the latest from the Emirate.

As has become the tradition in TLME print (and now digital) publications, we begin with an insight into Dubai itself. This isn’t simply for the glitz and glamour, nor because the TLME offices are headquartered here, but because Dubai acts as an exemplar for the region as a whole.

Dubai was the first major Middle Eastern city to ‘go global’, moving from a relatively unknown desert strip in the 90s to a major global city in record time, and having now cemented its place on the top table, it’s looking to go one step further.

Of course, this has implications for the UAE and the Middle East, and arguably now even the world. Why?

Because Dubai is now a global tourist hotspot, a highly strategic location in the movement of goods and people, as well as an increasingly important political player. To add the cherry on top, Dubai is also hosting the Conference of the Parties (COP) 28 in November/December 2023, meaning hot on the heels of Expo 2020, the world’s leading figures will descend on Dubai once more to discuss climate action for the new age.

Before we look into the opportunities and challenges COP28 promises for the region, let’s first set the table in order to understand the political, economic, and cultural landscape Dubai (and the supply chain) finds itself in today.

Massive Government Investment Bringing Forth New Golden Age?

The major news of 2023 that so much of Dubai’s future centres on is the US$8.7 trillion economic plan to boost trade, investment in the region and Dubai’s already significant global hub status. Sheikh Mohammed recently tweeted that Dubai aims to “double the size of its economy in the next decade” and become one of the “top 3 economic cities around the world”.

Quite ambitious plans then to put it mildly. Yet, ambition and Dubai go hand-in-hand as the Emirate has historically strived to transform Dubai into a leading light of the modern world, heavily in-step with cutting-edge technology, business, and lifestyles. This is perhaps why, with some controversy in traditional corners of the region, the UAE recently changed the Islamic weekend of Friday Saturday, to the Western weekend of Saturday-Sunday, which has been replicated by most of the world. Such moves are emblematic of the thinking in the region, global rather than regional, aligned rather than out-of-sync.

It goes without saying that Dubai’s massive fiscal injection isn’t haphazard either, seeming to be meticulously planned in terms of specifics. Reportedly we are to see 100 “future transformational projects” included in a ten-year economic roadmap. These transformational projects include boosting foreign trade to 25.6 trillion dirhams from 14.2 trillion dirhams in the last decade, nearly doubling annual foreign direct investment to 60 billion dirhams yearly and increasing government spending from 512 billion dirhams in the last decade to 700 billion in the next.

The plan also aims to bring private sector investments up from 790 billion dirhams in the last decade to 1 trillion in the next and pledged 100 billion dirhams in annual contributions to the economy from digital transformation projects.

With this announcement, things are looking rather auspicious for Dubai and the broader region. At present, much of the world, especially the Western world, is struggling under the weight of high costs of living, challenging geopolitical issues, recessions, and even identity crises. Meanwhile, Dubai, and the region looks set to flourish.

Say it quietly, but we may be witnessing a reshaping of the global order, with declining American influence, as well as a stagnation of European markets, and with a resurgent China and an ambitious and driven Middle East, we could be on the cusp of a new world.

Tourism, Reality, Supply Chain

Dubai's tourism sector, very much a key driver of its modern economy, has rebounding strongly after the Covid-19 pandemic. According to Emirates NBD Bank, 3.1 million visitors landed in the emirate over January and February, as Dubai is fast becoming a pre-eminent getaway for European and Russian visitors looking for some revitalising sunshine during the winter months while remaining a highly popular destination for Indian visitors.

The figures are obviously inflated because of the pandemic aftereffects and ongoing lockdowns in 2022, but January 2023's visitor numbers were up 50% year on-year, although it should be added that these figures are still 9% below pre-pandemic levels. Although another caveat to this would be that in February Dubai welcomed 1.63 million visitors, which is actually up 7% on pre-pandemic levels, according to official figures.

The rise in arrival numbers also proved helpful for Dubai hotels to improve their average occupancy rates, which climbed to 84.4% in January and February, which was 0.2% higher than in 2019.

Meanwhile, the Dubai real estate market recorded 433 sales transactions worth AED820.06 million, in addition to 98 mortgage deals of AED419.64 million, and 13 gift deals amounting to AED55.19 million, data released recently by Dubai's Land Department (DLD) showed. The sales included 397 villas and apartments worth AED688.48 million, and 36 land plots worth AED131.58 million. The mortgages included 77 villas and apartments worth AED226.77 million and 21 land plots valued at AED192.87 million, bringing the total realty transactions of today to over AED1.2 billion.

Now, much more will be written on the supply chain in the region within this publication, yet to offer a brief insight, inflation and geopolitical tensions are set to dominate concerns for the regional (and global) supply chain over the next five years, that is according to a DP World study released in April 2023.

In the study, DP World surveyed dozens of freight forwarders in October 2022, in order to get a clear picture of the industry. That picture is of an industry in turbulence, with climate change and access to talent weighing heavily on business resilience, while the ability to create seamless supply chains remains a challenging issue across the board. In the study, 63% of respondents said “inflation” was a main concern, while 56% cited geopolitical tensions as another major cause of concern, presumably referring to the stand-off in Ukraine between the US, EU, and Russia, as well as tensions surrounding Taiwan with the US & China.

Cop28

The World Climate Summit – The Investment COP 2023 returns on 3-4 December alongside COP28 in Dubai, promising a revolution in climate action. As stated prior in this piece, it’s another scalp for the region to attract a global set of decision-makers, thereby solidifying Dubai’s place at the top table.The World Climate Summit has stated that it aims “to share best practices and innovations across sectors that are essential to decarbonisation efforts in the focus areas of energy, transport, buildings, industry, finance, and nature”.

Further, the event links up to the ongoing ‘Global Stocktake’, with a focus on how non-government stakeholders can achieve transition pathways to deliver on climate action. The Summit further serves as a platform for frontrunning pledges, commitments and action plans aligned with the objectives of the Paris Agreement.

In essence, we have a very exciting decade ahead of us in Dubai and the Middle East region. Now is not a time for holding back, but being bold, brave, and creative as a new tomorrow is being created in real-time.