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Video: Zawya Thomson Reuters on MENA markets in 2014

Arabian Gateway was fortunate to grab an hour with Antonio De Gregorio, Managing Director of Zawya Thomson Reuters.

We conducted an interview with the busy MD, asking a range of questions about the impact of Expo 2020,  MENA market predictions, Dubai’s economic bounce-back and how Arabian Gateway and Zawya Thomson Reuters will benefit companies looking to expand into the Middle East.

Here’s the first segment of that interview, where Antonio talks about the current economic situation of the MENA region.

We’ll be posting more instalments from this interview  over the coming weeks. Enjoy!

Arabian Gateway is an event designed to assist international  companies to expand into the MENA region, using the UAE as their gateway. Backed by Dubai FDI and Dubai Chamber of Commerce, and with local regional delegates actively looking for partnership also present, the event offers a high level of privileged networking and introductions. Learn more about Arabian Gateway and its comprehensive program agenda here.

Dubai FDI and Arabian Gateway encouraging businesses to expand into market of ‘infinite opportunity’

Fahad-Al-Gergawi-RS

Fahad Al Gergawi – Chief Executive Officer, Dubai FDI

Arabian Gateway recently sat down for a chat with the Dubai FDI CEO, Fahad Al Gergawi.

We asked him why Dubai FDI was supporting the Arabian Gateway event.

“Dubai FDI is delighted to support the Arabian Gateway forum as this gathering and its objectives are well-aligned to our mission of enabling businesses and investors overseas to benefit from being in Dubai. As the hub of an economically vibrant region and gateway to the world’s fastest growing markets across the Middle East, North and East Africa and South Asia, Dubai provides businesses with infinite opportunities to grow and expand.

“The government of Dubai has shown an unwavering commitment to economic diversification and building on its attractions as an investment destination. With Dubai selected to host the World Expo 2020 the city will attract a varied range of business expertise and the government has pledged to spend nearly 30 billion dirhams (US$8.1 billion) in Expo-related infrastructure alone. The Arabian Gateway forum will enable delegates coming from all over the world to learn about the unique characteristics of Dubai as a promising destination that combines opportunity, stability, and sustainability.”

Arabian Gateway is an event designed to assist international  companies to expand into the MENA region, using the UAE as their gateway. Backed by Dubai FDI and Dubai Chamber of Commerce, and with local regional delegates actively looking for partnership also present, the event offers a high level of privileged networking and introductions. Learn more about Arabian Gateway and its comprehensive program agenda here.

ICT Sector in GCC Flourishes on Back of Heavy Investment & Aggressive Strategies for Growth

Internet of Everything, ICT sector in GCC

GCC nations are steadily rising up global ICT rankings that indicate how well each country’s economy is positioned to grow and benefit from the oncoming wave of the knowledge economy, ‘Smart City’ initiatives and tech innovations.

Qatar (23), UAE (25) and Bahrain (29) are ranked inside the top 30 of the World Economic Forum’s 2013 Network Readiness Index (NRI). Saudi Arabia lies 31st, Oman 40th, while Kuwait lags further behind in 62nd place.

Conducted on an annual basis, Qatar and the UAE have improved their NRI rankings most among the GCC nations, moving up from 28th and 30th place in 2012, respectively.

The World Economic Forum’s NRI rankings are a globally recognised assessment which measures a country’s ICT infrastructure, and the usage of ICT among major stakeholders, including individuals, business, and government.

The steady trajectory of GCC countries up NRI global rankings is tremendously encouraging for not only tech companies operating in, or seeking expansion into, the region’s strengthening ICT sector, but all industries which rely on advanced technology to create, connect and achieve greater efficiencies. Consider these two paragraphs taken from the World Economic Forum’s NRI study, which contextualise the strategic importance of NRI trends:

“As the world transitions into what we call the Internet of Everything (IoE) – the intelligent connection of people, processes, data, and things – only the networked readiness of countries will dictate where the IoE will take hold and who will reap its benefits.

The IoE and intelligent networking will impact all sectors, creating opportunities for people, businesses, and countries. An intelligent network will be the driver of the next round of innovation, productivity enhancement, and employment.”

 

Heavy investment by GCC governments in the ICT sector is set to continue, enhancing an already world-class platform of infrastructure, incubation of tech innovations and manufacturing of hardware that will spur further growth in telecoms, media and information technology.

Let’s look at some figures coming out of research and analysis into the Gulf’s ICT market.

“The ICT sector in the Middle East represented 5.9 percent of regional GDP and a $81billion value in 2010; with a coordinated effort from stakeholders, it has the potential to reach $173billion and 7.5 percent of GDP by 2015.”
Booz and Company, 2011

“During 2003-2010, ICT spending in the UAE has grown at a CAGR of almost 19 percent to reach a value of $12billion. We forecast ICT spending in the GCC will reach $318billion over the next five years (2011–2015). About 50 percent of this amount will be accounted for by Saudi Arabia, followed by the UAE and Qatar. ICT spending for the period 2013-2015 is expected to be about $40billion in the UAE.”
Kuwait Financial Centre (Markaz)

“The ICT market in the GCC is expected to grow at a rate of approximately 8.6 percent from 2010 to 2015. Software is expected to grow at 10.3 percent over the next five years, while hardware is expected to grow at 7.1 per cent.”
Business Monitor International 2013

“ICT spending in the Middle East will top $96billion in 2014. The region’s spending will place it as one of the top three fastest-growing IT markets in the world. Public sector investments to improve government services, education and health care will be the main drivers for growth. The numerous Smart City projects in the GCC in particular will increase machine-to-machine connections by 19 per cent to reach $224million.”
International Data Corporation, 2013

“Dubai’s Smart City initiative will leverage the Internet of Everything to become one of the world’s most connected and sustainable Smart Cities – in time for Expo 2020. Dubai joins a growing global Smart City movement, with Frost & Sullivan estimating a global Smart City market potential of $3.3trillion by 2025.”
Cisco, 2013

ICT Developments Powering Growth in Abu Dhabi, Dubai and Qatar

 

Global Chipmaking Industry in Abu Dhabi

Abu Dhabi has made significant recent investments as part of its vision to become a major player in a $20billion global chipmaking industry. State-owned Advanced Technology Investment Company (Atic) is building an advanced technology cluster to manufacture semiconductors and attract other semiconductor companies into the region. In 2009, Atic invested $1.4billion in partnership with US company Advanced Micro Devices to create a manufacturing division, Globalfoundries. In 2010, Atic paid $1.8billion for a majority stake in Chartered Semiconductor of Singapore, which elevated Globalfoundries to the third-largest contract chipmaker in the world.
FT

Dubai’s ICT Outsourcing Drive

Dubai is seeking to become a leading ICT services outsourcing centre, reaching far beyond the simple answering of phones and helpdesk support for companies, but also encompassing IT operations and infrastructure management, server consolidation and Internet services. Dubai Outsource Zone (DOZ) began operations in 2006, and now hosts more than 100 firms that employ some 7000 staff. DOZ offers tax-exempt status, allows for full ownership of their business and 100% repatriation of capital. It also has the advantage of being integrated with Dubai Internet City (DIC) and other state-backed developments aimed at supporting the ICT industry at all levels.
Competitiveness of the ICT Sector in the Arab Region, United Nations 2013

Qatari Investment Sows Seeds for Growth

In Qatar, the government’s goal is to create a competitive knowledge-based economy through its five-year National ICT Plan, which aims to double the ICT workforce and the ICT sector’s contribution to the GDP; the government will invest more than $1.7billion to advance this digital agenda by 2015. The booming technology sector has grown at an average rate of 17 percent a year for the last five years, to a total value of approximately QAR 15.5 billion in 2011, which represents around 1.6 percent of total GDP in Qatar, up from 1.2 percent in 2008, and includes more than $300million in investments from global firms such as ExxonMobil, GE, and Microsoft.
Competitiveness of the ICT Sector in the Arab Region, United Nations 2013

Arabian Gateway is an event designed to assist international ICT companies to expand into the MENA region, using the UAE as their gateway. Backed by Dubai FDI and Dubai Chamber of Commerce, and with local regional delegates actively looking for partnership also present, the event offers a high level of privileged networking and introductions. Learn more about Arabian Gateway and its comprehensive program agenda here.

How the UAE Defence Sector is Evolving from Importer to Exporter

Arabian_Gateway_military_plane

The UAE’s ambition to develop an indigenous defence industrial base offers opportunities for foreign defence companies beyond the Gulf nation’s prolific buying volume of aircraft, weapons and military hardware.

Recognised as the world’s fourth-largest defence importer, the UAE accounted for almost 5% of global defence imports in 2011. Between now and 2016, with an annual defence budget of around $10 billion, the UAE is projected to spend almost 6% of its GDP on defence.

However, the scale of UAE expenditure goes further than obvious strategic objectives of ensuring protection of its oil and gas infrastructure and its wider regional security concerns. With greater intent than any of its GCC neighbours, the UAE is building  its own defence industry through collaboration with foreign defence contractors, as it seeks to change from being an importer of defence capabilities to being an exporter.

In this blog post we’ll examine how this evolving defence strategy of the UAE is motivating North American and European defence companies to set up operations in the country, and also the growing importance of the MENA region to the global defence sector.

Arabian Gateway is an event designed to assist international defence companies expand into the MENA region, using the UAE as their gateway. Backed by Dubai FDI and Dubai Chamber of Commerce, and with local regional delegates actively looking for partnership also present, the event offers a high level of privileged networking and introductions. Learn more about Arabian Gateway and its comprehensive program agenda here.

Inside the MENA Defence Market: KSA & UAE the Big Spenders

The defence industry’s future is increasingly shifting to the Middle East and Asia, with both of these regions continuing to spend heavily on developing military capability while Western defence budgets are being steadily trimmed.

Growth in the Middle East market is clear. Military expenditure in the MENA region was estimated at USD $91 billion in 2010 and is expected to reach USD $118.2 billion by 2015, according to Al Masah Capital.

Global defence spending graph 2010. Source: Al Masah Capital

Global defence spending in 2010

Saudi Arabia and the UAE lead defence spend in MENA. In 2010, Saudi expenditure totalled USD $45billion, followed by the UAE (USD $16billion), Algeria (USD $5.7billion) and Kuwait (USD $4.6billion).

High levels of military spending by MENA governments as a percentage of GDP is evident in the graph below. In comparison, North American expenditure was estimated to be 3.8% of GDP between 2001 and 2010.

Defence spending in GCC per GDP

Defence spending in GCC per GDP. Source: Al Masah Capital

The buying pattern of the MENA region has typically centered on large quantities of aircraft, missiles and armored vehicles, with the UAE among the most active buyers of arms in the international market (Al Masah Capital). During 2005–10, the UAE accounted for 35% of all major conventional weapons purchases in MENA , followed by Algeria (21%), Egypt (16%) and Saudi Arabia (13%).

Defence Offset Policies in the Middle East

Very few countries in the MENA region have an offset policy for defence contracts, which, when combined with their prodigious budgets, creates an especially attractive market.

MENA nations that do operate offset programs set their offset percentages at levels much lower than other parts of the world. Average offset programs in the EU, for instance, are estimated to be 135%.

Offset policies of the GCC’s biggest players (Al Masah Capital):

· Kuwait: the value of offset obligations is estimated at 35% should the value of the defence contract be USD $10 million or more

·  Saudi Arabia: a minimum offset of 35%. KSA has not stated a threshold for which the offset obligation kicks in

· UAE: the most extensive offset policy among MENA countries. A minimum offset of 60% should the value of defence contracts be USD $10 million or more

UAE the Leading Defence Manufacturer in GCC

The UAE has identified the development of its own defence industrial sector in order to become a global manufacturing base for defence R&D and evolve into an exporter of high-tech, high-margin military hardware.

Over the course of the last decade, on the back of its offset program and Free Zone initiatives, the UAE has made significant progress on this front and successfully positioned itself as the leading defence manufacturer in the GCC – including its bigger spending neighbour, Saudi Arabia.

In 2010, the joint efforts of international contractors and UAE’s private sector are believed to have created over 40 commercially viable and profitable businesses, attracting foreign investment in excess of USD $2.2 billion (Al Masah Capital).

Lockheed Martin, Boeing Co. and SAAB are examples of international companies who have set up joint venture operations in the UAE. Locally, UAE government-sponsored companies such as Mubadala, Tawazun, Abu Dhabi Ship Building and International Golden Group are producing armoured land vehicles, weaponry and naval vessels for international supply.

The Free Zone Advantage

Free zones in the UAE offer especially favourable conditions for foreign defence companies to develop, research and manufacture military technology and hardware. Free zone businesses can be owned outright and enjoy full repatriation of capital, protection of IP and exemption from company and personal tax. From a manufacturing and logistics perspective, free zones offer cheap energy, access to highly advanced infrastructure and the advantage of affordable leasing of warehousing, machinery and storage.

Industry leaders will be present at Arabian Gateway to discuss the benefits and implications of setting up your business in free zones or engaging in local partnerships, as well as critical issues of transparency, intellectual property rights and protecting your investments in the region.

Arabian Gateway is a comprehensive seven-day program, with delegates attending the first two days in the city closest to their current business premises (London, New York, Sao Paolo, Singapore, Sydney or Johannesburg). The final five days take place in Dubai, at the JW Marriot Marquis, from 25th-29th May 2014 (Flights and accommodation included). Book your place today.

Infrastructure Opportunities in MENA and the Domino Effect of Dubai Expo 2020

Crane on construction site

Rapid infrastructure development across the GCC is being powered by mind-bending sums of investment, and has only been amplified further by Qatar’s hosting of the 2022 FIFA World Cup and last month’s confirmation of Dubai’s winning Expo 2020 bid.

GCC governments are currently committed to USD $804billion of ongoing infrastructure projects in the region (Zawya). These infrastructure projects form part of a much wider GCC construction drive over the next decade, estimated at USD $4trillion, as governments seek to diversify their economies into non-oil sectors and cater to some of the fastest growing populations in the world.

Qatar’s 2022 FIFA World Cup™ and Dubai’s Expo 2020 involve monumental construction efforts, and are set to have a domino effect on those countries’ tourism, banking, trade, IT, logistics and other related sectors in the lead up to, and beyond, both events.

Dubai will require infrastructure investment of USD $43billion (government and private sector) to host Expo 2020, according to Deutsche Bank. Qatar’s infrastructure spend ahead of the 2022 FIFA World Cup™ is expected to reach USD $150billion, with 40% of Qatar’s government budget allocated to infrastructure projects between 2011 and 2016.

In this blog post we’ll look at the largest infrastructure projects underway in the GCC, and also how Expo 2020 is expected to fast track infrastructure development in Dubai and its wider impact on the UAE economy.

The scope of all this activity has created tremendous opportunities for businesses operating across all segments of the construction industry. Arabian Gateway is an event designed to assist construction companies expand successfully into MENA. Industry experts will explore insight and challenges within the sector; market analysts will facilitate workshops to help you build strategies specific to your company to tap into these opportunities; and you will be networking with 700 senior business delegates from across the globe. Book today for your 10% early bird discount.

A Snapshot of Infrastructure Projects in GCC 
(Zawya’s GCC Project Report 2013)

Saudi Arabia: The Ninth Development Plan commits spending of USD $284billion to develop infrastructure over 2010–14. Projects include expansion of King Abdul Aziz International Airport, development of a high-speed rail track connecting Mecca with Medina, housing projects, and addition of a 3,900km railway network with development of three major railway projects.

UAE: The estimated total value of projects planned or underway in the UAE is USD $549billion. Each of the seven emirates has separate infrastructure development plans. Abu Dhabi will spend USD $200billion over 2008–13 as part of its Abu Dhabi Vision 2030. Major projects include USD $58billion for roads and bridges.

Qatar: Qatar’s spend is estimated to be USD $225billion, as part of its infrastructure development drive ahead of the 2022 FIFA World Cup™, and in accordance with Qatar Vision 2030 pipeline for 2011–16. Major projects include USD $20billion investment for road development, USD $ 25billion investment in rail, USD $15.5billion to build a new airport, USD$ 4billion investment to build stadiums, USD $8billion to construct a deepwater seaport and USD $ 1billion transport corridor project in Doha.

Kuwait: Kuwait plans to invest around USD$ 110billion in line with its Kuwait Vision 2030 pipeline for 2010–14. Major construction projects include Kuwait City’s USD $ 7billion metro project, USD $ 3billion Kuwait International Airport terminal project, USD $6.2billion for construction of motorways, USD $ 1.8billion water and power project, and a USD $14.5billion refinery that would be the largest in the Middle East.

Oman: Oman has planned investments of around USD $ 78billion over 2010–15. Major projects include USD $ 4.4billion for new road constructions, and a new port.

Bahrain: The estimated value of projects planned or underway is USD $62billion. Major projects include USD $4.8billion for Bahrain International Airport expansion, USD $4.2billion for a 40km Bahrain-Qatar Friendship Bridge, and USD $3.2billion for housing development.

Dubai Expo 2020 – 25million Visitors Driving Infrastructure Demand

Dubai’s hosting of Expo 2020, which ranks third in global importance in terms of economic and cultural impact behind the Olympics and FIFA World Cup™, means a substantial boost for construction in order to build necessary infrastructure to successfully deliver the event.

  • Barclays report Dubai’s economy may grow 6.4 percent on average over the next three years and potentially 10.5 percent annually through to 2020.
  • It is anticipated that Expo 2020 could boost the emirate’s GDP by USD23 billion, or 24.4%, over 2015–21 (Bank of America Merrill Lynch).
  • Ripples of growth will be experienced throughout the wider Dubai economy, particularly in the tourism, hospitality, transportation, logistics and retail sectors.

Deutsche Bank forecasts 25 million tourists and visitors to Dubai in 2020, up from 10m in 2012. Infrastructure requirements will be significant, and their analysis shows a total of USD $43billion (government and private) will need to be spent on the following:

Airport Expansion USD $7.8bn
Construction of hotel rooms and hotel apartments USD $24bn
Creation of additional retail space USD $9bn
Metro expansion plan USD $1.38bn
Jebel Ali Port – T3 Terminal USD $1bn
Total infrastructure spend USD $43bn

Tourist arrivals, underpinned by domestic population growth, will be the key driver behind construction of USD $33billion of new developments in Dubai’s hotel and retail space.

Dubai hotel room growth EXPO 2020

Dubai hotel supply – completed / under construction / required

Dubai retail growth EXPO 2020

Dubai retail space completed / under construction / required

Oxford Economics expects around 277,000 new jobs to be created as a direct result of Expo 2020. Job creation will be robust across most of the sectors, particularly hospitality, construction, transportation, logistics, retail, and services.

Expo 2020 job creation

Job growth forecast in Dubai as a result of Expo 2020

Arabian Gateway is a comprehensive seven-day program, with delegates attending the first two days in the city closest to their current business premises (London, New York, Sao Paolo, Singapore, Sydney or Johannesburg). The final five days take place in Dubai, at the JW Marriot Marquis, from 25th-29th May 2014 (Flights and accommodation included). Book your place now, and enjoy a 10% early bird discount.

All Signs Point to Robust Growth in UAE Healthcare Sector

Hospital surgery room

Colliers International this week released a healthcare report that stated high quality, efficient private hospitals in the UAE could achieve 15% – 20% net profit margins over the coming years.

It’s a very bold forecast, but one that is aligned with wider market research and recent industry developments that all point to high returns on healthcare investments in the UAE.

Dubai’s announcement last week that mandatory health insurance will begin to take effect from 2014 is tremendously significant. This long-awaited measure will have a profound and positive impact on the emirate’s growth and demand in healthcare services. Abu Dhabi passed similar health insurance legislation in 2006, paving the way for an immediate 40% increase in demand for healthcare services and doubling of revenues for most private hospitals in subsequent years, according to Colliers.

NMC Health, a UAE healthcare company trading on the London Stock Exchange, reacted to the Dubai health insurance announcement with its shares rising almost 9%, according to Bloomberg data. Consider, too, the performance of UAE’s Al Noor Hospital Group, which floated as an IPO on the London Stock Exchange less than a year ago. Its stock price has risen dramatically by 45%.

In this blog post we’ll look at how and why Colliers, along with Deloitte and other intelligence units monitoring the healthcare sector, have arrived at these conclusions, and why private companies like Al Noor Hospital Group and NMC Health are riding high on optimistic investor sentiment.

Robust growth in UAE healthcare seems inevitable, and Arabian Gateway is designed to help your company expand into, and take advantage of, MENA’s attractive healthcare opportunities. You’ll build winning strategies on the back of our comprehensive 7 day event that gives you direct access to industry panelists, active participation in workshops conducted by market analysts and incredible opportunities to network with 700 delegates harbouring the same expansion aspirations as you. Don’t wait. Book your place today.

Three factors appear to be driving growth in the UAE healthcare market.

  1. A rapidly growing affluent population and subsequent increases in elderly demographics
  2. Current high levels of Government healthcare spend, and the necessary unloading of that financial burden to the private sector, resulting in huge potential for growth in the near future
  3. Mandatory health insurance laws in Abu Dhabi have driven rapid growth in patient encounters, and last week’s announcement that Dubai is set to follow suit will undoubtedly result in a similar trend

Demographics: a foundation for continued growth and demand

The significant increase in the UAE’s population will be the primary driver of demand for healthcare goods and services. Population growth in the UAE is among the highest in the world, primarily due to immigration.

The UAE’s per capita healthcare spend, ranked second highest in the GCC region, is expected to grow at a CAGR of 5 percent from 2011 – 2014 (Economist). Deloitte believes growth will be fuelled by a combination of an increasing incidence of chronic lifestyle diseases, a growing aging population, high purchasing power, substantial government budgetary allocation to the sector and an increasing volume of patient encounters due to mandatory insurance coverage (more on this later).

Healthcare expenditure per capita in GCC

Healthcare expenditure per capita in GCC region.

The elderly form a big market for healthcare, as they are prone to age-related ailments such as heart diseases, hypertension and diabetes. The MENA region’s elderly population totalled around 10 million in 2010. It is estimated to rise more than 40% to 14.3 million by 2015. Incidence of lifestyle-related diseases, such as obesity, hypertension and diabetes, has increased in the MENA region due to growing preference for fast-food diet, lack of exercise, sedentary lifestyles and tobacco smoking (Deloitte).

Shifting the burden from public to private healthcare providers

UAE government expenditure on healthcare is among the top quartile in the world, and it is emerging as the GCC’s fastest growing healthcare hub. Al Masah Capital report that, in 2011, total healthcare spending in the UAE was estimated at USD10.8 billion (24% of the 2011 federal budget). By 2016, Al Masah Capital estimates this figure to reach USD15.7 billion.

However, this will change as government health departments actively encourage private sector investment to share the burden. The increased role of the private sector is likely to create tremendous opportunities for investments in healthcare and Information Technology.

Private healthcare providers are already gaining an increased share of UAE patient encounters. In 2006, the share was evenly split between public and private sectors at 50%. In 2011, the private sector share had risen to 64% of patient encounters (National Bureau of Statistics).

Demand looks set to continue. Studies show that, despite its vast wealth and ongoing investment in healthcare, the UAE still lags behind other developed countries such as the US and UK, with shortages of doctors, nurses and beds. This is viewed as a crucial issue that needs addressing, and the UAE government is fostering private sector investment to meet this shortfall.

Mandatory health insurance creates tremendous opportunity

The introduction of mandatory health insurance in Abu Dhabi in 2006 has created exponential demand and benefits for healthcare providers in the emirate, as illustrated in the graph below. Dubai, which will begin implementing compulsory health insurance laws for expatriate workers from 2014, can expect similar growth.

AbuDhabi medical claims history

Historical growth for healthcare services, following Abu Dhabi mandatory health insurance laws.

Colliers report that Abu Dhabi experienced an immediate increase in demand of over 40% for healthcare services, and that revenues for most private hospitals had doubled in subsequent years.

Once private health insurance takes hold, as planned, across other UAE emirates, it is expected that patient volumes for private providers will rapidly increase.

Arabian Gateway is a comprehensive seven-day program. Delegates attend the first two days in the city closest to their current business premises (London, New York, Sao Paolo, Singapore, Sydney or Johannesburg). The final five days take place in Dubai, at the JW Marriot Marquis, from 25th-29th May 2014 (Flights and accommodation included). Book your place now.

More market analysis and opportunities:
Exciting growth and potential in GCC food services
Building opportunity in a $4trillion GCC construction sector

Exciting Growth and Investment Potential in GCC Food Sector

Supermarket aisle

There is very good reason for the high levels of optimism currently circulating the GCC food sector.

Core demographics, fundamental to growth in Food Services, indicate a very positive outlook for private sector companies that are positioning themselves to meet growing demand in the GCC and MENA.

This blog post examines some of those key growth drivers and emerging trends in Food Services, and includes insight from industry analysts and leading companies operating in the region.

Let’s look at four key factors driving food consumption in the GCC:

1. Rapid population growth (2 x global average)
2. An increase in tourism
3. Economic growth (the region’s GDP is expected to reach US$ 1.8 trillion by 2017 from US$ 1.1 trillion in 2010)
4. Purchasing power strength in the region (per capita income is likely to increase to US$ 36,839 in 2017 from US$ 27,304 in 2010).

Consider alongside these powerful indicators the rising significance of the Halal food industry, which has ballooned to a global value of USD $685 billion. Dubai, with its governmental push to lead the ‘Halal revolution’, combined with its advanced logistical might, is widely viewed as the pivotal regional player.

Historical and forecast food consumption in the region is spiking. The GCC will consume 49.1 million tonnes of food annually by the end of 2017, with the UAE to be the largest consumer in per capita terms, according to a 2013 GCC Food Industry Report. The same 2013 study shows that, over the past five years, the value of the UAE’s total foreign trade in food products was $80.4 billion – remarkable growth of 84%.

Arabian Gateway’s global gathering is designed to help your company successfully expand into MENA, using the UAE as its gateway. Attending delegates will benefit from direct access to our industry panel experts and market analysts from Zawya Thomson Reuters, who will be facilitating workshops to examine opportunities in detail and build strategies specific to your company to tap into this potential.

Book your place now and position your company for success.

Trends and Investment Positives (Alpen Capital Group 2013)

  • In-line with the global trend, the region is also going to see a changing consumption pattern – a shift to a protein-rich diet that includes meat and dairy products from a carbohydrate-based one that consists of staple food items such as cereals.
  • Increasing urbanization, hectic lifestyles, growing popularity of large food retail formats and presence of multinational food companies in the GCC region are expected to increase the popularity of high-value processed foods among consumers, driving their consumption.
  • While there is a growing awareness and drive about healthy living, obesity rates are high and diabetes is a concern for the region. As a consequence, demand for health food (also known as functional food) which is high on energy and nutrition is expected to gain traction. This is likely to be a fast growing segment.
  • Halal food consumption is growing at a faster pace with the rise in income levels, and tourist activities in the region.
  • Per capita consumption in the region is low compared to that in developed economies and is expected to increase at a relatively higher rate.
GCC food_consumption by capita

Over the past five years, the value of the UAE’s total foreign trade in food products was $80.4 billion – remarkable growth of 84%.

Market Insight & Observations

“An increasing trend of dining out and stronger preference for quick meals, including fast food and ready-to-eat foods, have opened up exciting growth opportunities in this sector” – The Savola Group

“The GCC government focus on food security is likely to see more investments in the regional / local food processing and production sector and setting up of home grown units” – A’Saffa Foods SAOG

“With rising population and income levels, demand for food and food products in the GCC has been rising at a much faster rate than the developed economies. Such favourable demographic factors present tremendous opportunities in Food Services” – Allana International Limited

“With continuous government support and private sector involvement, the food processing segment is becoming one of the leading and most diversified industries in the GCC. Growing food requirement and a high dependence on imports creates interesting opportunities for private sector companies operating in this sector” – Alpen Capital Group

“We estimate that due to population growth, increase in foreign tourists and per capita income, food consumption will reach 49.1 million metric tonnes (MT) by 2017, growing at a CAGR of 3.1% over the period 2012-2017. To meet this increasing demand for food arising out of the growing consumption is both a challenge for the GCC governments and an opportunity for private sector players to expand within the GCC markets” – Alpen Capital Group

“Among GCC countries, the UAE leads the food processing sector due to its strategic location and strong logistics” – Alpen Capital Group

You can learn more about our Arabian Gateway program agenda here.

Arabian Gateway is a seven day program. Each delegate attends the first two days in the city closest to their current business premises (London, New York, Sao Paolo, Singapore, Sydney or Johannesburg). The final five days take place in Dubai, at the JW Marriot Marquis, from 25th-29th May 2014 (Flights and accommodation included). Book your place now.

Also: Building opportunities in a $4trillion construction sector

Deconstructing Expo2020: Download a FREE report by Clyde and Co

A $23 billion boost to the UAE economy by Expo 2020 has been predicted by the Global Emerging Markets report by Bank of America Merrill Lynch. The centerpiece of development is a 438-hectare site at the southwestern end of Dubai next to the Dubai Word Central close to Jebel Ali port.

Redevelopment

According to a report from alternate investment firm Al Masah Capital, Expos have aided physical redevelopment of host nations and cities. Expo Montreal 1967, for instance, led to the construction of structures such as the Décarie Autoroute and the Louis-Hippolyte Lafontaine Bridge and tunnel, which were essential to Montreal’s subsequent growth.

The 1988 Expo in Brisbane, Australia, witnessed the laying of nearly 2,000 kilometers of telecommunications wire. Expos have been useful for branding of the host country/city. For instance, the Eiffel Tower, one of the most recognizable structures in the world, was built as the entrance arch to the 1889 World Expo in Paris, France.

As Dubai’s celebrates its Expo triumph, Gulf Business takes a look at the diverse areas which are expected to experience growth and development across the cityscape in the lead up to the 2020 event.

Retail

Some of the world’s most powerful luxury brands fill the 95 malls, markets and souks in Dubai and during the city’s short history it has become internationally recognized for its retail market. “The retail sector in Dubai has always been strong, underlying the nation’s growth,” said Majid Al Ghurair, chairman of the Dubai Shopping Malls Group.

“As Dubai increasingly becomes recognized as a centre of commerce for the Southern Hemisphere, the Expo could potentially boost this reputation with exponential growth of up to four times [the current retail sector],” Ghurair said.

Banking

Another highly anticipated key-gainer from the Expo 2020 is the banking sector. The event, which is the third largest in the world behind the Olympics and the Soccer World Cup, is expected to bring an increased confidence in Dubai’s financial centre, further boosting the reputation of the UAE as credible economic force on the world stage. According to a recent report by Bank of America Merrill Lynch Expo will improve the GDP of the UAE.

“We estimate a successful Expo 2020 bid would provide a modest lift to GDP growth, leading up to the period, and a more material one around the event itself. It should lead the award activity pipeline to show strong improvement.”

Airlines

Middle East airlines are expected to experience a hike in business during the run up to 2020, as 70 per cent of the 25 million predicted visitors to Expo are expected to travel from outside of the UAE. However, according to Helel Almarri, Director General of Dubai’s Department of Tourism and Commerce Marketing (DTCM), the planned aviation development between 2013 – 2020 fits within long-term growth plans for Dubai’s tourism industry, irrespective of the Expo 2020.

“The tourism vision for 2020 includes the target figure of welcoming 20 million visitors per year to Dubai by 2020. Clearly hosting Expo [will] help us achieve that ambitious target, but our plans are not reliant on it,” Almarri said.

Hotels

In the run up to Expo 2020, there are plans in place to diversify the range of hotels available to people visiting Dubai. Playing a key part in this is a new government incentive that will give a concession to businesses setting up a 3 or 4 star hotel. These business owners will be exempt from the ten per cent municipality fee which is currently applied onto room rates for each night of occupancy.

“Part of the strategy to deliver our Tourism Vision for 2020 is to continue to grow our hotel offering. We intend to almost double the number of rooms between 2013 and 2020 and part of this is increasing the mid-market offering.

Approximately 25 hotels with a total of 6,250 rooms are due to open by the end of 2014, 50 per cent of which are 3 and 4 star and hotel apartments so you can already see that there is growth in this range” said HE Helal Almarri. Some business leaders however may look to high land prices as an obstacle in achieving monetary value from expanding into the mid-to-lower hotel market for the Expo event.

Recruitment

The effect on the job market has been one of the most talked about factors surrounding Expo 2020, with the Department of Tourism and Commerce Marketing predicting 275,000 jobs being created between 2013 and 2021. An impressive figure, the government has said that the growth within this figure will be felt most across construction, engineering, transportation, retail, hospitality and aviation. Konstantina Sakellariou, a partner at recruitment firm Stanton and Chase has emphasised the need for sustainable investment in the job market.

“A number of sectors will benefit. [Expo] will boost demand for human talent, while it will also attract additional investments, funds and residents, which will increase consumption, having a positive impact in additional sectors of the economy.

“However, one needs to be cautious in order to avoid opportunistic reactions in the human talent market, which were experienced in the past. This will be the biggest challenge the overall human talent sector will have to face, and we hope that the experiences of the past will allow both candidates and companies to be wiser and more professional.”

DEWA

In a recent World Bank report, Doing Good Business 2014 DEWA (Dubai Electricity and Water Authority) was ranked first across the Middle East, and fourth in the world for adept electrical output. The main electricity and water supply for Expo 2020, the event is likely to further promote the international credibility of Dewa.

This is something which is welcomed by the company’s CEO Saeed Mohammed Al Tayer, who has said Dewa’s electrical and water supply which maintains a safe excess of the amenities to current demand will provide the basic formula for reliable expansion for 2020.

Al Tayer has repeatedly voiced his support of Dubai’s Expo campaign over recent months and is confident that the company’s plans for expansion for the 2020 event will be successful. The CEO has also emphasized that DEWA will keep reliability and availability at the core of the company’s expansion.

“We will spare no efforts to achieve Dubai’s goal of development and support preparations for hosting Expo 2020,” said Saeed Mohammed Al Tayer.

Construction

In true Dubai style the planned 438-hectare site for Expo 2020 is set to be the largest ever created for a World Expo. The construction industry as a whole is expected to gain from the event, with 30% of the jobs created by Expo 2020 expected to be in construction.

The government has also announced that all new and existing construction projects are going to be fast-tracked to be ready for 2020. These projects will be distributed across hospitality, transport and amusement facilities. A reinvigorated confidence in the construction industry is also set to take hold with projects such as The World being fast-tracked to be ready in time for the Expo.

Transport

An estimated Dhs5 billion is to be invested in transport to and from the Expo event. Central to this expansion will be the new Dubai ExpoRiders, which will include 750 zero emissions buses that will cover the entire city scape through 35 stations.

Expansion to the Dubai metro will also be fast tracked for the 2020 event, with the current Red metro line being expanded to the event site. Levels of the use of public transport are also expected to increase, with a zero-private cars policy being applied to the event, in order to encourage the support of Expo’s green living aim.

Sustainability

Sustainability is one of the three core themes of Expo 2020 and is set to play a key part in the infrastructure of the Dubai event site. Site planners are aiming for the Expo site to generate at least 50 per cent of the energy the site will use, including the latest photovoltaic technology whereby electrical currents will be produced using solar energy. In line with Dubai’s Expo transport policy the event will also be a zero emissions site.

Although the UAE is currently one of the world’s biggest carbon emitters, the emphasis that will be placed on sustainability over the next seven years in the lead up to the 2020 event will no doubt help to promote this fundamental issue with the UAE and help communicate the need for sustainable lifestyle on a global platform at the event in 2020.

After the Expo event, the site itself is to be recycled and used as a research centre and university, based around the study of the aims related to Expo, including sustainability. This development in particular could help many generations benefit in the quest for sustainability

You

Perhaps the biggest person set to gain from Expo 2020 is ‘you’, the resident of Dubai. With a focus on sustainable development, transport infrastructure and a boost to the local financial market, the long-term benefits of hosting Expo are perhaps to be felt, undoubtedly most by those living in the city. According to Bank of America Merrill Lynch the real estate sector will experience a positive momentum over the remainder of the year, reacting positively to the Expo win.

“[Expo will] be a great accolade for the emirate, opening a new window to the world to promote Dubai’s status as a global city, and one with world-class infrastructure. Importantly, it would also help to drive demand in the emirate’s property sector, helping to reach new and untapped markets and ultimately increasing Dubai’s global reach.”

CBRE global research consultancy has also confirmed that Expo is expected to boost the residential market in Dubai.

Majid Al Ghurair added: “Dubai is considered as a safe haven and hence hosting the World Expo 2020 will not only have a positive impact during the event but also after the event. The whole region will be able to take advantage of the economic upgrade, improved employment and enhanced regional integration. It will also give an opportunity to enhance the Emirate’s repositioning of the Middle East as a centre of innovation.”

(Source: Gulf Business)

Deconstructing Expo 2020 by Clyde & Co

Fill in your details to access this complimentary publication on Deconstructing Expo2020 by Clyde & Co. Topics covered in the digital document include a summary of what the Expo 2020 holds for Dubai. Learn more about opportunities arising for developers, contractors and consultants across all sectors of construction; discover key projects in the pipeline, understand factors for setting up business in Dubai, recognize local laws and joint venture agreements and much more.

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Building Opportunities in a $4trillion GCC Construction Sector

Demand and investment in infrastructure construction projects across the GCC continues to show robust growth as regional governments look to diversify economies away from their rich oil and energy sectors.

The Middle East is expected to spend over $4 trillion on infrastructure in the next decade (Emirates 24/7), which means vast and significant opportunities for companies providing construction services, materials, equipment, logistics, man power and consultancy.

In this blog post, we’ve collated a snap shot of each GCC country’s strengths and opportunities in the construction sector, together with an overview of the largest projects currently underway and forecast. A breakdown of projects by sector is also highlighted.

Arabian Gateway, together with keynote industry speakers and construction analysts and market experts from Zawya Thomson Reuters, will be conducting a series of comprehensive workshops during our global gathering to successfully position your company to expand into this lucrative construction market.

With 700 inbound delegates from across the globe, and the backing of Dubai FDI, Arabian Gateway offers extensive opportunities to network and create contacts within the MENA construction sector.

Book your place before November 30 to receive your 12.5% early bird discount.

 UAE Strengths

• Government-supported infrastructure spending in transport and utilities will intensify as a means of diversifying the economy away from oil, in addition to keeping the population quiescent at a time of wider unrest.

• A clear regulatory environment and the governing of private investments in infrastructure create a favourable investment climate.

• State-owned utilities (ADEWA, DEWA) are willing to take on majority equity stakes in projects and provide government guarantees in a bid to attract investors.

UAE_construction_project_market

UAE construction market by project. Source: Deloitte

UAE Opportunities

• The decline in cement and steel prices in the region reduces the cost of new projects.

• The construction industry remains one of the largest sectors in the UAE, after oil & gas, as the country tries to transform its oil-dependent economy by spending billions of dollars on its infrastructure and tourism sectors.

• Government willingness in Dubai and Abu Dhabi to allow private participation in infrastructure still appears high.

• The UAE is becoming a hub for renewables and green tech, with Masdar spearheading new ventures.

UAE_construction_by_sector

UAE construction by sector. Source: Deloitte

KSA Strengths

• Saudi Arabia has the largest construction sector in the Middle East. Alongside active government spending, efforts are also being made to increase private investment. Government-led activity boosted by oil windfalls is driving demand in the construction industry.

• The Ninth Development Plan for the Kingdom of Saudi Arabia sets out plans to invest SAR 1,444bn (US$385bn) in social and economic infrastructure between 2010 and 2014.

• The total value of contracts issued in the Kingdom’s construction sector grew by 50% year-on-year in H212 (following a 140% y-o-y increase in awards during 2011).

KSA_construction_market_projects

KSA construction market by project. Source: Deloitte

KSA Opportunities

• The number of ongoing mega-projects means that many multinational firms have a presence in the country.

• Increasing private investment should provide opportunities for large foreign contractors to increase their involvement in the country.

• As other construction industries in the Gulf stagnate, construction companies look to Saudi Arabia for opportunities.

• Saudi Arabia remains a ‘construction safe heaven’ amid both wider political and financial turmoil.

KSA_construction_project_by_sector

KSA construction projects by sector. Source: Deloitte

Qatar Strengths

• Construction of large-scale transport infrastructure projects is under way – a move that will ease the strain on existing infrastructure.

• A number of international companies operate in the country, which is open to international private sector involvement.

Qatar_construction_by_project

Qatar construction by project. Source: Deloitte

Qatar Opportunities

• Qatar is developing its non-oil sector, thereby supporting infrastructure development.

• Hosting the FIFA 2022 World Cup should yield considerable contracts across the construction and infrastructure sectors.

Qatar_construction_project_by_sector

Qatar construction project by sector. Source: Deloitte

Kuwait Strengths

• With large oil reserves, Kuwait has a significant cushion to weather economic difficulties.

• The country has been generating surpluses for a number of years, meaning it has financing available for large projects.

• USD 12.6bn infrastructure investment will further boost development and growth.

• Tighter integration with neighboring states makes Kuwait a more enticing investment prospect.

• Kuwait has a strong country structure and Kuwaiti firms have considerable infrastructure and construction expertise.

Kuwait_construction_by_project

Kuwait construction by project. Source: Deloitte

Kuwait Opportunities

• The tight integration of infrastructure development between Gulf states throughout the GCC provides opportunities for Kuwaiti firms to win contracts in the region.

• The Al-Zour refinery project appears to be back on track, offering opportunities for both energy infrastructure and wider construction projects.

• The government’s continuing support for infrastructure stimulus provides opportunities for developments. Improvements in power and transmission systems are particularly beneficial for sustained growth.

Kuwait_construction_project_by_sector

Kuwait construction project by sector. Source: Deloitte

Oman Strengths

• The government’s strategy to diversify away from oil is well under way and is helping to drive infrastructure and tourism development.

• The government is keen to attract the private sector, including foreign companies, and has a strong market orientation.

Oman_construction_by_project

Oman construction by project. Source: Deloitte

Oman Opportunities

• Growing tourism and transport infrastructure offer opportunities for developers and new business in the country.

• Diversification of the economy will lead to a number of construction contracts and investment into accompanying infrastructure.

Oman_construction_project_by_sector

Oman construction project by sector. Source: Deloitte

Sources: Deloitte, Meed, Business Monitor International.

Business Between the UAE and South Africa

Informal bilateral relations between South Africa and the UAE were initiated in 1992 when the South African Department of Trade and Industry and the South African Foreign Trade Organization organized a successful exhibition.

This exhibition of South African products took place in October 1992 and has laid the foundation for what soon became a prosperous business relationship. In an attempt to further explore and expand bilateral economic relations, a range of Provincial visits from South Africa, often led by Premiers, have taken place, particularly since November 2006.


There is a growing community of South African nationals in the UAE, stimulated, in part, by a growing demand for South African labor force. The major sectors where the requirement is increasing are: construction, hospitality, financial, medical, retail management and education.

Others range from well-known restaurant groups such as Nando’s, Butcher Shop, Meat & Co, Mug & Bean and Debonairs Pizza, to companies in the construction and engineering, banking, energy, travel and hospitality, trading, and HR consultancy sectors.

The UAE is seeking to strengthen trade between the two countries, particularly in the industrial sector, by appearing at business and trade events in South Africa.

Irfan Al Hassani, a UAE-based economic expert, stressed the importance of improving trade links with South Africa. “South Africa is fast becoming an emerging market that provides diverse products and resources,” he said.

He added that the healthy import growth highlights the importance of South Africa as a key supplier of a number of commodities. But, he reiterated that the government would like to see more South Africans invest in the UAE.

Recent Trade and Investment Highlights:

  • South Africa is the 19th largest investor in the UAE, having invested Dh1.5 billion since (2003).
  • More than 135 South African companies have established themselves in the UAE since (2012).
  • Trade between the UAE and South Africa jumped 21.7 percent exceeding $1 billion in (2010) .
  • The volume of non-oil exports from Dubai to South Africa has jumped from Dh1.26 billion in 2009 to Dh2.41 billion in 2010, according to the Dubai Chamber of Commerce and Industry.
  • Dubai imports from South Africa show growth from Dh3.011 billion to Dh3.055 billion in 2010.
  • The Dubai Chamber said that mineral fuels, mineral oils, bituminous substances and mineral water are the top exports with 48.1 percent.
  • Other major Dubai export/ re-export products to South Africa include electrical machinery, equipment and parts comprised 18 per cent of foreign trade in (2010).
  • Bilateral trade between the two countries valued at approximately US $3 billion

(Source: Gulf News).

 

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