EXPONENTIAL GROWTH SEEN IN GCC ASSETS UNDER MANAGEMENT
Dubai is set to reinforce its status as the region’s leading financial hub with new legislation and regulation expected to attract inward investment as the GCC is forecast to see an exponential growth in assets under management to nearly $111 billion by 2020, a new study reveals.
While fund managers in the UAE are expected to see their asset under management (AUM) grow from $1.6 billion in 2016 to $18.9 billion in 2020, fund managers across the GCC are expected to more than double their AUM from $45.8 billion in 2016 to $110.9 billion in 2020, said the report DIFC Wealth & Asset Management Report 2017: Mapping Opportunities in the Measa Region.
While greater financial sophistication of the region’s financial markets drive the rapid growth in fund assets in the GCC, the Middle East investment market is expected to more than double between 2012 and 2020, with assets rising to $1.5 trillion by 2020 from $600 billion in 2012 – 12 per cent at an annualised rate, the report noted. The report explores the latest investment opportunities in the region, while providing a five-year projection for AUM in key Measa (Middle East Africa and South Asia) countries.
At the end of 2016, total AUM by fund managers in the Measa’s key financial centres (India, South Africa, Nigeria, Egypt and the GCC countries) was $436.5 billion. By 2020, the report projects total AUM to reach $678.9 billion.
“The DIFC has identified the wealth and asset management industry as having huge potential for growth over the next five years, which is why we are making a number of enhancements to our platform. From the DFSA’s recently updated collective fund regime to potential legislative changes on the horizon, we believe Dubai and the DIFC can play a central role in attracting assets to the region and preparing it for the future of the financial services industry,” said Arif Amiri, chief executive officer of the DIFC Authority.
According to the report, Dubai, leading the Global Financial Centre Index in the Measa region, has the aspiration to provide a bridge for capital flowing to South Asia, Africa and the Middle East due to their central locations and convenient time zones relative to Europe.
“While Bahrain has long been the jurisdiction of choice for many fund managers operating within the GCC, growth slowed there in the wake of the financial crisis. Political instability during the Arab Spring also hit confidence and many fund managers who moved to Dubai at that time have stayed despite a return to stability in Bahrain,” it said. The report pointed out that the UAE has several different regimes for fund managers but most managers use one of the free zones, particularly the DIFC.
QATARI INSURER CLOSES BRANCH IN ABU DHABI
A Qatari insurance company is closing its branch in Abu Dhabi because authorities there have not renewed its licence.
Qatar’s stock index also hit a five-year low on Monday because of concerns over the impact of the diplomatic dispute on some of its companies.
Qatar Insurance Company said its Abu Dhabi branch, open since 2002, would shut because it could not renew its licence. In response, the firm’s share price dropped 2.3 per cent; the branch earned gross premiums of about $30 million annually.
In the initial weeks after the UAE, Saudi Arabia, Bahrain and Egypt cut diplomatic and transport ties with Doha on June 5, many long-term investors sat tight, hoping the dispute would be resolved soon and allow normal business to resume.
ADCB TO SUSPEND SERVICES FOR 3 DAYS FOR SYSTEM UPGRADE
Abu Dhabi Commercial Bank (ADCB) has announced that most of its services will be discontinued for three days due to a system upgrade.
The bank said in a statement on its website that the services will not be available from 4pm on September 30 till 8am on October 3.
However, the bank’s customers can use their credit and debit cards during the three-day period for cash withdrawals at ATMs as well as for in-store and online purchases.
ADCB’s branches will, however, remain open but most of the services will be unavailable, including cash deposits and withdrawals at tellers, cheque collection, service requests, trade services-related applications, etc. The bank, however, will accept documents but will process them only from October 3 onwards.
EMAAR TO BUILD DUBAI HARBOUR RESIDENCES, HOTEL
Emaar Properties announced on Wednesday a mega project featuring residences and a hotel development at a waterfront location in Dubai Harbour.
The new 10 million sqft development is located between Jumeirah Beach Residence and the Palm Jumeirah.
“Emaar will focus on building a series of high-rise residential apartments overlooking the Arabian Gulf,” the developer of Burj Khalifa, the world’s tallest tower, and The Dubai Mall, the world’s largest shopping and entertainment destination, said.
Emaar’s hospitality project will be operated by its Address Hotels + Resorts and will include branded residences.
Dubai Harbour, the new residential and tourist destination being developed by Meraas, was launched earlier this year by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. It features the Dubai Lighthouse, a modern cruise port with two terminals and the Middle East and North Africa’s largest marina. It will also feature futuristic public transport system and water stations.
The 135-metre-high Dubai Lighthouse will have an observation deck offering 360 degree views of Palm Jumeirah and Bluewaters, home of Ain Dubai, the worlds’ tallest and largest observation wheel.
WHY REVIVING STALLED PROJECTS IS A WIN-WIN FOR INVESTORS
Dubai enjoys a plethora of investment opportunities, the majority of which may be legally navigated with relative ease. Property investments, as well as sale and purchase transactions, practically proceed in accordance with the requirements imposed by the Dubai Property Law which provides for registration of projects, approval of escrow accounts and involves strict financial reporting. Although it is not uncommon to encounter slight discrepancies in application, for the most part, the property regulation structure provides security and well-documented procedure under which recourse is fairly clear cut should any difficulty be encountered.
However, what happens in the instance of investment under an altogether different set of circumstances, where the possibility of return on investment may be improved owing to prior circumstances which render the opportunity less attractive to the ordinary investor in respect of projects which, but for the circumstances surrounding their status, would see potential return and development at a competitive rate. Projects that have already encountered complication and have been enrolled at the Dubai Land Department (DLD) may now be resuscitated by investors willing to navigate a previously murky passage that is now becoming ever clearer.
Enter Tanmia, an initiative of the DLD established as the Real Estate Investment Promotion and Management Centre to provide a platform for investors and developers alike to seek opportunity in the form of incomplete projects of varying degrees that have encountered difficulty and have subsequently been cancelled.
ABU DHABI TARGETS $5 BILLION WORTH OF IPOS AHEAD OF SAUDI ARAMCO MOVE
Abu Dhabi is hoping to fast-track at least $5 billion of stock market listings by state-backed companies next year before Saudi Aramco’s planned $100 billion IPO dominates investor demand.
Like Saudi Arabia, Abu Dhabi is restructuring its industrial sector, hoping to lure foreign investors with privatisations.
This could result in at least five large listings, including Abu Dhabi National Oil Company (Adnoc’s) fuel distribution unit, aluminium-maker EGA, industrial conglomerate Senaat and Abu Dhabi Ports, government and banking sources said.
Bankers had pitched for the Abu Dhabi Ports IPO, but no decision has been made and the company has said there are no immediate plans for listing.
The IPOs could raise at least $5 billion, several of the sources said, exceeding money raised through listings in the UAE over the last five years. A total number of 13 IPOs have raised $4.49 billion since 2012.
Bankers said the companies hope to complete their IPOs before Saudi Arabia’s IPO of its crown jewel Saudi Aramco either in late 2018 or early 2019 as part of a wider multi-billion dollar privatisation programme.
“The timing for all of this is now and, if at all possible to achieve, ahead of the IPO of Saudi Aramco and the upgrade of MSCI Saudi Arabia to emerging market status,” Sanyalaksna Manibhandu, head of research at First Abu Dhabi Bank, said.
Government-owned companies in Abu Dhabi have been told to manage budgets efficiently and control spending and possibly raise their own finances for expansion to make them less reliant on the state, a source close to the government said.
“Abu Dhabi is taking bold measures to kickstart the markets and boost investor confidence by pushing government-related entities to sell shares and list publicly,” an Abu Dhabi-based senior bank executive who has advised on deals there said.
UAE’S CLEAN ENERGY AGENDA: A LIGHT-BULB MOMENT
Renewable energy has, of late, become a household name now and one of the hottest topics globally – thanks to climate change and greenhouses gases resulting in harsh weather in different parts of the world.
Be it a developed or develop country, no nation is immune from the impact of global warming, resulting in financial losses running into billions of dirhams and also rise in deaths due to air pollution. Going by a global study, the UAE can save billions of dirhams in costs related to energy, health and climate change, create a large number of jobs in addition to reducing the number of deaths due to air pollution by transitioning into 100 per cent renewable energy.
Conducted by Researchers at Stanford University and other US and European universities, the study showed that the UAE can create 611,500 jobs by successfully adopting cleaner renewable energy.
The study, by Solutions Project, stated that 364,159 jobs can be created in operational segment and 247,340 in construction sector. These figures are based on the numbers of jobs where a person is employed for 40 consecutive years.
EXPO 2020 DUBAI EFFECT: FUTURE RISING
Construction activity in Dubai is expected to pick up substantially over the next few years with more than Dh350 billion worth of contracts to be awarded prior to Expo 2020.
According to figures released by BNC Network, and exclusively shared with Khaleej Times, around $97 billion (Dh356 billion) worth of contracts will be awarded in Dubai ahead of Expo 2020.
“This includes projects that have been announced and are in different stages of construction lifecycle. However, leading to Expo 2020 new projects are expected to be announced that may be awarded before the event,” Avind Gidwani, CEO of BNC Network, said.Gidwani disclosed that the expected size of infrastructure related contracts from both the public and private sector to be awarded prior to Expo is around $12.2 billion (Dh44.774 billion).
And the size of contracts to be awarded that are directly linked to Expo is estimated to be around $5.34 billion (Dh19.6 billion).
“Most project owners and developers are looking at completing their building projects before October 2020,” Gidwani said. “As we move forward, we expect more road and infrastructure projects to be brought under construction for them to be completed on time.”
According to Cyrus Engineer, managing director at Shapoorji Pallonji International Property Developers, the construction market sentiment is continuously improving.
“With an appreciation of the manner in which the government bodies are dealing with the current economic situation and upcoming events such as Expo 2020, we expect sizable improvement in market next year. We believe the approaching year will see considerable development in hospitality, retail and commercial sectors,” Engineer said in a statement to Khaleej Times.
“There are many projects that are being appraised to support Expo 2020. It is expected that there shall be around 25 million visitors during that period. To handle such a large number of visitors, there will be a huge requirement for infrastructure development in Dubai. The government has already started investing in four main areas – public transportation and transit, accommodation, a strategically-positioned site and a highly scalable supply chain. It will not be wrong to say the momentum has already started picking up,” the statement added.