UAE: Dubai

The recent promotion of the UAE to “emerging market” status could well boost capital inflows to Dubai, although the full effect of the change is likely to take some time to become apparent.

The emirate’s aviation authorities have floated a proposal to expand what is already one of the busiest airports in the world, looking to double the planned capacity of Dubai International Airport (DXB) as part of what could be a major shift in government policy.

The emirate’s external trade figures hit record levels in 2012, assisted by its strong transport and logistics infrastructure and underpinned by areas of the economy that remain in recovery mode. Attention is now turning to widening the scope of trading partners to further strengthen this important sector.

Despite achieving record growth in 2012, telecoms operators in the UAE have seen their profit margins affected by a new royalties programme introduced by the federal government. However, surging demand in Dubai for the latest mobile devices, particularly smartphones and tablets, as well as a more diversified range of value-added services, should result in in even greater growth and profitability in the coming years.

A surge of interest in new property developments in Dubai has almost inevitably prompted concerns with respect to the sustainability of the sector’s recovery, recalling the bubble in 2008. However, most old hands in the industry believe investors, regulators and developers have all learned some important lessons from the crash in the sector five years ago, and that the heightened activity signals a the continuance of a rebound that began around a year ago.

The UAE’s central bank has postponed plans to implement a cap on mortgage lending, a move welcomed by Dubai bankers who had been concerned the tight restrictions originally proposed could limit lending growth just as the real estate sector is showing signs of recovery in certain sub-sectors.