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Dubai's economic growth is backed by fundamentals, not speculation

A new study by research organisation Unitas analyses the real causes of Dubai's economic growth – and shows that the emirate's economic growth of the last 24 months is based on some solid factors, and not speculation

Date: Dubai, October 09, 2013 : The     revival     of     Dubai's     economy     over     the     last     24     months     is     supported     by fundamentals     centred     around     four key factors – increased business activities, population       growth, continued government       spending       on       infrastructure    development    and an increase    in    Foreign    Direct Investment   aided    by    the knock-­‐on     effects    from    the    Arab    Spring, according to Unitas Consultancy, a Dubai-based asset management and advisory firm.

It's latest research report titled, Dubai: If You Build It, They Will Come, analyses various data and statistics issued by Dubai Land Department and other credible sources on the new developments across Sheikh Zayed Road, Mohammed Bin Zayed Corridor that shows that the surge in economic activities is fuelled by strong underlying fundamentals and not mere speculation.

The research shows that prices of properties have appreciated 15 per cent and rents increased 11 per cent year on year.

As    Dubai     begins   to   build   out     its infrastructure, the   supply   is   more gradual and   measured   relative   to   the last   decade    – 35 per cent less      supply      being    injected      into      the      market      annually      over      the      next      3      years      relative      to      the  prior      decade, research shows.   

“As Dubai    recovers    from    the    crash    of    2008, we    see    strong    underlying fundamentals    supporting    this    recovery.    A    continued     growth   in   the   population at  5.6 per cent Compound Annual Growth Rate (CAGR) over   the   last     six years, a 26 per cent increase in foreign direct investment (FDI), an   8 per cent    increase  in the number of trade licenses issued by the Department of Economic Development (DED) year-on-year, has lead    to a   steady  increase in the emirate's gross domestic product (GDP) at 5 per cent year-on-year,” Sameer Lakhani, Managing Director of Unitas Consultancy, said.    while releasing the report today.

“A sustained    growth in the tourist population, coupled  with continued    infrastructure    developments    will    be    centre    of    Dubai's    sustainability    going    forward.”

The    construction    sector    has    been a crucial    part of    Dubai's    GDP, representing   15 per cent within the last  two    decades    as    Dubai     has   evolved   itself   into a  trade, finance and tourism hub.  

“The first construction   boom   (2002-­‐2008) driven   by    freehold    ownership    resulted    in    the    development    of    infrastructure    along    the    Sheikh    Zayed    Corridor.    However, before    this    momentum    could    develop    along    the    Mohammad    Bin Zayed    corridor,  the    real-­‐estate      market    crashed,   stalling    major    projects    such    as    Dubai    World    Central,    City    of    Arabia,    and    Dubai    Industrial    City,” he says.

However,  the    bulk    of    the    construction    in    the    pipeline    over    the    next    two    decades  is    centred    around    Mohammad    Bin    Zayed    Road;    with    Mohammad    Bin    Rashid    City    and    Dubai    World    Central    – including    the    New    Al Maktoum    International    Airport –    at its    core.      

“As   Dubai   gathers   momentum, city-­‐wide     property   prices   are   on   an upward trajectory   with a 15 per cent increase   in   home    prices, and an 11 per cent    increase    in    rents,” Lakhani, said.  

“We    believe    that    the    overall    rise    in    Dubai    rents    have    resulted    in    migratory effect, relocating     people   from   the   Sheikh   Zayed   Road   to   more affordable areas   on   Mohammad   Bin   Zayed   Road.   We   expect    to    see a higher-­‐rate    of    home-­‐ownership    in    these    areas,” he said.

Dubai   is   also   experiencing a price   convergence   between   under-­‐developed    communities   along   the   Mohammad   Bin    Zayed     Road   and   the   Sheikh Zayed   Road, the research shows.  

“Communities      such    as Dubai Sports    City, Dubai    Silicon    Oasis, and    Jumeriah  Village    will    start     to   gain   momentum    as    their    infrastructure     near   completion thus   converging with  the   more   established   communities, whilst prices   in Jumeirah    Golf    Estates    appeared    to    have    overshot    to    the    upside,  relative    to    the    infrastructure    development.    In    the    last    rally    of    prices    high-­‐rise    communities    in    the    Mohammad    bin    Zayed    Road    Corridor    have    under    performed    by    40 per cent, insinuating    an    upside    potential    as    their    infrastructure    ramps    up,” Lakhani concluded.

Editors' Notes

Unitas Consultancy, a Dubai-based private equity, asset management and real estate asvisory firm, provides customised solutions for its clients that meet the twin objectives of wealth creation and capital preservation. Unitas offers its clients unparalleled experience in real estate asset 
management/advisory/ private equity/ execution abilities.

Unitas Consultancy invests over a plethora of sectors: Facility Management, Food and Beverage, Real Estate, Trading and E-commerce. Towards this end Unitas has entered into Trading and Real Estate funds with a view to offer investors access to the rapidly growing market sectors in Dubai in a seamless and transparent manner.

The company plans to keep on diversifying its portfolio into other growing sectors of the economy. Unitas thrives on private sector finance and management with environmentally and socially responsive practices, to build up cash flows during the investment term and capital gains at exit.

Unitas invests equity in a 'buy, build and transfer' cycle with a 5-year term and yields current income as a function of operating cash flows, plus capital gains at exit. The guiding principle of Unitas is cash flow to investors and long-term benefits to communities and businesses.

Furthermore, it has made forays into the e-commerce and F&B sectors as well as facilities management with a view towards diversifying income streams.

For further information, please visit

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Posted on : Wednesday, October 9, 2013  10:21:00 PM UAE local time (GMT+4)
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