Despite Saudi competition, UAE thrives as Middle East business hub

Anwar Gargash, then UAE Minister of Foreign Affairs, attends the preparatory meeting for the GCC, Arab and Islamic summit in Jeddah, Saudi Arabia, May 29, 2019. Photo: Reuters/Waleed Ali.

If real estate is any guide, Dubai is pooh-poohing Saudi efforts to displace it as the Middle East’s business and expat hub of choice.

Saudi Arabia insists that companies doing government-related business in the kingdom, many of which have a regional base in Dubai, Move their office to Saudi Arabia Interest in UAE real estate has yet to dampen into 2024.

Kingdom this month relaxed rules With regard to countries relocating offices to Saudi Arabia, exempt companies that are the sole bidders for government contracts, and businesses with overseas business worth less than SAR 1 million ($266,000) per year.

Likewise, mega-projects in Saudi Arabia have so far failed to dent the Dubai real estate market.The most prominent of these items are Neom, a $500 billion desert city covering 25,000 square kilometers in the Red Sea.

Saudi Crown Prince Mohammed bin Salman (MBS) expects Neom to be home to 9 million people, which looks more like a science fiction blip than a real-world project.

In addition, the new city will also host Middle East’s first international winter sports championship 2029. Neom borrows from Dubai’s marketing strategy, which has successfully promoted the project in the emirate in a superlative manner.

conceived as linear metropolis, Noem envisions the creation of 15 islands, the “biggest marina on Earth”, and a commitment to sustainable energy and turning 95% of the city into a nature reserve. If indeed built as envisioned, Noem would run on 100% renewable energy, have no carbon emissions, have no roads or cars and, thanks to its small infrastructure footprint, would preserve most of the area for wildlife.

Meanwhile, Dubai’s real estate market is soaring.

In October, Indian billionaire Mukesh Ambani Purchased 5,534 sqm of land for US$163.4 million On the Palm Jumeirah, an artificial island dotted with luxury hotels, luxury villas and apartment buildings. Ambani also bought an $80 million mansion for his youngest son.

A few weeks later, a mystery buyer paid $82.4 million for an eight-bedroom, 18-bathroom villa on the Palm Jumeirah.

An influx of ultra-high-net-worth individuals, many of whom are Russians, who often pay in cash, has driven demand for real estate in Dubai, pushing prices up 70 percent last year. Trading on a whim is one of the reasons the Financial Action Task Force (FATF), the anti-money laundering and terrorism financial watchdog, placed the UAE on a gray list.

The FATF has since said that as a result of the reforms, the UAE’s desire to be seen as a transparent international financial center and model global citizen has become “Meets” 13 of its 40 recommendations“basically meet” 23 recommendations, “partially meet” 4 recommendations.

Even so, Dubai appears to have no intention of making its property registry public. Critics assert that authorities have little incentive to increase oversight or transparency, which would dampen interest, at least in terms of corporate business, at a time when Saudi Arabia is trying to overthrow the emirate.

As well as the Russians, recent buyers have included cash-rich Gulf nationals, Israelis, people who have left China since Covid-19 restrictions were eased, and people who moved operations out of London after Britain’s exit from the European Union.

In a statement last year, the UAE said it “takes the protection of the integrity of the global financial system very seriously. This includes embedding A clear regulatory framework for real estate agents“, they are obliged to submit reports on real estate purchase and sale transactions to the government’s financial intelligence unit.

Overall, the Dubai real estate market has seen its ups and downs. Many see the 2008-2009 crash as a fallout from the global financial crisis, although research by major real estate firms, driven in part by activity in the UAE, predicts recession preceded recession and has nothing to do with the collapse.

Analysts have warned that debt refinancing due to rising borrowing costs is a threat to the Dubai real estate market, but developers are less concerned.

“Am I worried about a tsunami or a typhoon? Well, it’s like a pandemic, nobody saw it coming, but it’s coming. you really don’t have to worrysaid Murat Ayyildiz, chairman of Alpago Properties, a luxury real estate developer in Dubai.

Dr. James M. Dorsey is an award-winning journalist and academic, Adjunct Senior Research Fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, and author of a syndicated column and blog, The turbulent world of Middle Eastern football.