Dubai is considered to be part of the MENA region – Middle East and North Africa. MENA is a $500 billion economy, accounting for 0.7% of the world’s GDP. In 2014, Dubai experienced growth of 12.0%, and although performance is not as strong in 2015, growth in the MENA region is generally expected to expand due to the high proportion of people under the age of 30, which drives the demand for housing, water, power and other infrastructure.
Not Just Oil
When thinking of investment in the MENA region, or in Dubai, it is oil that immediately springs to mind. However, Dubai’s investment market is far more diverse than this. It realised some time ago that it would need to diversify in order to insulate itself from a drop in oil prices, and has made an effort to attract business and capital from the rest of the region. As a tourist destination, Dubai has benefited from the recent drop in oil prices as it has led to cheaper air fares, giving a boost to its tourism industry.
Oil production in Dubai has been falling since the early 90s, and oil now comprises only 2% of the Emirates’ GDP. To fill the void, other sectors have expanded quickly, such as tourism, trade, aviation and finance. Dubai’s infrastructure is booming – it has the world’s busiest international airport, which has a growth rate of 13.5% as well as the largest artificial port and the Emirates airline is already the biggest in the world.
Alternative Energy Investment
Dubai has set clean energy targets so that by 2030, it aims to obtain 71% of its energy from natural gas, 12% each from nuclear power, and 5% from solar energy. As a result, a number of solar farms have been built, including one photovoltaic plant that is set to become the biggest renewable energy project in the world. The second phase of this development attracted international interest as it has produced an all-time record of the cheapest price per kilowatt hour.
The Real Estate Market
A shift to affordable housing is beginning to gain traction in Dubai. Both residential sales and rental rates have experienced strong growth over the past three years; they have outstripped salaries, making affordability an issue for residents. A number of new affordable developments have come onto the market, and these have sold extremely well.
With continued private sector expansion and growth in employment and output, now could be the perfect time to invest in this region.
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