The last Economy update of 2023:
James Binding
Private Equity & Portfolio Finance | London | Dubai | Abu Dhabi | Riyadh | Executive Search.
Here are Some highlights of the regional economy that you may have missed:
Population Statistics:
Over the past twelve months, Dubai’s population has grown 104k to 3.651 million. There is a theory that supply has been lagging demand because of Covid, but what is sometimes forgotten is that Dubai’s population growth rate has been moving at a much quicker rate over the past four years, post-Covid – by 2.279% to 3.411 million in 2020, by 1.964% to 3.478 million in 2021, by 2.070% to 3.550 million in 2022 and by 2.845% to 3.651 million in 2023. It is estimated that the number of housing units will reach 830k by the end of this year – an increase of 46.4k from 2022’s total of 783.6k (639.0k apartments and 144.6k villas). A quick estimate would see the approximate household size being 4.40 people per household, with recent trends showing that this ratio is declining.
The outlook for 2024 is positive, with a caveat that we live in a period of turbulence, and all bets could be off the table if a significant incident occurs next year. There is every likelihood that Dubai’s population will jump by at least 3.65% in 2023, which would add 0.128 million to the population by the end of 2024 at 3.784 million based on an average of 4.30 per household, a total unit portfolio would be 880k – a 50k unit annual increase. Over the previous four years, Dubai residential units rose from 663.2k at the end of 2019 to 830.0k by 31 December 2023 – a 166.8k jump, equating to 41.7k per annum. Dubai’s residential property market supply has been lagging behind population growth, with the affordable segment also witnessing shortages after luxury in some regions of the emirate.
An agreement with Dubai Mall sees the listed toll operator, Salik, deliver a parking management system by Q3 2024. This move aligns with Salik’s strategy of diversifying revenue streams and easing visitor traffic. In conjunction with the mall’s management, the terms of the agreement will feature automatic fee collection for ticketless parking, using vehicle plate recognition to deduct fees from Salik user accounts. According to chief executive Ibrahim Al Haddad, “the project is important for the company’s strategy to offer sustainable and smart mobility solutions to drivers in Dubai, as well as our objective to diversify into complementary revenue streams,” and that “the solution eliminates the need for gates or barriers at Dubai Mall, helping to minimise congestion and traffic for customers.
Banking:
The Central Bank of the UAE has raised its 2024 forecast for GDP growth to 5.7% – up 1.4% on its previous 4.3% projection, with non-oil growth at 8.1`% and oil growth of 4.7%. It expects this year’s growth to come in at 3.1%, with non-oil growth at 5.9%. It noted that actual Q2 growth of 3.8% was down on the year by 4.2%, with 8.0% recorded in Q2 2022, with non-oil growth at 7.3%, compared to 4.5% a year earlier. Regarding the non-oil sectors of the economy, the report highlighted significant expansions in financial services, insurance, construction, wholesale and retail trade.
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DP World will move its global headquarters to Expo City Dubai; after eighteen years, located in Jebel Ali, it was established under its current name in September 2005. The fifty-year-old global supply chain operator will move to a new building (designed by Dubai-based DEC Dynamic Design Studio), integrated with DP World’s iFlow Pavilion and water fountain; it will have nine storeys, encompassing 37.3k sq mt of space and will house approximately eight hundred dedicated staff. Its Group Chairman, Sultan Ahmed Bin Sulayem, noted that moving to Expo City Dubai “puts us at the heart of Dubai’s future and signifies our commitment to innovation, sustainability, and making trade flow for our global customers”.
As part of its US$ 437million digital strategy 2023-2030, the Roads and Transport Authority has unveiled eighty-two new projects structured around six key pillars:?– people’s happiness, quality digital services, data intelligence, integrated digital operations, excellence in asset management, and innovation and partnerships. It will be implemented in four phases – the?Preparatory, First, Second and Third Phases – covering seven, sixty-two, ten and three projects valued at US$ 127 million, US$ 225 million, US$ 68 million and US$ 27 million, respectively.