Dubai economic indicators signal healthy investment market: Emirates NBD Private Banking

3 Min | 06 December 2012

Dubai is set to consolidate its place as an attractive investment destination with economic indicators pointing towards a healthy recovery, said Mark McFarland, Chief Investment Strategist, Emirates NBD Private Banking.

Low debt and falling default risk enhancing the region’s prospects further: Emirates NBD Asset Management study

Dubai, December 4, 2012: Dubai is set to consolidate its place as an attractive investment destination with economic indicators pointing towards a healthy recovery, said Mark McFarland, Chief Investment Strategist, Emirates NBD Private Banking.

Speaking at a recent presentation at the International Adviser Gulf Expert Investor Forum 2012 in Dubai, McFarland pointed out that Dubai had taken concrete steps to improve its finances, resulting in steady decline in the risk of default in the emirate. Dubai’s CDS stood at 445pts on January 1, 2010, but has fallen by almost half to 247pts since then. He added that this development is particularly noteworthy as it is much larger than declines experienced in many other parts of the Emerging Markets world.

"With all its key economic segments on the upswing, Dubai is making strong progress," said McFarland. "Across the region, sentiment is improving and the combination of low debt and falling default risk is enhancing the region’s prospects further."

Into its fifth year, the International Adviser Gulf Expert Investor Forum has become one of the top networking and educational forums for professional intermediaries. It allows financial advisers, wealth managers, investment specialists and tax and estate planners to meet with some of the world's most highly-rated fund managers. This year, the event’s sponsors included Emirates NBD Asset Management.

Citing the IMF World Economic Outlook, McFarland said that while developed economies grew by 1.6% in 2011, MENA economies put up a stronger show with GDP growth believed to be about 3.5% after adjusting for inflation. The recovery in energy prices meant that GCC growth could have been twice that.

He emphasised that investment as a percentage of GDP stood at 26.6% in the MENA region, in comparison to 18.8% in the developed economies, while the region’s growth rate of 3.5-4.5% is expected to comfortably surpass that of developed markets over the next few years.

"In this optimistic scenario, Dubai’s potential as an investment destination continues to remain strong with financial indicators pointing to healthy growth," McFarland said.

Other indicators such as real estate, hospitality industry and trade too showed a positive investment trend in Dubai. Studies by
Emirates NBD Asset Management show that Dubai real estate is finally on the recovery path, with mid-range villas recording more than 20% recovery rate and mid-range apartments witnessing up to 10% growth during the second half this year.

Hotel occupancy rates have also recovered more than 10% in July 2012 compared to the figures a year ago. Studies also show hotel guest nights steadily increasing from less than 10 million in 2001 to over 30 million in 2011.

Usman Ahmed, Head of MENA Fixed Income at Emirates NBD Asset Management, discussed the opportunities and outlook for fixed income funds in the MENA region. He underlined that there had been a strong recovery in MENA issuance, with the total value of issuances touching USD30 billion in the first nine months of 2012, compared to USD32 billion for the entire 2011.

Ahmed said that the MENA region is gaining acceptance once again from the international investor community. He also gave a detailed assessment of the Emirates MENA Fixed Income Fund, managed by Emirates NBD Asset Management, which has performed strongly since inception and which is Silver rated by S&P.

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