Economic Recovery of Dubai
of Dubai Emirate
In 2020, the economy of Dubai contracted by 10.9% year-on-year amidst the pandemic, as the city relies heavily on industries such as travel, retail, tourism and hospitality. However, according to the recent governmental projections, the city is forecasted to expand 3.1% in 2021 thanks to increased global travel and one of the fastest vaccination campaigns across the globe. In fact, the Emirate was ranked first globally for its resilience by the United Nations in 2021, since it is prepared to deal with unforeseen crises and develop long-term strategies to manage all kinds of risk.
It is no wonder that Dubai’s economic growth has jumped, with data for Q1 2021 showing an 11% increase from Q4 2020. These figures show that there is a positive development and a rapid recovery of Dubai’s economy, compared to 2020. As well as that, the city’s gross domestic product is expected to expand 3.4% in 2021. Primarily, this will be driven by Expo 2020, which has already witnessed a flow of 411,768 ticketed attendees during the first 10 days. And, of course, as the winter approaches, Dubai will attract even more visitors from colder shores by its warm weather.
According to the latest Consumer Index Report for Q3 2021, consumer confidence hit its highest level in 10 years in Dubai. This index evaluates present and future expectations regarding job prospects locally, personal finance and other factors. As stated by Mohammed Ali Rashed Lootah, CEO of the Commercial Compliance & Consumer Protection sector in Dubai Economy, this is clear proof that Dubai successfully overcame economic challenges related to the COVID-19 pandemic by reinitiating economic activity. The study also shows that 82% of Emiratis and 81% business owners of other nationalities believe that the current economic climate is satisfactory.
According to a police brief released in 2021, the Emirate has managed to place itself within the top 10 cities globally for security, with over 100 indicators related to security and safety in several internationally acclaimed competitiveness reports. In fact, Dubai ranks first in more than 11 indicators regarding Personal Safety, in the indices such as the Safe Cities Index by the Economist Intelligence Unit and the Smart Cities report by IMD World Competitiveness Center, where scores evaluate personal, health, infrastructure and digital safety.
The police brief also reviews the range of technologies the government has used to fight the pandemic, from utilizing drones to conducting sterilization campaigns, to specialized tubes for the transportation of COVID-19 positive patients. These initiatives clearly showcase the readiness of Dubai for any contingency scenarios that could occur in the future.
As well as all the above, in July 2021, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, announced the launch of the Drone Box platform. The service became officially functional with the opening of Expo 2020 and it is set to reduce police response time to criminal activities and traffic accidents from 4.4 minutes to only 1 minute. The drones can identify faces with the help of high-resolution videos, which are subsequently used by Dubai Police to arrest criminals. Also, Dubai boasts artificial intelligence systems that assign police patrols across Dubai without human intervention, as well as a system of 300,000 round-the-clock smart surveillance cameras to ensure the utmost security for its residents, citizens and tourists.
With initiatives that bolster innovation, investment and the development of pioneering technologies, Dubai is on the way to becoming the smartest city in the world. In fact, this year, the Emirate has been rated the top city for business innovation in the Arab world and the 94th city globally by the Finom.de study.
Dubai continues to invest in smart policies such as Dubai Data Strategy, Dubai 10X, Smart Dubai 2021, Dubai Blockchain Strategy and Dubai Pulse Platform in order to support innovation, growth and business. To this end, they have launched more than 100 smart initiatives and 1,000 smart services to make daily processes and operations, including government services, more efficient and to increase the happiness quotient of its citizens. Moreover, Dubai is considered to be the biggest hub for Information and Communication Technology business, with more than 1,600 ICT companies.
Alongside this, there is the Dubai Internet of Things (IoT) strategy, which is aimed at creating the most advanced IoT ecosystem to transform Dubai into a model smart city. It will help reduce costs, enhance innovation and make more productive decisions based on data analysis. In addition, a control and command center was designed which monitors the technical infrastructure in accordance with the business requirement of Dubai. The IoT is expected to grow rapidly from AED 2.6T (USD 726B) in 2019 to AED 4T (USD 1.1T) in 2023, becoming the world’s most advanced technological ecosystem.
In addition, the Dubai Data Wealth Initiative is another step in the protection of the city’s digital wealth and making it 100% digital and paperless. It covers data-storing and processing technologies, paperless transaction policies and systems, smart-tech transformation, as well as digital signature and ID. Dubai strives to create a data-driven economy by applying the most up-to-date technologies, in artificial intelligence, the cloud, big data analytics, 5G communications, autonomous transport, blockchain technology and 3D printing. Recently, in August 2021, Vice President and Prime Minister of the UAE, Sheikh Mohammed bin Rashid Al Maktoum had issued a decree, according to which 25% of Dubai’s buildings have to be constructed using 3D printing technologies by 2030. It is worth noting that the Emirate is already home to 2 printed buildings, such as the Office of the Future in Emirates Towers and Dubai Municipality’s Center for Innovation.
Moreover, Dubai has established the first of its kind AI Lab in partnership with IBM, which implements AI technology and machine learning for government and city services. It is also witnessing a growing number of cloud service providers setting up data centers here, for example, the above-mentioned IBM has already launched a center in Dubai. It is worth noting that the Emirate ranks first worldwide in Dedicated Cyber Security teams and Level of Technology employed, as reported by the Dubai Competitiveness Center in Dubai Economy.
Resonance Consultancy ranked Dubai first in the People category as well, since the population of foreign-born citizens in the Emirate accounts for more than 80% of the total population, making it a very diverse environment. In fact, Dubai took the 11th position in a global index of 25 cities by Henley & Partners, where professionals, company owners, entrepreneurs and high-net-worth individuals can obtain residency through investment migration programmes.
Dubai also topped the list of cities around the world where high-income residents earn the most take-home pay after tax and social security obligations, beating Hong Kong and Singapore, as reported by PwC UK. Income earned by salaried employers in the UAE is 100% tax free in most cases, and there are no social security contributions levied for non-nationals.
In addition, the Emirate is known for its exceptional healthcare system, offering extremely high-standard services under the supervision of The Ministry of Health and Prevention. According to the previously mentioned policy brief, Dubai ranks first in Emergency Services, fifth in Arranging Medical Appointments online and seventh in Medical Services Provision Satisfaction across the Middle East. These indicators obviously prove that Dubai has one of the most advanced healthcare infrastructures and is on the way to becoming the heart of medical tourism in the region.
Expats with children can also find numerous quality educational options, since Dubai houses over 200 private schools for ages 6-18, which follow the US, UK and French curriculums, among others. Providing education for over 300,000 students, private schools serve 90% of the studying population at the moment. Furthermore, Dubai features 5 public and 58 private colleges and universities, including campuses of some of the leading institutions in the world. A few from the list are Murdoch University, University of Wollongong in Dubai, British University Dubai & Hult International Business School.
As well as the above, the city is the second most popular destination worldwide for digital nomads, who prefer to live and work remotely from home, according to the Work-from-Anywhere Index report from Nestpick. In October 2020, Dubai launched an innovative programme, allowing overseas telecommuting specialists to live in the Emirate while continuing to work for their initial employer. Following this initiative, the digital nomads’ check-in rose by 71% in 2021 in Dubai, and now there are about 1,800 foreign remote workers. To shape up its human resource, in September 2021, the UAE also introduced The Green Visa, targeted at self-dependent individuals, who will be allowed to work in the country without an employer's sponsorship. Moreover, visa holders can sponsor their parents and children up to 25 years of age.
In order to motivate more people to work and live in Dubai, the Dubai Land Department has reduced the value of the property price to acquire a 3-year renewable residence permit, from AED 1M (USD 272K) to at least AED 750K (USD 205,000), with the provision of a spouse and children sponsorship. Meanwhile, in the rest of the UAE, the minimum requirement for a visa through investment is still set at AED 1M (USD 272K). This initiative will be another major attraction for capital, among the incentives and precautionary measures announced during the pandemic. It is worth noting that the real estate sector of Dubai is the only market with the lowest price bubble risk among 25 leading global cities, according to the UBS Global Real Estate Bubble Index. This is due to affordability, flexible mortgage regulations and a limitless supply.
As Dubai’s confidence in business, economic competitiveness and its growing appeal to visitors are promoting its diversified economy, the city has been witnessing a surge in new companies launching throughout 2021. In September, Dubai Chamber revealed that a total of 16,000 companies joined during the first 8 months of 2021, marking a YoY growth of 68.5%. The number of electronic transactions also increased 7% to reach 450,000 during January-August 2021, compared to about 419,000 transactions in the same period of 2020.
One of the main reasons for this growth is the Government of Dubai’s decision to reduce fees and introduce waivers to a number of service charges that applied to its various entities beforehand. These include Dubai Municipality, Dubai Land Department, Dubai Tourism, the Roads and Transport Authority and Dubai Courts. Not only do the changes mean less costs for citizens, but also less paperwork, significantly facilitating business management in Dubai. This initiative was announced in July 2021, and includes reduced fees for issuing and renewing licenses of business centers, waiving some fees related to residency visas and canceling fees for obtaining certified copies of rulings of civil cases, among others.
In addition, the Dubai World Trade Center Authority, which deals with offshore licenses for businesses, has announced new regulations from 10 October 2021 regarding family business, in order to attract more HNWIs and UHNWIs to the city. The new platform will allow offshore entities, founded directly by members of a single-family, to own and manage their collective assets, businesses, wealth and investments through the incorporation of a new free zone establishment or free zone company. The city has already witnessed a surge of multi-millionaires and billionaires, the number of which rose to 54,000 in June 2021, up by 3.8% from 52,000 last December. As stated by New World Wealth, possible reasons for Dubai’s continued appeal are its safety, healthcare services, attractions, tax benefits and top financial services.
As reported by Resonance Consultancy, it was the actual product that the city offers that helped shift Dubai to the fifth position, as the city reinvented itself throughout the 2010’s, turning into an international business and tourism hub. The Emirate already houses the planet’s most visited mall, the tallest tower, one of the largest aquarium tanks and the largest choreographed water system in the world, along with other out-of-this-world attractions. Also, the year of 2021 has seen the opening of the world’s deepest diving pool, the first Madame Tussauds Museum in the GCC region and other sought-after destinations. And there are still more astonishing entertainment destinations to come, which will set the bar for a whole new level of unique leisure experiences.