Invest in Dubai

Dubai is one of the 7 emirates of the United Arab Emirates. It is the largest by population and second largest in surface area. UAE as a country is bordered with Saudi Arabia and Oman on the Arab Peninsula as well as lying on the Persian Gulf. Dubai is different from the other emirates in that it only receives 6% of its revenues from oil, rather most of the money generating sources have been from tourism and the services industry.

Historically Dubai used to be a port for the past 200 years and gained further importance in the 70’s and 80’s. However after that period Dubai has reduced its importance in international trade and created industry specific “free zones” including Dubai International Finance Centre and Dubai Internet City.

Dubai International Financial Centre

The DFIC is the Middle East’s’ regional financial centre. Although in its developing stage it already has established a presence with major investment banks and financial centers. It initially was created to benefit the economic development of Dubai as well as the rest of the UAE. It is the newest financial centre having only been established in 2004. Types of firms in the DIFC include banking, asset management, brokerage, reinsurance and financial operational services. Typical benefits of starting a business in the centre are 100% foreign ownership on all parts of the established business, 0% tax on profits, no restrictions on capital and foreign exchange repatriation and transparent and a highly developed operating environment. Compared to the majority of tax havens which are offshore, the DFIC is onshore. In terms of the physical structure of the center, the DFIC has developed modern day offices and technology to attract the best companies as well as smaller financial startups.

The main objective of developing the centre was because of the large amounts of money that was invested and spent abroad. In terms of high net worth individuals in the Middle East, the size of the asset pools which are invested abroad amounted to over 1.5 trillion USD. The lack of available liquidity and political risk as well as bad banking practices of the region have caused investors to send their funds in foreign institutions. This has been especially true in the past 30 years when oil prices rose rapidly. The development of the centre allows for the efficient process of transferring the funds in a local region as well as allowing potential profits to be locked in the emirates, rather than abroad. The increased liquidity which the center will create will also reduce the investment risk in the region and create better credit ratings for local banks as they have more efficient funds available.

Many companies in the Middle East are seeking to make themselves public as a means of raising capital. This has been especially true with the growth in privatization, the fact that Dubai is the 3rd biggest re-export centre in the world and the increasing amounts of foreign direct investment in the region by foreign multinationals. The IPO market for Middle Eastern countries are flourishing and DFIC is going to attract a lot of IPO’s and PO’s as well as fixed income and money market originations. DFIC will be the Wall Street of the Middle East. It has also established the Dubai International Finance Exchange (DFIX) which will be the regions main exchange where, equities, fixed income, index products, derivatives and Islamic funds will be traded.

Dubai Internet City and Dubai Media City

Dubai Internet City was set up by the government in 2004 and is a member of TECOM Investments. Like many of Dubai’s other important business districts it is a trade free zone. It was built as a strategic base for companies engaging in the international marketing of their technology businesses. The theme of the region is designed as an information technology park. The main incentive which the center brings to foreign investors are zero taxes and 100% ownership for the next 50 years. The DIC has over 1 ½ million square feet of commercial office space as accommodating over 10’000 workers. A service which is included in the centre is a Metro Ethernet environment, which is the world’s largest commercial internet protocol telephony network. Typical companies which have offices in the center include: - Microsoft, Cisco, Nokia and Sun Microsystems. Many small to medium sized enterprises are also part of the community.

Dubai Media City

Dubai Media City has the same tax free structure that DIC has to offer. It has been built to boost the UAE’s media capabilities and recognitions as the next “Hollywood” of the Middle East. It has been developed as a conventional market where different businesses work together to form a unit. The DMC has many different business segments not limited to broadcasting, media support services filmed entertainment/production and publishing. Other Benefits that the DMC has to offer are fully furnished business units, flexible leasing terms, flexible visa and work permit structures to benefit foreign entrepreneurs. Other similar districts include Dubiotech which target biotech companies with the aim of growing the regions medical and pharmaceutical research capabilities.

Real Estate Developments.

Real estate prices have rapidly risen in the past decade after the government shifted its main revenue sources from oil and trade to services and tourism. There was a major property boom in 2004 to 2006.

More Real Estate

The real estate prices in Dubai.

Property development in the region is split into two main types: 1. Inland 2. Offshore. Inland projects include many of the very modern skyscrapers (which include some of the world’s tallest buildings) which Dubai boasts. Examples are “Burj Dubai” which is the worlds tallest structure built by Emaar properties. It’s neighbor is “Dubai Mall” which is the world’s largest shopping mall. Dubai also has a number of buildings which are replicates of famous buildings around the globe including the Eiffel Towers. Other original type structures include an underwater hotel and an indoor ski resort.

Offshore developments include Palm Island which is the world’s largest artificial Island and includes over 30 of the worlds top hotels and 75 kilometers of beaches. Other offshore developments include “The World” which is a group of islands which form the shape of the globe when looking at it from the sky.

Dubai already has a fully running bus system but to create further accessibility of the above centers and is investing under 4bn USD to develop a high tech transportation system called the “Metro”, which is supposed to be fully operational by 2012.