Investors upbeat on Expo 2020 as realty sector gains traction

Inayat-ur-Rahman, Business Editor

The Expo 2020 has been truly remarkable and impressive. Starting from the opening ceremony, economic momentum, busy airport and visitors arriving in the show to strike a business agreement, it augurs well for the economy and growth architecture for UAE.

This was revealed by Kashif Ansari, CEO,  IQI Global, during an exclusive interview with Gulf Today, adding that the mega event has generated a lot of interest in the market globally due to solid market positioning and travel and tourism  hub.

According to New McKinsey Global Institute (MGI) research finds that there is potential to accelerate annual productivity growth by about one percentage point in the period to 2024. That would be more than double the pre-pandemic rate of productivity growth—a positive welcome .

According to the latest update from Goldman Sachs Mena equities have risen 12% since May and posted better sharpe ratios than Russian equities and oil prices themselves. The metrics suggest further ‘room to recover’ across the Mena region compared with other EM clusters.

Ansari echoed that Expo 2020 is expected to generate $100 billion to $150 billion of trade and  commerce transactions with over 1 -2 million investors anticipated to arrive. Expo -2020 can provide forward guidance to the economy what is expected in the next 3-4 years.

“Higher oil prices, modern infrastructure and positive impact of Expo-2020, its foreseen that UAE GDP is expected to meander around 2 and 3% for the current year. “

M&A market has picked up pace with global investment banks entering the market aggressively. According to the data compiled by IQI Global,  JP Morgan has topped the any Mena Involvement M&A league table in 2021 with $43.3 billion in related activity, or a 40 percent share of the market. Goldman Sachs came second with a 37 percent share of the market.

Mena equity capital markets raised $14.5 billion from 42 offerings in 2021, a 193 percent increase in proceeds from last year and a thirteen year high in the number of ECM deals.

Initial public offerings raised $8.2 billion in 2021, accounting for 56 percent of total proceeds, a 341 percent increase from 2020.

“Real estate market remains buoyant with global investors continue to park funds in areas like Emirates Hills, Business Bay, Meydan,  Palm Jumeirah, Arabian Ranches and JBR.

“According to our market intelligence report and talking to industry experts: these areas registered double-digit growth in price appreciation and transaction. Villas in Arabian Ranches show a year-on-year 34.1% increase in property value and 58.9% in growth transactions. Meanwhile, the Lakes recorded a 31.2% increase in price appreciation and a 16% rise in sales deals.” Ansari added.

“Similarly, apartments in Palm Jumeirah and JBR posted a 17.3% Y-O-Y price gain and 14.6% growth in capital values respectively. Their increase in sales transactions was 131.1% and 68.1%.”

According to industry sources areas closer to the Expo 2020 site have also started to gain traction. These areas were previously hard to access but with the launching of the Route 2020 metro lines, areas like DIP, Al Furjan, Jumeirah Golf Club, and The Gardens have easier access now to those using public transport. According to the latest UBS real estate market index : Dubai remains as one of the hotspots for global investors  due to

a) strong market performance,  b) stability and mature regulation c) solid growth outlook and d) Positioning from sophisticated and smart investors in real estate market.

Moreover, this bolsters investment coming into the country. According to Economic department, Dubai attracted Dh15.9 billion ($4.3bn) in foreign direct investment from 378 projects in the first nine months of 2021 as the emirate’s economy continued to recover from the coronavirus pandemic.

 “Global investors have placed their faith in Dubai’s business ecosystem, making it among the most attractive FDI locations in the world. Initiatives such as full foreign ownership, an evolving visa administration and the alignment of the work week with global markets demonstrate Dubai and the UAE’s responsiveness to business needs.”

On the oil market, Ansari is bullish on the oil market and cited Shan Saeed—Chief economist of IQI Global and his forecast of oil outlook for 2022: oil prices are up 24%YTD and in backwardation phase ie spot is higher than future. Brent Trading at $97 a barrel. Oil prices are heading north meandering around $77 to $107/ barrel in 2022. Higher energy prices are going to benefit oil exporting countries including Malaysia, Russia, GCC, Canada and Mexico to mention a few. Higher oil prices would provide boost to the fiscal side of the balance sheet of the government. This provides impetus to move forward with expansionary fiscal policy to provide infrastructure investment to maintain the macro equation buoyant.