Shifting sands

In November 2008 the world witnessed the landmark opening of the lavish Atlantis Hotel – part of the celebrated Palm Jumeirah resort in Dubai. An opening party featuring a vast fireworks display and Australian pop diva Kylie Monogue cost an estimated $32 million in what was billed at the time as the most expensive private party ever staged.

In a region of enormous wealth, Dubai presented a glittering, optimistic vision of a future built on a thriving and well regulated financial centre, advanced infrastructure development and tourism.

Yet for all its wealth, ambition and stunning modern architecture, Dubai was not immune to the global financial crash. A booming local property market slumped as expected demand, hard hit by wider problems in global finance, trailed off. As growth stalled some wondered if the golden vision of the early 2000s had been a financial mirage. The key question for government and regulators was: could Dubai recover?

Improving picture

In recent months the picture has proved increasingly positive and economic fortunes continue to improve as recovery takes hold. Earlier this year the International Monetary Fund projected real GDP growth of 3.3 per cent, up from 2.1 per cent in 2010. Rising oil prices and pragmatic debt restructuring also look set to buoy economic fortunes for both Dubai and the wider United Arab Emirates region.

In a region rarely short of news stories, the “Arab Spring” which triggered wide scale protest and unrest across a number of regional states throughout 2011 appears to have had a limited or even beneficial impact on Dubai – long considered one of the more politically stable centres in the Middle East. Local tourism and business hospitality in particular have received a strong boost from those seeking stability in an uncertain regional political climate.

While the global downturn presented a serious challenge to Dubai’s prosperity and growth, it also gave the financial sector the chance to restructure, rethink and improve business models to boost competitiveness and speed recovery. Dubai International Financial Centre (DIFC) officials have been at the forefront of efforts to refine and improve regulation and legislation to bolster the reputation of the centre as a world class financial jurisdiction open for business.

Regional strength

In fact, Dubai continues to consolidate its position as a leading regional financial centre and a global hub for international business targeting Middle Eastern clients. The centre has a nominal GDP of US$5.4 trillion*. It also plays host to eight of the world’s top 20 asset managers by size, 19 of the world’s top 25 banks and six of the top 10 global law firms, well versed in Dubai’s independent common law judicial system.

For financial companies seeking to launch operations in Dubai, the centre offers state-of-the-art telecommunication networks and infrastructure, 100 per cent repatriation of capital and profit, financial time zone advantages and a well educated and highly skilled multicultural and multilingual workforce.

According to the March 2011 Global Financial Centre Index report* Dubai now enjoys undisputed status as the leading financial regional centre between Europe and Singapore and is now one of the top 10 global centres where companies are most likely to set-up offices. With a largely expatriate community, Dubai is also a superb place to live and work offering luxurious retail and leisure facilities, an extremely low crime rate and some of the world’s best air and sea ports.

From an asset management perspective, Dubai offers robust support for a range of investments including sovereign wealth funds, insurance and pensions related business. RBC Dexia Investor Services has a strong local presence and we are committed to assisting our clients within the region and beyond, whether they be sovereign wealth funds, family offices, local funds or global fund managers seeking local opportunities.

Despite the impact of the economic downturn, the rationale for doing business in Dubai remains compelling. We are strongly committed to doing business in the Middle East and North Africa (MENA) region, proud of our local presence and continue to develop investor service solutions for our wide range of local, regional and global clients.

Both the United Arab Emirates and states in the wider MENA region such as Saudi Arabia, Bahrain and Quatar, hold significant long-term growth potential. As the local market recovers from the impact of wider global financial shocks, serious asset management, distributive and asset servicing potential is emerging in a modern, well connected centre committed to future growth.

Cormac Sheedy is Senior Executive Officer Middle East & Africa

*DIFC figures

*Published by Z/Yen

© 2011 RBC Dexia Investor Services Limited. RBC Dexia Investor Services Limited is a holding company that provides strategic direction and management oversight to its affiliates, including RBC Dexia Investor Services Trust, which operates in the U.K. through a branch authorized and regulated by the Financial Services Authority. All are licensed users of the RBC trademark (a registered trademark of Royal Bank of Canada) and Dexia trademark, and conduct their global custody and investment administration business under the RBC Dexia Investor Services brand name.™ Trademark of RBC Dexia Investor Services Limited.

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