Developing Dubai

September 2010

RISING TO THE

CHALLENGE

A special report examining Dubai’s economy and revealing how the city continues to prosper as a vital global trading centre

R

Real Estate

T

Telecoms

B

Banking

M Markets

R

Retail

M

Manufacturing

T

Tourism

T

Transport

S

Sport

7DAYS

Developing Dubai l 2

Foreword

Contents

he 7DAYS ‘Developing Dubai’ publication presents a comprehensive overview of Dubai’s economy and, through examination of key industry sectors, underlines the importance of this innovative and dynamic emirate as a regional, national and international economic powerhouse.

T

3 Expert Overview Dr Nasser H Saidi - Chief Economist and Head of External Relations at the Dubai International Financial Centre Authority (DIFCA)

The thoughts of leading economic and industry experts combine to deliver an informed and objective analysis of the Dubai economy and whilst recognising the impact of the global financial crisis, there can be no doubt that this is a positive story - one that underlines Dubai’s position as a premier location for any serious global organisation.

In his 2008 book ‘Dubai & Co’, Aamir A Rehman comments that “Dubai captures international attention because of its open business environment, fast-paced development, media savvy and assertive global ambitions and Dubai has quickly become the region’s economic hub.”

The Global Competitiveness Report 2010-2011, published by the World Economic Forum, ranks the United Arab Emirates (UAE) 25th in the world for competitiveness, with the country included for a second year in the third and most advanced stage of ‘innovation-driven economies’.

The elite group includes the highest-ranking countries, classified on the basis of their adoption of factors that promote innovation in economic development. The UAE is the only Arab country to appear on the list and joins nations such as Japan, Australia, Canada, the United States, Sweden, Switzerland, Germany, United Kingdom and Singapore.

As Mishal Kanoo (Deputy Chairman, The Kanoo Group) suggests on page four: “The secret of Dubai’s success is what makes every entrepreneur successful - the ability to see a demand before others do and then cater to it.”

One cannot help but marvel at the emirate‘s entrepreneurial achievements, particularly over the last decade.

4 Expert Overview Mishal Hamed Kanoo Deputy Chairman of The Kanoo Group

5 Real Estate Consider the iconic buildings - not least the Burj Khalifa, the world’s tallest tower - the city’s stunning transport infrastructure, including the Dubai Metro railway system, the phenomenally successful Emirates Airline and continuing growth of Dubai’s International Airport and Al Maktoum International Airport. Then there are the worldclass shopping malls and hotels underpinning a vibrant, growing tourism sector (along with year-round sunshine) and a host of global sporting events from international rugby 7s to World Cup horse racing.

Jamal Bin Ghalaita (Group Deputy CEO of Emirates NBD) points out on page 20: “Dubai is also strategically located at the heart of the wider Middle East, North Africa and South Asia region that is home to one quarter of the world’s population.” He adds: “The city continues to derive its strength from being the investment, trade and knowledge hub for the Gulf region.”

I should give the final word to the man behind the emirate’s success. HH Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, states on his official web site: “The global financial crisis, despite its temporary effects, will not dissuade Dubai from its ambition of development; it will not topple Dubai from its leading position; it will not distance Dubai away from playing an integral part in the global economy; and it will not break the determination of our people to continue the process of development.”

All these factors combine to create a trading environment where innovative local, regional and international organisations will continue to derive a competitive advantage and prosper.

I hope you enjoy reading ‘Developing Dubai’ and take from it a clearer view of the emirate’s unique evolution.

Mark Rix The Burj Khalifa, Dubai

Dubai’s property market has gone from boom to bust, but the future promises sustainable growth

13 Telecoms Mobile phones, the internet and associated technologies have seen rapid uptake in the Middle East, making telcos big business

19 Banking The emirate’s banks have had strong support from the UAE Central Bank, helping the burgeoning industry to stay on track

27 Markets The investment scene is changing as NASDAQ Dubai and the Dubai Financial Market (DFM) make trading more accessible globally

31 Retail The global recession saw a tightening of the purse strings, but Dubai is still seen as a premier place to shop

39 Manufacturing Dubai’s location attracts international names to make a base in the emirate for opportunities in the region and further East

43 Tourism Dubai’s tourism industry witnessed trying times after the financial crisis, but it continued to grow and is now seeing rapid recovery

51 Transport

CEO, 7DAYS

Planes, trains and a lot of automobiles - Dubai’s transport infrastructure has seen huge investment and development

Developing Dubai Publisher Editors Design Pictures

: : : :

Mark Rix Claire Sharrock, Brid-Aine Conway Gopikrishnan Menon Aamir Shah, shutterstock, gettyimages/galloimages

7DAYS is the UAE’s most-talked about daily newspaper and is part of the UK-based Daily Mail and General Trust Plc media stable.

We are delighted to bring you this edition in Dubai and in London via UK METRO’s world-class distribution network.

7DAYS

57 Sport Despite the hot desert sun, Dubai is a hub of sporting activity and hosts several major world-class events, attracting the biggest stars

7DAYS

Expert Overview l Developing Dubai l 3

Gateway to growth Dubai’s open economy left it exposed when recession hit, but it is this openness that will ensure the emirate remains firmly on the road to recovery Dr Nasser H Saidi Chief Economist and Head of External Relations at the Dubai International Financial Centre Authority (DIFCA) Dr Nasser H Saidi is a member of the IMF’s Regional Advisory Group for MENA and co-chair of the Organisation of Economic Cooperation and Development’s (OECD) MENA Corporate Governance Working Group.

He served as the Data Protection Commissioner of the DIFC from January to August 2007 and was recently appointed as head of the External Relations department at DIFC, leading the external links with governments, central banks, financial centre counterparts as well as international organisations.

In 2010, he was named among the 50 most influential Arabs in the World by The Middle East Magazine, for the second year.

He was the Minister of Economy and Trade and Minister of Industry of Lebanon between 1998 and 2000. He was the First ViceGovernor of the Central Bank of Lebanon for two successive mandates, 1993 to 1998 and 1998 to 2003.

He was a member of the UN Committee for Development Policy (UNCDP) for two mandates over the period 2000 to 2006, a position to which he was appointed by former UN Secretary General Kofi Annan, in his personal capacity.

He has written a number of books and publications addressing macroeconomic, capital market development and international economic issues in the region. His research interests include macroeconomics, financial market development and information and communication technology (ICT).

ubai is one of the most open economies in the world. It is a global hub for trade logistics and advanced business services, a major tourist destination, and hosts one of the leading financial markets in emerging countries.

The emirate embarked over a decade ago on a most ambitious plan of economic development and diversification to build an advanced 21st century economy to serve a wide region extending from the Gulf to East and North Africa to Central and South Asia.

The Dubai growth process suffered a blow from the global financial crisis. The repercussions of the Lehman bankruptcy were felt mostly in three areas credit markets, global trade and commodity and energy prices.

Dubai was hit on all counts because it had embarked on a massive infrastructure build-up financed through loans; its ports and airports depend crucially on merchandise traffic from Asia and Europe, and a sizeable portion of the liquidity that sustains investments in financial markets and real estate are linked to regional oil and gas revenues.

In short, the extraordinary openness of this city - like Singapore and Hong Kong - left it exposed to the chilling winds of the downturn.

However, after a few painful months, the recessionary forces were countered by equally powerful elements of resilience and sustainability: the growing trade and investment ties with emerging Asia, the flexibility of its firms and its labour market and the continuous public support for infrastructure projects.

Despite the crisis, the fundamental drivers of Dubai’s growth - the ‘Dubai model’ - remain strong: Openness and economic reform, excellent infrastructure and logistics, diversification from oil, an internationally networked trade and tourism hub, the dynamic role of the freezones such as the Dubai International Financial Centre (DIFC), economic clustering and the pool of regional and international companies and people.

The Great Recession has led to a decoupling of emerging

D

Passenger flow at Dubai Airport has increased by more than 20 per cent since the first half of 2008 and the new cruise terminal has led to a tripling of passengers at Dubai ports.

Reflecting these trends, the tourism sector has been only marginally affected by the crisis

markets from the performance of the mature economies.

In particular, China suffered only a short-lived hiccup to its growth rate and lifted most of its Asian partners (and to a lesser extent Germany) so the trade flows through Dubai have regained strength and in the first half of 2010 they surpassed the figures recorded in the first half of 2008.

Passenger flow at Dubai Airport has increased by more than 20 per cent since the first half of 2008 and the new cruise terminal has led to a tripling of passengers at Dubai ports. Reflecting these trends, the tourism sector has been only marginally affected by the crisis with the number of guests in hotels in the first half of this year actually higher than in the same period of 2008, even if per head spending is lower.

Hotel room prices have been

The Gate, Dubai International Financial Centre headquarters lowered to attract customers, but on the other hand the 2008 prices reflected a boom in demand that could not be sustained and with an increased supply of rooms, competitive pressure has seen these level off.

The other pillar of the Dubai economy, namely the retail sector, has experienced a more sluggish recovery after a marked decline that started in mid-2009.

But with the return of international visitors from the Gulf, Russia, India and East Asia, sales have gradually picked up, and are heading towards a full recovery of pre-crisis nominal levels by year end.

Indeed the main area of concern has been and remains the burst of the real estate bubble.

Prices and rentals that reached record levels in the summer of 2008 have retrenched sharply according to most survey data and with new buildings being completed they will remain subdued.

However the decline in prices and rentals should be welcomed as part of the adjustment process - high residential and commercial rents had

The decline in prices and rentals should be welcomed as part of the adjustment process - high residential and commercial rents had raised the cost of doing business and negatively affected competitiveness raised the cost of doing business and negatively affected competitiveness in Dubai’s services-oriented economy.

This made it more difficult to attract businesses, investments and talents. Hence the normalisation in this sector will produce a positive effect on the rest of the economy.

International demand is starting to benefit from Dubai’s safe haven characteristics in a region facing continuing geostrategic uncertainty.

Dubai needs to deal with the debt overhang resulting from the property bubble.

The banking sector needs to deal with its exposure to real estate and related developers, enabling it to renew the flow of credit to the economy. For this reason the restructuring of nonperforming loans should be carried out in orderly fashion.

In the last month, we have seen Dubai World successfully completing negotiations with creditors, providing a framework for restructuring arrangements with less high-profile cases.

The Dubai World resolution should help to restore the credit flow to healthy companies and put the Dubai economy back on a more sustainable, if lower, growth track trend.

Investors will look beyond recent turbulence to the fundamental factors and the gateway role of Dubai to the region’s strong growth prospects at a time when the advanced economies are struggling to recover, rebuild their insolvent banking and financial sectors and face the risk of a doubledip recession due to the build-up of unprecedented budget deficits and bloated public debt.

7DAYS

Expert Overview l Developing Dubai l 4

Spirit of adventure is alive and well Is there life after tough times for a city like Dubai?

Captain of industry, Mishal Kanoo, believes there’s plenty more to come from the thriving emirate Mishal Hamed Kanoo Deputy Chairman of The Kanoo Group Mishal Hamed Kanoo is Deputy Chairman of The Kanoo Group, one of the largest independent, family-owned group of companies in the Gulf region. Mishal is a UAE national, born in Dubai in 1969. He finished his schooling in Dubai and holds an MBA in finance from the University of St Thomas, Houston, Texas.

Mishal started his professional career with Arthur Andersen in Dubai as an auditor before taking up his current position in 1997.

He is a regular speaker at conferences in the Gulf.

He made his debut as a columnist in Money Works Magazine.

His wide-ranging knowledge of regional business affairs and global capital markets gives him a unique and often controversial insight into business life in the Gulf region.

Mishal continues to voice his views by writing to local and regional newspapers, adeptly analysing the ethical and religious values, blending them with modernity and progress.

Mishal is an advocate of education and believes it allows people to take responsibility and control of their lives.

His guiding philosophy is a deep belief in honesty and looking ahead in life - values that underline the Kanoo family heritage which has always been vibrant and compelling from generation to generation.

ver the past decade, Dubai has gone through dramatic change of the kind that only a few other cities in the world have ever experienced. It has been transformed from a city hardly known to people outside the region to - at one point wrongly so - the focal point of all that was bad and wrong in the world.

As with all irrational thoughts, Dubai is neither a beacon for excess nor is it the sleepy fishing village it started out as over a century ago.

It is, without a doubt, the best example of what happens when you allow pragmatic, caring people - who understand a thing or two about trade and commerce - and understanding, business-minded leaders to treat the city and those who live in it, not as subjects to be dominated and force-fed idealisms that humans will never live up to, but instead as the energy that allows the city to grow and prosper.

It is no secret that when the average person within the Asian region, including Iran, Pakistan and India, is asked where would he most like to go to make his fortune, Dubai is high on that list, if not at the top. This has dumbfounded many as to what the secret of Dubai’s success is.

Is it its rulers? Is it its lifestyle?

O

Yesterday, Dubai could do no wrong. Today, Dubai is in a world of hurt from which it is not expected to recover.

Neither of these views is correct.

Is it its openness? Is it its liberal business attitude? The answer is all that and more.

In my humble opinion, the secret of Dubai’s success is what makes every entrepreneur prosper - the ability to see a demand before others do and then cater to it.

Over the last decade, Dubai has grown into a metropolis that shined so brightly that it burned itself out. Or did it? The naysayers today are the same cheerleaders of yesterday. They swing from one extreme to the other. Yesterday, Dubai could do no wrong. Today, Dubai is in a world of hurt from which it is not expected to recover. Neither

of these views are correct.

Like all cities, Dubai experienced a boom not seen in the region since the late seventies.

Then came the global financial collapse, which dragged Dubai down with it. True, Dubai left itself vulnerable to such swings, but the same people who are baying for blood now were the same people who swam in milk and honey when the money flowed and it looked like it would never end.

But no one asked the one question that set Dubai aside from the rest of the cities of the region. Why Dubai?

Allow me to return your memories to the end of 2001 when the whole world was still mired in the Afghanistan invasion. Emirates Airlines dropped the biggest bomb, although a positive one, when its Chairman HH Sheikh Ahmed bin Saeed Al Maktoum announced it would be buying 58 Airbus 380s to the tune of $15 billion.

This action was at a time when the world was holding its collective breath and the global airline industry was in freefall.

This is just one example of intelligent contrarian leadership that shows why Dubai is the place people gravitate to. This has now paid out quite handsomely, as Emirates recently

For all that Dubai has gone through and will go through, it will still be the vibrant, cosmopolitan city that beckons people to it. It will grow as will the people who live within it. This is the future of Dubai.

An abra, or water taxi, on Dubai Creek announced another profitable year, while other carriers are visibly struggling.

But this is all in the past.

Now we have a situation that appears to be never-ending doom. There are banks that are running scared, companies laying people off and pundits who can only say negative things about Dubai. Is that really the way things are or are we experiencing yet another extreme emotional swing?

Let’s try to look at things as they are. Imagine that you are in a car going at 100 km/h and you hit a wall. The car is completely crushed but you are alive with a few bruises and some broken bones. You are alive. You have faced the worst that can happen and you are still alive. Your bones will heal soon enough, as will your bruises. You have learned an important lesson that hopefully if you are smart, you will never need to repeat. You can go on with your life and you can choose to allow this experience to force you into your shell or take it as just a great story for you to tell your grandchildren.

This is what happened to Dubai. It is alive. It breathes through the people that carve their livelihood from it. It is still growing and will continue to do so. Some bones, or industries, have been broken and will take a while to heal, in some cases a

really long while. Others were hardly affected. As a body, you feel the pain, but not all the body was hurt. The body will function and grow even though some of it was damaged. It is the same with Dubai. That is why the city will still be the attraction it is to others. It is a risk-taker. It is willing to try what others shy away from.

Sometimes these choices turn out to be foolish. Other times, they might seem foolish to the untrained eye, but with time they bear fruit.

So where will Dubai be in six months time? Or even in six years? Dubai is not going anywhere soon and no other city will be fighting for its crown just yet. But even such an outlook is wrong. Does London take away anything from Paris?

So in the same spirit, neither Doha nor Abu Dhabi will take from Dubai. They all complement each other. People will come and go.

Some who invested at the wrong time may hate Dubai forever, yet they made their choices, not the city. Others will come here and fall in love with it. This is the way of life.

For all that Dubai has gone through and will go through, it will still be the vibrant, cosmopolitan city that beckons people to it. It will grow as will the people who live within it. This is the future of Dubai.

7DAYS

Developing Dubai l 5

R Real Estate Dubai’s property market has gone from boom to bust, but as the recovery gains momentum, the benefits of the downturn are becoming clear.

A number of projects that started in the good times and have been recently completed, such as DMCC’s Jumeirah Lakes Towers and Emaar Properties’ Downtown Dubai, are returning on investment, whilst the wheat was separated from the chaff among the emirate’s real estate agents when times got tough

7DAYS

Expert Opinion Real Estate l Developing Dubai l 6

The road to recovery It’s no secret the real estate sector in Dubai was hit hard by the downturn - the key to rebuilding it, says analyst Matthew Green, is a more balanced approach Matthew Green Head of Research and Consultancy, CB Richard Ellis, UAE Matthew joined CB Richard Ellis as an Associate Director in February 2009 to run the Research and Consultancy department for the UAE. Matthew has more than seven years experience in the Middle East and UK property markets.

He has extensive experience of market studies, feasibility/best-use analysis and development consultancy, in the form of reports, presentations and financial analysis.

Matthew has advised on several high-profile projects within the UAE, including Capital Centre, Reem Island, Mina Zayed, Rawdhat Abu Dhabi, The Palm Jumeirah, Meydan, Dubai Marina and Dubai Silicon Oasis. He has also undertaken work across the GCC region, including recent projects in Oman.

espite the challenges of a global market downturn, the past 12 months bore witness to some truly memorable events in the history of Dubai.

The opening of the emirate’s first mass transport system, the Dubai Metro, in September 2009, was followed in January 2010 by the spectacular launch of the world’s tallest tower, the Burj Khalifa, and the unveiling of the new Armani Hotel in April.

However, reality once again beckons and the road to recovery lies ahead. With celebrityendorsed projects and world record attempts now hopefully behind us, it is time for Dubai to mature and move into an environment where functionality trumps visual form, and bigger is not always better.

As we look back, it is clear that a shift in perspective has already occurred. This is reflected in the growing number of banks now actively seeking new

D

mortgage custom, a phenomenon very much missing during the previous year. Certainly, it seems the overall market mood is now more positive, more forward looking, and in general sentiment terms, vastly improved over this same point last year. This is not to say that further challenges are not around the corner, rather that the worst would at least seem to be behind us. The major test now manifests itself in the form of the sizeable new supply completing across virtually every market segment.

Over the next three years, more than 38 million square foot of new commercial office space could complete, dependant on the impact of continued construction and infrastructure delays

Further examinations lie ahead with swift resolutions required for Dubai’s ongoing company debt problems, and a resulting requirement for the timely resolution of outstanding corporate governance and regulatory reform issues.

With existing office stock comprising just 14 per cent of ‘Strata Titled’ space, it is clear that a significant shift in market dynamics is about to occur.

Over the next three years, more than 38 million square foot of new commercial office space could complete, dependant on the impact of continued construction and infrastructure delays.

Of this space, approximately 79 per cent will come from split-ownership properties, meaning multiple owners within buildings and potentially even on individual floors.

What is already apparent is that many occupiers have a preference for non-strata buildings, largely due to the likely stumbling blocks of finding consecutive floors for larger lettings, the prospect of dealing with multiple landlords, and also sourcing expansion space within buildings.

However, despite the obvious concerns over fractional ownership structures, the situation does create opportunities for owners and developers of single-ownership assets, to attract the cream of tenants, build tenant loyalty, and to create tradable investmentgrade assets.

Ironically, given the current oversupply situation, some of the larger corporate occupiers are already finding difficulty sourcing suitable office accommodation in order to meet their requirements, a problem that is only likely to worsen. It is yet to be seen whether the government would consider enacting ‘compulsory purchase orders’ to try to mitigate some of the impact likely to be felt as a result of split-ownership properties.

Opportunity lies not just with developers and building

owners, but also with management and facilities management companies who can fill gaps in current service provision, and offer more transparent and impartial services to owners’ associations.

Service charges currently represent a barrier to new investment into residential property, as well as being an obvious concern for owners and existing buy-to-let investors in the emirate.

Declining rental rates have been much-publicised in recent times, but the drop in leasing and for that matter sales levels has, by and large, not been followed by similar reductions in unit service charges. The overall impact then has been to decimate rental yields and to create an obstacle to new inward investment.

Many existing unit owners now face service charges equivalent to 20 to 35 per cent of their total potential rental income, which obviously reduces the draw for would-be buyers into the market.

The creation of owners’ associations thus represents an essential component of the ‘Strata Law’, particularly as the legislation will help lead to greater transparency in the actual breakdown of charges, while also allowing independent parties to tender for contracts.

During times of such major upheaval and change, it is important to remember the success that Dubai has had in repositioning its economy.

Over the past ten years, Dubai has successfully emerged as the pre-eminent headquarter office location for occupiers looking to service the MENA region. The quality of infrastructure, in the form of transport, hotels and

Many existing unit owners now face service charges equivalent to 20 to 35 per cent of their total potential rental income, which obviously reduces the draw for would-be buyers into the market

offices, is unrivalled in the Middle East arena.

This creates an obvious competitive edge, which must be exploited over the coming years as the recovery process evolves and growth returns.

The implementation of new laws and importantly the enforcement of proposed regulations will help to create a more mature market environment, leading to improved levels of transparency and the encouragement of further investment.

Recent clarification from the Dubai Land Department on Law No. 27 of 2007 - the Strata Law - signified a purposeful stride forward in the challenge to improve visibility issues for current owners and would-be investors. This needs to be complemented by further and ongoing regulation and supervision of - and where necessary enforcement against - individual companies to ensure that inadequacies of corporate governance do not manifest themselves again.

7DAYS

Real Estate l Developing Dubai l 8

The new heart of Dubai Dubai has a new epicentre, known simply to residents as Downtown - a vibrant focal point for the city, created around the world’s tallest building owntown areas are central business districts, bustling nerve centres where people live, work and play. Downtowns are also the vibrant heart of a city, the must-visit destination in a tourist itinerary.

Now, Dubai has a new downtown. Emaar Properties, the company that built it, calls it ‘Downtown Dubai.’ Residents simply refer to it as ‘Downtown’.

This 500-acre community celebrates the buzz of the

D

celebrate: If shopping is your chosen therapy, there are 1,200 retail outlets, including the world’s leading hautecouture brands, boutique stores, and an array of high-street brands at The Dubai Mall.

For dining choices, anything you fancy - from a global array of delicacies - beckon you at the mall and at Souk Al Bahar, a destination blending Arabian architectural elegance, a souk-like ambience and modern dining and retail outlets,

The total cost for the Burj Khalifa was about US$1.5 billion; and for the entire ‘Downtown Dubai’, US$20 billion

‘Dubai lifestyle’, one that reflects the true cosmopolitan outlook and character of the city, one that highlights the concept of ‘global oneness’.

Not long ago, Downtown Dubai was another extensive patch of land that housed a government establishment.

Today, more than 50 million visitors come to this community, described as the ‘most prestigious square kilometre on earth’.

Downtown Dubai also brought with it a new energy and lifestyle to the city - a defining character and identity that elevates it to the league of Fifth Avenue, the ChampsElysees or Ginza.

For some, this is home. For others, this is the office. This is where lasting memories are created, where people look forward to meet and live the lifestyle they cherish.

Downtown Dubai is the flagship of Dubai’s aspirations and ambitions; it is the perfect blend of what a city and its people can accomplish, when powered by the vision to excel and exceed.

With thousands of residents living in Downtown Dubai’s world-class residences, this is where Dubai meets to unwind, shop or simply relax, any time, any day of the week.

They have reasons galore to

with magnificent views of the world’s tallest performing fountain. Souk Al Bahar is the perfect getaway for leisurely gettogethers or a quick relaxation in between your shopping spree.

Without you even realising, time will slip by, as you watch The Dubai Fountain come to life, magically dancing and swaying to the beats of classic and popular music.

There are 1,200 retail outlets, including the world’s leading haute couture brands, boutique stores, and an array of high street brands at The Dubai Mall

Meet friends or business acquaintances in more formal settings at one of the five luxury hotels, social hotspots that bring together the movers and shakers of the city.

And winding down this vibrant community is the 3.5-km Emaar Boulevard, which already hosts popular events such as the Downtown Dubai Classic Car Show.

Finally - and most strikingly of all - the Burj Khalifa, rising majestically over Downtown is, a true representation of Emaar’s development outlook, framed by an abiding respect for heritage and led by the vision to innovate and create new benchmarks. Burj Khalifa, today, lends an unmistakable identity to the Dubai skyline, soaring above, shining bright in a festival of lights.

The tallest building in the world, while under construction, was referred to as ‘History Rising’.

Today, the world calls it ‘A Living Wonder’ and a ‘Vertical City’.

An extraordinary union of art, engineering and meticulous craftsmanship, Burj Khalifa brought together over 12,000 professionals from more than 100 nations to accomplish a design inspired by the six-petalled desert flower, Hymenocallis.

Now, towering into the sky at 828m, Burj Khalifa is a

record-smashing accomplishment for humanity.

The first residents of the ‘most prestigious address’ in the world have already moved in and corporate offices are undergoing finishing touches.

Armani Hotel Dubai, the world’s first luxury hotel bearing the signature style of haute couture legend Giorgio Armani, has also opened its doors to guests.

And ‘At the Top, Burj Khalifa’, the world’s highest observation

deck, welcomes hundreds of visitors who come to marvel at the amazing views from the world’s tallest building.

Dedicating the tower to the power of global collaboration, Mr Mohamed Alabbar, Chairman of Emaar Properties, said: “Burj Khalifa shows just what can be achieved when people from all over the world come together to strive for a common purpose.”

Emaar, indeed, pushed the frontiers for the whole world.

Burj Khalifa brought together over 12,000 professionals from more than 100 nations, to accomplish a design inspired by the six-petalled desert flower, Hymenocallis

Today, more than 50 million visitors come to this community, described as the ‘most prestigious square kilometre on earth’

7DAYS

Real Estate l Developing Dubai l 9

Live, work and play with the DMCC The Dubai Multi Commodities Centre has developed its own freezone, housing commodity trading, business and residential towers

Already home to more than 2,300 companies and in excess of 10,000 residents in 50 towers, including 28 residential towers, JLT is growing and is on track for completion in mid 2012

umeirah Lakes Towers (JLT) was designed to provide the physical infrastructure for businesses looking to set up in Dubai and to fulfil Dubai Multi Commodities Centre’s mandate.

JLT, the freezone of the DMCC, offers both a living and working environment in a 200-hectare mixed-use real estate development. Envisioned as a unique master development, nurturing both trade and community living, JLT offers both freehold property and leasing options.

Already home to more than 2,300 companies and in excess of 10,000 residents in 50 towers, including 28 residential towers, JLT is growing and is on track for completion in mid 2012.

The development, which is on Sheikh Zayed Road near Dubai Marina, offers investors the opportunity to own property on a freehold basis. A total of 87 towers will complete this project, with 78 of them clustered in groups of three alongside landscaped gardens and unique

J

waterways - four winding, manmade lakes, stretching to approximately 179,000sqm.

In addition, eight new towers with views over the Jumeirah Islands’ lakes will be located in the JLT Embankment areas.

Central to the development is Almas Tower, which houses the headquarters of the DMCC. The DMCC was the first UAE freezone authority to offer freehold business premises, in addition to all other standard freezone services; and is the licensing authority for businesses operating in JLT, enabling businesses to benefit from a freezone status with a zero income and corporate tax rate. Within JLT, DMCC has developed three

purpose-built towers, Almas Tower, Au tower and the Ag Tower.

These towers are equipped with industry-specific infrastructure to cater for commodityspecific needs. Almas Tower, the 65-floor flagship tower built for the diamond industry, is the focal point of DMCC’s development. The 16th tallest commercial tower in the world and the tallest office tower in the Middle East, Almas Tower houses DMCC’s corporate offices, the Dubai Diamond Exchange and the Pearl Exchange, in addition to gold and diamond vaults and business centre facilities.

The three towers were built to form a physical commodities

Upon completion, JLT will have an estimated resident population of around 60,000 and a working population of another 120,000

The Jumeirah Lakes Towers development cluster within the freezone community for the DMCC member companies.

This will also enable DMCC’s registered members to access a comprehensive commodities knowledge base comprising all stakeholders of the commodities trade, and will facilitate the development of mutually beneficial relationships across the entire value chain of each commodity sector.

Upon completion, JLT will have an estimated resident

population of about 60,000 and a working population of 120,000.

Proximity to the growing markets and developments in new Dubai makes JLT one of the most sought after mixeduse communities.

With strong demand for high quality property in Dubai, this expansive development offers a much-needed supply of safe and secured apartments and office space with easy access to the city. l

Building a new lifestyle he world has a new icon standing tall in Dubai. The Burj Khalifa, the world’s tallest building, is a compelling statement on the contribution of Emaar Properties to developing the socio-economic dynamics of

T

Dubai. An integral partner in the growth story of the city, Emaar Properties was instrumental in setting in motion a new lifestyle shift for the city, and in the process, offering residents a sense of belonging, a feeling of

A lifestyle community in The Springs, Dubai

home and a taste of integrated community living.

Mohamed Alabbar, chairman of Emaar Properties, recalls that one of the founding objectives of Emaar was “to build a company that would transform not only the physical landscape of Dubai but every aspect of the city”.

Complementing the fastpaced growth of Dubai, led by the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, Emaar introduced the concept of master-planned communities that offered world-class homes, offices, hotels, malls and leisure destinations for the cosmopolitan population of Dubai.

Emaar started its success story with Emirates Hills, the first of its kind lifestyle

community in Dubai, before developing such landmark developments as Arabian Ranches, a premier villa community; and Dubai Marina, the first and largest of its kind waterfront development in the region.

Emirates Living, a collection of luxury neighbourhoods including The Springs, The Lakes, The Meadows and The Greens, also marked the evolution of what is referred to as ‘New Dubai’.

The crowning glory of Emaar is its flagship mega-project, the $20 billion Downtown Dubai, which anchors the Burj Khalifa and The Dubai Mall, the world’s largest shopping and entertainment destination.

Today, Emaar is extending its project management competencies across the world, with a

Dubai Marina Water Channel Length Marina Walk Length of Roadway Network Buildings

3.6 km 8.5 km Approx 16 km Approx 200 residential towers

Just one example of Emaar’s many projects. Today, Emaar is extending its project management competencies across the world, with a geographic footprint across the Middle East, North Africa, Pan-Asia, Europe and North America.

geographic footprint across the Middle East, North Africa, PanAsia, Europe and North America.

In all these countries, Emaar brings a new lifestyle shift, which also supports the local economic development goals of creating new jobs and supporting ancillary industries.

From its primary interest in property, Emaar has expanded

into shopping malls and retail, hospitality and leisure and healthcare, complementing the Emaar development ethos of creating integrated communities.

Committed to adding longterm value to its stakeholders, including the Government of Dubai, Emaar continues to redefine lifestyles and deliver on its promises. l

7DAYS

Real Estate l Developing Dubai l 11

On the regional road to recovery While investment in Dubai continues, expansionary companies such as Al Futtaim Group are looking outside its borders

The GCC retail industry is expected to grow in the future with a rise in population, urbanisation, middle class (with increasingly higher per capita income), inflow of tourists and a growing number of passengers in transit. These factors continue to provide conditions conducive to real estate and retail development in the GCC countries

Cities within cities Al Futtaim’s Festival Cities offer retail, residential, leisure and business in one development

l Futtaim Group Real Estate (AFGRE) has not been idle during the global recession. Work on its massive mixed-use project, Dubai Festival City - hotels, retail, residential, leisure and business districts spanning 3.8km of water frontage on the eastern bank of Dubai Creek - has continued since the first store, IKEA, opened in 2007.

“We are progressing with construction within Festival Centre.

Further construction is happening on Al Badia Business Campus with the new 237,000sqft office tower and phase three of our residential programme in Al Badia to be completed by the end of 2011,” said Philip Evans, AFGRE Director of Commercial and Retail Leasing.

The group’s other current Festival City project in Cairo is also well on its way for its 2012 retail opening.

“We are aiming to be 95 per cent let on opening and are well on target to achieve that. Interest from both retailers and food and beverage and leisure operators has been phenomenal.

“Progress of the development has continued according to schedule, despite the economic crisis. This year we launched our prestigious apartment range Festival Living and our business district,” Evans said.

But AFGRE has not only been keeping its current projects alive in the face of the challenges of the downturn, it’s also planning new ones.

“We’ve only recently signed

A

The thriving Dubai Festival City waterfront and below right, another part of the complex a joint venture and will soon set plans in motion for the dhs6 billion state-of-the-art entertainment and retail complex in Doha slated to become a driving force behind Qatar's diverse economic development,” said Evans.

“Construction for the 4.6 million sqft project - the first of its kind in the country - will begin in early 2011. The first retail phase is due for completion in the first quarter of 2012 and the remaining two phases will be completed by 2015. IKEA, ACE, Toys ‘R’ Us, Marks & Spencer and Intersport - all part of the Al-Futtaim Group - have already confirmed as the project's premier anchor tenants.”

Al-Futtaim is one of the biggest family-owned enterprises in the region. It is most renowned for its Festival Cities - “cities within cities” that offer retail, residential, leisure and business in one development.

Dubai’s Festival City continues to grow and work on the project is ongoing, despite the fallout from the financial crisis on the emirate’s real estate market.

“We have just announced our deal with Hard Rock Café, in addition we have finalised the leasing for our 80,000sqft

indoor family entertainment centre that will be a theme park and will open in December,” Evans said.

And, while the amount of money spent at the Festival Centre mall has fallen, shoppers have continued to come, attracted by the large number of food and beverage retailers and the unique selling point of the Dubai Creek waterfront.

“We’ve managed to sustain footfall levels and up until August we were 15 per cent up year-on-year,” Evans said.

However, AFGRE did not remain untouched by the crisis, according to Ian Plumley, General Manager of Sales and Leasing.

“Al Futtaim has not been immune to the global economic downturn but the group’s guiding principle to keep it simple and maximise customer experience has helped greatly in the process to even the keel,” he said.

Plumley doesn’t think there will be a real sustained recovery for Dubai’s property industry until 2012.

“We are close to seeing the bottom at the moment and will stay put for a while before the recovery starts. We still have to face tough days ahead,” he said.

But he does see growth

Among GCC countries, the UAE will see the largest amount of spending on new hotels at about dhs1.7 billion, defying the lingering pressures on the tourism sector globally ahead in Dubai’s tourism and retail sectors that will help the real estate market on its way.

“The GCC retail industry is expected to grow in the future with a rise in population, urbanisation, middle class (with increasingly higher per capita income), inflow of tourists and a growing number of passengers in transit. These factors continue to provide conditions conducive to real estate and retail development in the GCC countries, according to a new report by Alpen Capital, ‘GCC Retail Industry Report 2010’.

“Proleads, a Dubai-based research company, predicted in May that among GCC countries, the UAE will see the largest amount of spending on new

hotels at about dhs1.7 billion defying the lingering pressures on the tourism sector globally,” he added.

Meanwhile, AFGRE will continue to invest in Dubai, particularly in its Festival City project, according to Evans.

“Early next year we will be opening a 15,000sqft nightclub adjacent to Hard Rock Café.

“We will also be working on Al Badia Business Campus - an office complex with associated service buildings and an approximate built-up area of around 237,000sqft.

“And we will be continuing progress on Al Badia Phase 3, which adds to our range of townhouses available for sales and lease,” he said. l

7DAYS

Real Estate l Developing Dubai l 12

The right attitude As Dubai’s real estate market has faltered, agents selling and leasing property have had to change their mindset, says Ryan Mahoney of Better Homes

What’s it like for your company at the moment?

money that people could make in the industry, so many people that were from media sales, or software sales or even banking went into real estate. Most people tend to know of friends that did this. When it all came crashing down, they quickly went back to their other industries.

Q A

It’s been difficult, the market is very slow. We don’t know how long it will last for so we have to look at how we manage it. We looked at how to cut costs, we made a lot of redundancies and tried to get ourselves to break even or be profitable and there was a period where we were losing money. It took some real cost-cutting to get ourselves back into profitability and it has been very difficult.

How have things changed for your agents?

Q A

It’s been a massive undertaking to get them in the right place - part of it has been changing the mindset.

If I showed you the company presentations from the early days of the crisis, 2008 say, our biggest concern was how do we take a team of agents from an era where they have just had to take orders and they can have an attitude, to an era where you really have to go out there and sell and you have to be creative

Can you give us any figures on what they were making back then and what they’re making now?

Q

Ryan Mahoney, Managing Director, Better Homes to find business and sell properties. When there are no more investors in the market, it is only about end users.

It was too difficult for most people. I would say 75 per cent of the agents that were in the Dubai market are no longer there. They either weren’t prepared to hack it or they didn’t have the skills. And the money that was being made, even if they were successful, was just not enough.

The amount of money that the top-producing agents can make today is far, far less than what the top producers could make then. Because of the

The average income in early 2008 was about dhs35,000 to dhs40,000 ($9,500 to $11,000) per month and now it’s down to about an average take-home wage of dhs12,000 to dhs15,000 ($3,200 to $4,000) .

Many people will make nothing for four months and many will average dhs5,000 and dhs6,000 ($1,300-1,600).

It’s been tough. It has taken real

A

commitment to make the business work now and people have had to get over the complacent attitude - it has been tough for us to change that.

It’s always infuriated us and other agencies when we have people with that attitude and they won’t return people’s calls.

It’s so damaging for the business and it’s difficult to fix.

As much as you train people, as much as you ask people not to do it, and you let go of people and so on, it still happens.

That is the most positive side of the whole shift. People have realised they have to go out there and get the business.

And it’s been a really good thing for consumers. It’s very painful for us as a business, but it’s good for consumers and the long term of Dubai’s real estate market. Finally people can rent property at a slightly more reasonable rate.

So was the recession ultimately a good thing for the real estate market?

Q

I think to be honest if the market had kept on doing what it was doing we would

A

have made a hell of a lot of money, so it is hard for us in the short term to see the benefit.

I do believe that for the long term - over a period of ten years - this is going to really firmly set Dubai as a centre of business in the region and it really will enure that the city has the infrastructure, real estate and reasonable set-up costs for businesses. It will make sure that all the elements are in place.

Property prices were starting to erode Dubai’s lifestyle because the cost of living was becoming unmanageable, not only for business but for people.

Residents started to move to Bahrain and Qatar and there needed to be brakes put on that.

The recession has made the cost of doing business and living in Dubai far more competitive.

The boom encouraged so

to scare people out of their megalomania. Now peope are realising: ‘We need to change if we want to be the Dubai we want to be, we need to be creative, competitive and to go out there and look for business’.

The infrastructure boom and the mindset change, will for us as a business, prove tremendously valuable in the years to come. But we’ll have to wait out the slowdown for the moment.

What do you foresee for the rest of 2010?

Q A

We will see more of what we have already seen in this year so far. I would say the second quarter was a good marker.

We’re not going to see prices rise, at least not yet, things will stay quite slow. But based on what happened in the second

Many people will make nothing for four months and many will average dhs5,000 and dhs6,000 - it’s really tough

many developers into the market that there is now an oversupply situation in Dubai that will be seen here for many years to come.

The crash has also changed the mindset of people in business and government in Dubai.

People were not competitive and they weren’t delivering a good service, whether we are talking about government or private companies.

This has been a wake up call

quarter we’re out of the period of ‘everything’s gone to sleep’.

But there aren’t that many people buying because the investor market is just not there.

The end user buyers are still buying however. Values will stay steady and I expect the number of sales to be similar to the second quarter of this year. The figures were not too bad. We’re probably talking about 50 per cent off peak in the number of transactions.

7DAYS

Developing Dubai l 13

T Telecoms Mobile phones, the internet and numerous associated technologies of the telecoms industry have seen rapid uptake in the Middle East, making telcos big business in the region.

However, as the market becomes saturated, Etisalat and du, the UAE’s government-run telcos, are facing similar challenges to companies in the US and Europe - a search for new revenue streams

7DAYS

Expert Opinion Telecoms l Developing Dubai l 14

Ringing in the changes As the mobile phone market in the UAE becomes saturated, the two incumbent operators will need to seek new lines of revenue, writes Zoran Vasiljev

Zoran Vasiljev Managing Director, Value Partners Dubai

He has led projects in market assessment, corporate and business unit strategy, mergers and acquisitions, strategybased transformation, marketing, sales effectiveness, CRM and programme management.

His extensive international experience comes from more than than 25 countries across Europe, Asia, Middle East and Africa.

Prior to joining Value Partners, Zoran was director of telecoms practice for Arthur D Little in the MENA region. He was also the founder and CEO of Affinitiv Consulting and the head of business strategy for StarHub in Singapore.

In addition, Zoran has specialised experience in telecoms sector liberalisation and growth strategy development, business development and strategic investments, corporate and business planning, and privatisation and restructuring.

He has authored a number of articles on industry topics and is a frequent speaker at industry events.

Zoran holds an MBA from Marshall School of Business and a degree in Computer Information Systems for Business from the University of Southern California in Los Angeles.

He speaks Serbian, English, German, and Russian. He is a serial entrepreneur.

W

Internet Subscribers (Thousand Subscribers)

Mobile Penetration ( Per 100 inhabitants)

Source: The UAE Telecommunications Regulatory Authority (TRA)

Zoran joined Value Partners in 2009 as a partner in the Middle East and North Africa region. He has extensive consulting, operational and management experience in the Middle East, Eastern Europe and South East Asia in the telecommunications and technology sectors.

ith the global recession having apparently run its natural course, telecoms operators appear to have escaped the worst of its effects, as consumer spending on telecoms products and services has remained fairly resilient during the period.

In the UAE, much of this resilience comes from the fact that telecoms services are increasingly seen as essential purchases, and given the rise in education, population and entrepreneurship in the region, demand for internet services has also increased in recent times.

Mobile and broadband access services in the UAE are today perceived as an indispensable staple in people’s lives.

The telecoms market in the UAE has seen substantial growth in recent times, mainly via government initiatives to open the market and the introduction of competition.

The Telecommunications Regulatory Authority (TRA) in the UAE is at the cutting edge of the telecommunications sector in the region and is continually assessing how to reinforce competition in the telecoms market.

The predominant governmentowned stricture of both operators has limited any heavy price competition in the UAE, protecting ARPU (Average Revenue Per User) revenues. The TRA implements price control regulatory policy and prohibition of cross-subsidisation or predatory pricing in order to discourage heavy price competition.

The results have been remarkable, and today the UAE’s telecoms sector is worth an estimated dhs1 billion.

This fantastic increase of almost 30 per cent from the previous year is due to rapidly increasing demand for data services and smartphones in the country. The UAE, with a 230 per cent mobile penetration rate, is one of the highest in the world. Coupled with a high income level, the UAE is a massive market for smartphones and data use, especially as the two operators continue to promote data plans and services.

With companies such as Apple, Google and Nokia creating full ecosystems around their operating systems, and having gained a larger share of the prof-

The predominant government-owned stricture of both operators has limited any heavy price competition in the UAE, protecting ARPU (Average Revenue Per User) and revenues

it pool, regional operators have been forced to review their degree of involvement across the content-value chain.

In the UAE, we have already seen greater emphasis being placed on developing content to stimulate higher-ARPU use among subscribers.

In 2010, du exhibited stronger competition in the country, while Etisalat announced Fibre to the Home (FTTH) plans in the UAE. We are also witnessing the introduction of bundled services and the overall iPhone phenomenon; operators have seen increased internet usage and revenues, the roaming revenues are up, and the quality of data experience is as important as qualityof-voice experience.

In order to meet the capacity requirements coming from data usage and mobile broadband, the two operators in the UAE have increased their network investments and upgrades.

These requirements are driven

by new behaviour where users are spending more time using phones for surfing the internet, emailing, downloading, and connecting with friends on social networks, than for making voice calls.

Beyond new investments, there is significant room for UAE operators to grow existing operations through consolidations or organically. In order to do this, they will need to lead and transfer know-how to more emerging markets both in Africa and Asia.

A key challenge posed in the UAE telecoms market is operating in a saturated home market - one that has become increasingly competitive over the past two years. ARPU erosion has also started to dent profit margins for UAE operators.

While growth can be sought outside the home market, international operations need to be well managed. Proper governance models for these new group organisations remain a challenge. There is also room to grow as true service providers

with services such as applications, managed services, and outsourcing.

UAE operators have tremendous growth opportunity in monetisation of content in the region (IPTV, mobile tv-3G etc).

The inclusion of mobile virtual network operators - new operators that use existing infrastructure - for segmentation of customers (eg affluent, youth, family etc) in the UAE is still at its early stages, but once adopted, can enable extraction of a lot of valuable information.

Looking into the future of the UAE telecoms sector, deep industry and business insights are required to identify and make smart, well-timed decisions. Increasing competition and penetration of broadband on multiple platforms are key business imperatives that can be embraced, and so are improving cost structures, investing in

The UAE, with a 230 per cent mobile penetration rate, is one of the highest in the world growth, driving efficiency, and strengthening relationships with customers.

The presence of a very young community in the UAE also presents big opportunities for innovation.

We should also expect to see more emphasis on accelerating decision making and execution, shortened time-tomarket and launch timelines and a renewed focus on green telecoms and innovation.

7DAYS

Telecoms l Developing Dubai l 15

Plenty of room for growth The UAE may have reached saturation in terms of mobile phone ownership, but du’s Chief Commercial Officer Farid Faraidooni is not expecting any drop in revenue as data usage on smartphones takes off

Has du been affected by the global recession?

What steps have you taken to mitigate these effects?

Q

I don’t think there is any one sector that hasn’t been affected. It’s just about how large the effect was.

Globally, the telecoms sector in general has been very resilient to the economic downturn. It’s now a need for everybody. It’s like the food industry it never dropped, people still need to eat.

OK, they might not order fancy food but they’ll continue to shop in the grocery store.

Telecoms has become part of our life, whether it’s mobile, broadband, or TV so there has been some impact globally but this sector is one that has been one of the most resilient to the economic downturn.

In the UAE, du has been doing great. We have been showing fantastic growth rates, even at the peak of the crisis.

In 2008 to 2009, our revenue growth rate was 35 per cent and 2009 to 2010 was another 35 per cent of growth. These are rates that are probably one of the highest in the region, if not globally in the telecoms sector.

Our mobile customer base from 2008 to 2009 grew from 2.9 million to 3.5 million. We have now crossed four million active subscribers in the UAE. We didn’t want to take a defensive approach and cut on marketing, advertising, or labour costs. We were ambitious.

We controlled our costs, but for example, we didn’t lay off people. We could have taken that approach, but we didn’t.

We were more ambitious, and invested more in our infrastructure. In 2008 to 2009, we invested dhs2.3 billion in our

A

I don’t want to give any forward-looking numbers but we will probably spend something above dhs2 billion in investment in our infrastructure in 2011

infrastructure. In 2009 to 2010, we invested dhs2.5 billion.

I don’t want to give any forwardlooking numbers but we will probably spend something above dhs2 billion in investment in our infrastructure in 2011.

Infrastructure includes continuing to develop and expand our mobile network, our fixed line network, our systems for operational support and customer support systems.

Do you think the cost of broadband in the Middle East is too high? How and when do you see broadband becoming more affordable in the UAE?

Q

Like every other market, as it matures and the behaviour of people and how they use broadband changes, prices will evolve.

There will be a continuous reduction in the prices as people use higher and more bandwidth.

Of course there are several reasons why the prices are there today. One of the main ones is that the Middle East is still geographically far away from where the core of the internet is.

Of course, this isn’t an excuse. This cost base will reduce as we consume more bandwidth, as we provide higher bandwidth, and as content develops locally and regionally.

It’s an evolutionary process.

And once these costs start to go down, the prices will start to go down as well. It’s about maturity. We have to go through this evolution.

We also need the big internet players to come and establish hubs in the region.

The likes of YouTube, Google and facebook need to create hubs in the region so that I don’t

A

need to go all the way to the US to access them. It needs to be somewhere in this region where my cost to reach the YouTube server would be much less than now.

So there are many factors that will help to reduce our cost base. Once this cost goes down, the retail price will fall. And I think we’ve seen this already.

Three or four years ago, the cost of broadband was at a completely different level from where we are today. Today du is offering 8mb at dhs199. That’s like 8mb at $54. This is very close to many European countries so we aren’t too far away.

We expect with these prices our customer base will get bigger and utilisation of higher bandwidth will get bigger, and that this will reduce the cost per unit and we’ll be able to afford even lower retail prices.

Telecom operators in mobile phone-saturated markets have had to come up with new ways to make money. Do you see that happening soon in Dubai?

Q

If you think, things that we used to watch on TV, we’re now watching on our laptops, and things we used to use our laptops for, we’re now using our phones. That is stimulating more usage.

Yes, the overall market is getting saturated. Voice is getting saturated, as is calling.

But on the other hand, things like using mobile broadband are still growing.

Accessing content through mobiles is still at its infinite phase. Every day we have new things that we’re accessing through mobiles. Two years ago, we used to only browse YouTube on PCs. Today we do it on the phone, so these things are stimulating mobile phone usage. So I don’t consider that we’ve reached saturation.

Maybe we’ve reached saturation in terms of the number of customers. For example the UAE has one of the highest

A

Farid Faraidooni, Chief Commercial Officer, du penetration rates. We have crossed 200 per cent. So every person in the UAE has at least two SIM cards. Maybe there is saturation from that perspective, but in terms of usage, not at all.

Usage is increasing. We see this on our data network. The utilisation of our data network is rapidly growing and that is because of all these different applications popping up everyday. That is the next level of growth and evolution.

What new revenue streams is du considering?

Q A

Voice will continue to be there but will be a commodity.

Data (accessing email and the internet) is the next big thing.

The portion of our revenue from data will continue to grow.

Content and entertainment and third party applications will be another source of revenue.

The likes of YouTube, facebook and Twitter will stimulate users to use data more and more and this will make our revenue stream bigger and bigger.

We’re doing more and more on our phones. Things such as entertainment, e-services, watching TV. We have something like 23 channels on our mobile TV platform - Arabic,

Voice is getting saturated, as is calling. But things such as using mobile broadband are still growing

Every person in the UAE has at least two SIM cards western, Asian, Chinese - and people use it a lot.

What changes will the introduction of a third telco, Yahsat, have on the market?

Q

We welcome competition.

We were the challenger in the market, we were the company through which choice became available in the UAE, so we like that and are already geared towards competition so we have no issues with competing.

The competition will get tougher. This will benefit consumers. Hopefully it won’t impact the quality of service because there always needs to be a balance between price and quality of service.

Quality will hopefully stay as it is or even get better. But I think customer service will definitely improve. The whole industry will have more pressure to provide better services and competition will hopefully be on that rather than just pricing.

If you enter into a price war, then you have to compromise on quality. I don’t expect we’ll get into that situation and hopefully there’ll be a balance of quality and market share through prices, quality and customer service. l

A

7DAYS

Telecoms l Developing Dubai l 16

du things differently The UAE’s telecommunications industry finally opened up with the launch of its second provider, du, in 2007 n February 2007, du was granted the second telecoms licence for the UAE and launched mobile services nationally. Today the company offers fixed and mobile telephony, broadband connectivity and IPTV services to individuals, homes and businesses, and carrier services for businesses.

By the beginning of 2010, more than 3.7 million people had chosen to become du customers and an impressive 262,000 new mobile subscribers were added over the last quarter.

As a rapidly-growing enterprise, du has close to 2,000 staff working to develop and expand its service offerings.

Its staff hail from more than 60 different countries - mirroring the rich cultural diversity of the UAE. More than half of its senior management team and customer-facing staff are UAE nationals and the telco is committed to providing opportunities for the best people for the job in a cosmopolitan working environment.

In less than four years, du has established itself as the

I

By the beginning of 2010, more than 3.7 million people had chosen to become du customers

operator of choice for the majority of new subscribers in the UAE. “We are proud that our contributions are helping to transform the UAE market by providing customers with choice and making a difference in quality, innovation and pricing,” du says.

Among its most recent achievements, the telco announced the launch of its new broadband services, which provide up to 16 times the speed of existing broadband, while maintaining current customer pricing levels, signalling the dawn of a new era in national broadband services.

The company says its ‘Real Broadband’ service will offer better value than similar broadband services offered in the region and will be even more competitive than similar services provided in other markets such as Ireland and Canada.

The company successfully implemented its next-generation WiFi service across the new Dubai Metro, earning it the award for ‘The Most Innovative Mobility Project’ at Cisco

Networkers 2010. This groundbreaking new service offers onthe-move continuous wireless internet for passengers onboard trains and in stations. du’s strategy for 2010 is to consolidate its position in the market. With the Telecommunications Regulatory Authority (TRA) recent ruling on infrastructure sharing, du now has a tremendous opportunity to provide all its services, nationally.

“The timing for this couldn’t be better,” du says.

“As we have been preparing by fully upgrading our infrastructure to the most cutting-edge network, allowing us to deliver our existing services to new customers on a much wider and larger scale.

“Above all, we offer value, while we continue to deploy state-of-the art technology to keep enhancing the service experienced by our customers.”

Du is currently developing its existing products and services, such as the elite mobile plan,

WoW recharge cards and On-demand services, in order to provide better, more cutting edge products and services that are more relevant to customers.

The company is also aiming to simplify tariffs from its ‘One World One Rate’ international roaming product that will provide greater transparency for customers.

In addition, there has been an increase in the number and variety of retail outlets, where customers can purchase or pay for du services. “You can’t deliver the best experience to your customers if you don’t provide them with easy access to your services,” du says. du is striving to streamline its organisation and ensure it invests in the right people, the right products and services, to provide a valuable and customer-driven telecommunication experience. l

Our strategy for 2010 is to consolidate our position in the market.

With the TRA recent ruling on infrastructure sharing, we now have a tremendous opportunity to provide all our services, nationally

The internet is on track Commuters get online on the train as du powers the Dubai Metro with WiFi he Dubai Metro became operational on September 9, 2009. It is a driverless, fully automated metro network that is projected to carry approximately 355 million passengers per year.

Since September 2009, du, the UAE’s integrated telecom service provider extended its WiFi service to the new Dubai Metro line. This announcement marked a noteworthy milestone for du, empowering the transport industry for the first time in the UAE with smart in-rail wireless communications.

The company’s next generation network offered on-themove wireless internet connectivity for passengers on trains

T

and in stations and first-to-market seamless wireless internet connectivity for passengers stepping into and out of trains.

The train compartments were connected to the operator’s network using a state of the art WiMAX and third generation network for backhauling.

With this implementation, du was able to offer its customers wireless internet access while travelling at speeds of up to 70km per hour.

The Dubai Metro is the only railroad in the world to use Mobile-WiMAX and 3G (for trains) and fibre (for stations) networks as support to the WiFi system onboard the trains and inside the stations. du offers

WiFi to ensure seamless broadband connectivity on the metro network. The du Metro WiFi service is now available to any resident or visitor with a WiFienabled device such as a laptop, smartphone or PDA. This solution enables du to offer a convenient service, enhancing the customer experience, and complementing the image of Dubai as the most advanced city in the region. du’s fundamental goal is to provide value and deliver the ultimate telecom experience anytime, anywhere and at any speed. The du Metro WiFi service won the award for ‘The Most Innovative Mobility Project’ at Cisco Networkers 2010. l

du’s next generation network offered on-the-move wireless internet connectivity for passengers on rains

7DAYS

Telecoms l Developing Dubai l 18

Enterprise Benefits Etisalat’s fibre roll-out has also provided significant benefits for businesses with the advantage of a scalable and dedicated network for business to offer maximum reliability and uptimes.

This is a huge differentiator since businesses value faster response time, higher service availability and information security. In terms of services, Etisalat today is able to offer the highest broadband speeds of 100Mbps for businesses.

Overall, the fibre network provides a solid and reliable backbone for Etisalat in its objective to become the partner of choice for businesses, offering a suite of ICT solutions ranging across mobility solutions, business connectivity solutions, managed services and ebusiness with customised offerings and professional services tailored to the industry and company requirements.

The cable guys Etisalat’s major new fibre-optic network will help power the UAE’s economic growth, as well as offering consumers access to state-of-the-art internet and television

tisalat has established a reputation as a telecom service provider that is continuously innovating and identifying new ways for customers to experience and benefit from world-class services and technologies.

In 2007, Etisalat made the

E

Etisalat has invested over dhs5 billion to achieve this landmark project

challenging decision to connect the UAE with advanced fibreoptics technology to create a futuristic network to meet customers’ ever-evolving lifestyles and communication needs.

Fibre optics have the capacity and capability for ultra-high bandwidth applications that offer a significantly enhanced experience for Etisalat’s business and residential customers.

Etisalat conceived the fibre-to-the-home (FTTH) network as a critical component to deliver the benefits of a broadband-enabled world. Apart from satisfying individual customers, a network of this calibre is also capable of delivering long-term economic benefits by augmenting the UAE’s transition to a knowledge-driven economy.

Fixed network implementation presents higher challenges compared to a mobile network.

For Etisalat to efficiently con-

nect the entire country by the year 2011, the project planning took into account the enormous scale of this project while setting the implementation timeframe.

Other important considerations were the scale of civil works involved and the adverse weather conditions during the summer under which Etisalat’s technical teams would have to lay out the fibre and meet delivery deadlines.

Owing to the rigorous project

planning that accounted for any and all eventualities, Etisalat has not encountered any major challenges after entering into the implementation phase of the project.

The project is still ongoing and the company’s aim is to fibre-connect the entire country in 2011.

Currently, Etisalat has laid out fibre across nearly 2.2 million km of the UAE. When completed in 2011, the UAE will be one of the first countries in the world to have nationwide fibre-optics deployment.

Etisalat has invested more than dhs5 billion to achieve this landmark project. The project has been funded internally.

A nation’s telecommunication infrastructure is an integral facilitator of its economic progress. It enhances the ways in which consumers and businesses communicate.

The fibre-optic network is a key enabler and Etisalat’s services based on this network have already started to benefit its customers, both individuals as well as businesses. l

Consumer Benefits n Etisalat’s portfolio of eLife services, which includes fastest broadband of 30 Mbps, high-definition voice and high quality IPTV on a single line, is the most robust in the marketplace and delivers choice, value and convenience across a range of options. n Customers have affordable and flexible options with eLife’s double play (internet and fixed line) and triple play (internet, TV and fixed line) packages. n Etisalat is amongst the first five providers in the world and the first in the Middle East and North Africa to have 3DTV, launched with the 2010 FIFA World Cup promotion for its eLife customers n Etisalat offers high voice quality to its fixed-line customers, owing to the data capacity and capability of the fibre network and the company’s partnerships with reputed international operators worldwide.

Currently, we have laid out fibre across nearly 2.2 million km of the UAE Etisalat’s eLife campaign

7DAYS

Developing Dubai l 19

B Banking While globally finance is in trouble, Dubai’s banks have had strong support and rapid action from the UAE Central Bank, helping the burgeoning industry to stay on track. There’s a renewed interest in Islamic finance as the old methods are questioned in the wake of the crisis. And even while investment prospects are reduced as the world economy recovers, locally-based banks are looking to grow outside the Middle East

7DAYS

Expert Opinion Banking l Developing Dubai l 20

Back to basics While Dubai’s banking sector has been bruised by the global financial crisis, its fundamentals have remained strong and it is now ready to grow once more Jamal Bin Ghalaita Group Deputy CEO, Emirates NBD A new future is emerging for the banking industry As Group Deputy CEO, Jamal Bin Ghalaita is instrumental in driving Emirates NBD towards the realisation of its core vision, to be recognised as the leading financial services provider in the Middle East.

He continues to provide strategic guidance to the various divisions at the bank, ensuring that their activities are closely aligned to the overall vision.

Ghalaita is also General Manager Consumer Banking and Wealth Management, a position he has held since 2007.

He has played a critical role in establishing this unit as the growth engine for the group and has set up and grown several new businesses at the bank, including Private Banking and Emirates Money.

He also pushes innovation on existing channels and products to deliver value to the customer (for example, development of Emirates Skywards credit card and channel branches).

Ghalaita’s illustrious banking career spans two decades with key roles in the corporate, retail, trade finance and human resources sectors in the Emirates NBD Group. His significant achievements include planning the launch of Emirates Islamic Bank, implementing strategy and process for key departments such as the treasury and merchant cards and launching the Al Shaheen priority banking services.

He holds a degree in Business Administration from the University of Arizona and has completed specialised courses in Leading Corporate Renewal and INSEAD programmes from Singapore and France.

wo years after the global financial crisis began, shaking the foundation of the international economic system, the world has entered a period of increasing stability and slow but sure recovery.

There remain, however, significant systemic risks - and the ever-present threat of a double-dip recession, especially in the US, where job creation remains anaemic, and Europe, where fears linger that government debt in countries such as Greece, Spain and Portugal could stagnate the continent’s economy.

T

Dubai is also strategically located at the heart of the wider Middle East, North Africa and South Asia region that is home to one quarter of the world’s population The MENASA region has a population of 1.6 billion, a combined gross domestic product of $3.2 trillion and is growing at five per cent each year. It is one of the few regions on earth that is experiencing such sustained growth.

Dubai has served that region for years, and will continue to do so in the future.

The city continues to derive its strength from being the investment, trade and knowledge hub of the Gulf region, which has a population of 40 million and an economy that has grown three-fold in only five years to $1 trillion

The Middle East, of course, was not immune to the impact of the crisis - including Dubai, which is a fully integrated participant in the global economy.

Despite a marked decline in the real estate sector, however, the city has proved its resilience in the face of these unprecedented challenges, led and inspired by the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

The city continues to derive its strength from being the investment, trade and knowledge hub of the Gulf region, which has a population of 40 million and an economy that has grown three-fold in only five years to $1 trillion.

To understand the impact of the global financial crisis on the city’s financial services sector, it is critical to view the performance of the sector in that wider regional, and indeed

UAE ranking by assets (USD Bn)

international, context.

Clearly, those banks that have embraced the Dubai model - seizing appropriate opportunities across the Gulf, MENASA and the world, while forging public-private partnerships - are in the strongest position to grow in the post-crisis world.

Domestically, the government acted quickly and efficiently, from the very earliest days, to take steps that substantially alleviated the impact of the crisis on the country.

Today, we continue to see the positive implications of those actions, as money supply continues to grow, despite reduced levels of foreign direct investment that are in line with global trends.

Yes, asset growth slowed over the period, and, yes, exposure to non-performing loans impacted the bottom-line performance of banks here, as they prudently took impairment provisions against those NPLs. But the sector’s fundamentals are strong.

The fundamentals of Dubai are also strong, and the city will continue to grow.

The growth of Dubai over the past decade and even longer, including specifically the development of world-class soft and hard infrastructure, will serve the city extremely well in the long term, consolidating its status as a regional hub for business, trade and financial services.

This investment - in

UAE ranking by Equity (USD Bn)

transportation and education, energy and healthcare, capital markets and regulatory frameworks - has been accompanied by unprecedented economic diversification. This diversification, including the diversity of the city’s skilled and hard-working population, is a source of enormous strength.

Today, we all recognise that a combination of excessive leverage, irresponsible shorttermism and inadequate regulation led to the development of the global asset price bubble - which burst when the US subprime mortgage sector imploded. This, in turn, led to the broader financial crisis, from which the world is now recovering.

With most of the GCC banks affected, regional governments had to act fast to inject billions of dollars into the system to ensure that the financial system weathered the global economic crisis. The UAE, which has the largest banking system within the GCC with total assets touching $414 billion, took the most definitive action with cash injections touching $438 billion.

With the economy on the road to recovery, there is increasing pressure on banks to begin lending again to stimulate growth. In the post-crisis world, of course, everyone is placing a premium on risk management.

This holds equally true in Dubai, where banks are focused on prudent lending growth, backed by stronger levels of risk management, governance and controls.

There is also increased focus on lending to strong businesses with a proven track record, or where there is guaranteed

UAE ranking by profits (USD Mn)

The UAE has the largest banking system within the GCC with total assets touching $414 billion

government support. Another financing model that has gained ground is funding crucial infrastructure projects backed by strong public private partnerships (PPPs).

Yet such prudence does not mean that banks here should not continue to seize expansion opportunities. Domestically and regionally, such opportunities clearly exist - in retail, private, corporate and Islamic banking.

In the small and medium enterprise sector, for example, there are countless success stories just waiting to be told, backed by growth capital and by entrepreneurs with the drive and vision to succeed.

Dubai is strategically located at the heart of a region stretching from Casablanca to Calcutta, and even further abroad. Across this arc of opportunity, the city’s banks will continue to play a key role in facilitating growth and engineering success.

Two years after the global financial crisis began, a new future continues to emerge and a new chapter begins in the incredible story of Dubai. l

7DAYS

Expert Opinion Banking l Developing Dubai l 22

Sharing the highs and lows The concept of Islamic banking was crystallised in Dubai in 1975. In the relatively short period of 35 years, it has taken the world by storm and today, an ethical revolution is silently fermenting across the world of finance, writes Sohail Zubairi Sohail Zubairi CEO, Dar Al Sharia Prior to joining Dar Al Sharia as CEO, Sohail had been serving Dubai Islamic Bank (DIB) as Senior Vice President and Head of Sharia Structuring, Documentation and Product Development since 2004. He is a qualified banker, having held senior corporate, structured and project finance and risk management positions at various banks in the UAE. Sohail has more than two decades of experience in the GCC market, acquired mainly in large corporate finance, risk management and syndication fields.

While associated with DIB, Sohail played a significant role in the successful completion of financing large projects based both in the UAE and abroad.

In 2004, he joined the prominent scholar Dr Hussain Hamed Hassan, Chairman, Sharia Board DIB Group, from whom he learned the art of structuring transactions and was involved in many innovative Sharia compliant financing and investment products.

Since joining Islamic banking in 2001, Sohail promotes the industry’s cause through articles in local print media and teaching Islamic Finance at the University of Dubai for final-year students.

He is also a regular participant at various conferences and seminars on Islamic Finance in the GCC region and beyond.

he vast success of Islamic banking and finance over the last ten years has intrigued many, the majority of whom are not aware of the great differences between the industry and its conventional counterpart - especially when it comes to treating customers’ deposits and the application of these funds to earn profits.

A conventional bank borrows funds from its depositors at a predetermined rate of interest.

It then lends these funds to its customers (individuals and businesses) at pre-fixed interest rates that are higher than the ones paid by the bank to depositors. The difference then becomes the bank’s income.

By virtue of borrowing these funds, the bank becomes liable to pay them back to depositors together with interest on the agreed maturity date of the deposit contract, irrespective of the outcome of the amounts lent.

Islamic banks do not borrow funds from depositors nor do they lend them to individuals or entrepreneurs. Instead, an Islamic bank accepts funds from its customers in the capacity of “fund manager” under a time-bound fund management contract.

The depositor of funds is called Rab Al Mal, the Islamic bank is called Mudareb (fund manager) and the transaction is referred to as Mudaraba (fund management).

The Islamic depositors provide equity to the Islamic bank, rather than lending money to it.

By so doing, they become eligible to share the profits while at the same time remaining exposed to the equity risks.

Therefore, the Islamic bank acts as the trustee and is responsible to judiciously invest depositors’ equity and is held liable in

T

Conventional banking could take some tips from Islamic finance

case of its negligence. However, any genuine loss is borne by the depositors since their money with the Islamic bank is classified as equity, rather than a loan.

The periodic profit distribution is audited and approved by the Sharia board through its Sharia auditors. The Sharia board is comprised of a minimum of three qualified scholars that have in-depth knowledge of Islamic jurisprudence in relation

Islamic banks do not borrow funds from depositors nor do they lend them to individuals or entrepreneurs.

Instead, an Islamic bank accepts funds from its customers in the capacity of ‘fund manager’ under a time-bound contract

to financial matters, whereas the Sharia auditors are trained by the Sharia board members to scrutinise transactions undertaken by the Islamic bank’s management. These are the two additional corporate governance layers in an Islamic bank compared to a conventional bank.

According to Sharia guidelines, the guarantee and the return are not allowed to mingle.

As such, the funds relating to investment deposit accounts (fixed deposits) and savings accounts are considered part of Mudaraba, and are not guaranteed by the Islamic bank, thereby eligible to earn profits.

On the other hand, the current account funds are treated as a loan guaranteed by the Islamic bank and hence do not earn any return since these are not part of Mudaraba.

The Mudaraba funds received from all depositors are put into a common pool from where the Islamic bank invests them in transactions approved by its Sharia board to ensure these are ethically appropriate. Sharia guidelines do not allow an Islamic bank to invest its funds in areas considered to be harmful to humans and the economy, whereas other ranges of activities are open for transactions.

The Halal (permissible) income generated from such investments is periodically

distributed among the Islamic bank and its depositors at a pre-agreed distribution ratio after it is audited and approved by the Sharia board. The Islamic bank meets with all the running expenses from its share of Mudaraba profit whereas depositors do not bear such expenses.

Contrary to the practice of conventional banks where depositors’ returns are fixed at the outset, the actual profit is distributed on a periodic basis between an Islamic bank and its depositors. This phenomenon has made it possible for the Islamic depositors to receive higher than usual market returns on their investments compared to conventional banks’ pre-fixed interest.

By default, Islamic banks were not allowed to invest in the subprime mortgages, derivatives or CDOs since Islam does not allow trading in debt. This was the primary reason why the banks were able to emerge strongly from the financial crisis.

With the conventional financial system having faced severe problems in the recent past and people’s faith in their respective economies seeming to have dipped at the low ebb, the Islamic financial system deserves much more focus and appreciation than it is currently given for having developed greater transparency and fairness levels, as well as

robust ethics in dealing with investors’ funds. Perhaps other institutions would benefit by taking a closer look at the Islamic banking business model. l

With the conventional financial system having faced severe problems in the recent past, the Islamic financial system deserves much more focus and appreciation than it is currently given for having developed greater transparency and fairness levels

7DAYS

Banking l Developing Dubai l 23

Combining to beat the crisis After the fallout of the Dubai World debt saga, one banking brand has remained a UAE powerhouse mirates NBD, a leading bank in the region, was formed in October 2007, when the shares of Emirates NBD were officially listed on the Dubai Financial Market (DFM).

A merger had brought together the UAE’s second and fourth largest banks by assets, Emirates Bank and National Bank of Dubai, creating a financial services powerhouse.

The group has operations in the UAE, Saudi Arabia, Qatar, the UK and Jersey (Channel Islands), and representative offices in India, Iran and Singapore, employing approximately 6,300 people.

Emirates NBD is a market leader across core business lines. It is the leading retail banking franchise in the UAE, with 129 combined branches and more than 650 ATMs spread across the country.

The group is also a major player in the corporate banking arena, with a combined market share of almost one fifth of corporate loans, in addition to fast-growing Islamic bankingaffiliated entities, strong investment and private banking services, as well as leadership

E

Despite a turbulent financial environment, Emirates NBD has performed well, delivering a net profit of dhs3.3 billion ($898 million) in 2009

in the field of asset management products.

In addition to the standard services such as account management, local and international remittances, telegraphic transfers, bill payments and the like, Emirates NBD continues to offer innovative retail banking products and services that add value for customers.

With product development a top priority at Emirates NBD, some of the more recent services include FlexiDeposits, which allow customers to make partial

withdrawals from their fixed deposit, while still keeping the rest of the deposit intact In 2009, there was significant focus on finalising all details related to the merger.

In particular, the integration of the two legacy systems, which was perhaps the most crucial aspect of the complex merger processes, was successfully completed and the seamless migration to the new core banking platform achieved.

The success of this project was internationally acknowledged when Emirates NBD won the 2010 Financial Sector Technology (FST London) award for ‘Systems Integration Project of the Year’, amid stiff competition from top UK and European financial organisations.

The bank also launched its new brand identity and reinforced its leadership position

in the local and regional banking space.

Emirates NBD has focused on preserving shareholder value and managing cost efficiencies resulting from the integration process. Despite a turbulent financial environment, Emirates NBD has performed well, delivering a net profit of dhs3.3 billion ($898 million) in 2009.

The bank continues to work within its conservative and robust credit and risk management framework, which is bearing fruit with credit metrics in line with the financial markets expectations.

In the second quarter of 2010, the bank registered a profit of dhs1.513 million ($411,947), despite significant exposure to Dubai World debt.

Emirates NBD has also bolstered its capital base and significantly improved its funding profile. l

In the second quarter of 2010, the bank registered a profit of dhs1.513 million ($411,947), despite significant exposure to Dubai World debt

Leading the new way Dubai Islamic Bank is ahead of the game when it comes to Islamic finance ubai Islamic Bank (DIB), the largest Islamic bank in the UAE, is also the first bank in the world to have incorporated the principles of Islam

D

in all its practices.

Today, DIB stands as an undisputed leader in the Islamic banking sector for providing a range of innovative Shariacompliant financial solutions for more than 900,000 customers in the UAE.

DIB’s resilience in the face of challenging global conditions is reflected in its positive financial results. For the full year 2009, DIB reported a net profit of dhs1.2 billion.

These results are a testimony to DIB’s approach to sustaining its growth path, supported by the bank’s continuous expansion of products and services, in addition to expanding its retail reach.

Constantly seeking ways to create new products that have been approved by its prestigious Sharia board, the bank recently launched Al Islami Salam Finance, an innovative finance product that is based on the Islamic financing structure of Salam, which is a sale contract whereby the Bank pays the cash price in advance, and the

customer agrees to deliver goods with certain specifications and quantity on agreed future dates. The first product of its kind in the region, Salam Finance marks a significant

Building a new brand - the Emirates NBD headquarters

milestone in Islamic banking.

The unique services DIB offers are tailored to its customers’ diverse requirements.

For example, for its high net worth clientele, DIB introduced Wajaha, a distinguished Wealth Management service with unparalleled advantages.

Dubai Islamic Bank has been actively expanding its retail footprint to support the needs of its growing customer base, set to reach a million customers by the end of 2010. This has involved not only opening more traditional

Dubai Islamic Bank has been actively expanding its retail footprint to support the needs of its growing customer base, set to reach a million customers by the end of 2010

branches but also enhancing its network through state-of-the-art technological channels. DIB currently has 63 branches across the UAE with plans to expand to a further 72 by the end of 2010.

As part of its global growth strategy, DIB has been aggressive in identifying, expansion opportunities in underserved markets. The bank officially launched operations in Jordan at the start of 2010 with the opening of its first branch in the capital, Amman. DIB today also has successful operations in Pakistan, Turkey and Sudan.

In recognition of its leadership position, DIB continues to receive industry accolades for its operational excellence and unique product portfolio. Most recently, it was named the “Best Islamic Bank” in the UAE for 2010

by Global Finance Magazine.

Having celebrating its 35th anniversary earlier this year, the bank continues to make a significant contribution to the overall economic growth and diversification of the UAE and all the markets that it serves. l

7DAYS

Banking l Developing Dubai l 24

What’s the alternative?

Stocks and bonds aren’t the only way to make an investment in your financial future hat is an ‘alternative investment’? Put simply, it is an investment that offers an alternative to the more conventional cash, bonds and equities. It’s a catch-all term for investments such as property, commodities, hedge funds and art.

The term conjures up both positive and negative feelings in investors. On the negative side, alternative investments can be illiquid and can suffer periods of significant volatility in prices.

In the period 2008 to 2009, many investors got stuck holding too much of their wealth in illiquid alternative investments just as they were trying to raise cash.

However, alternative investments can be fun!

You can enjoy your asset as you wait for it to appreciate in value. A work of art can bring pleasure to the owner as much as the owner can benefit from a rise in prices. An investment in a second home can be enjoyed if it also permits the owner to enjoy a holiday on the ski slopes of Courcheval or the beaches of Cannes.

Alternative investments, in my view, also have a serious role in a portfolio created to grow wealth over the longer term. Commodities, property and hedge funds have become more mainstream over time, in a senseless alternative.

All three classes of assets can be accessed in a generally

W

Gary Dugan Chief Investment Officer, Private Banking, Emirates NBD Gary Dugan has served as Chief Investment Officer for private banking at Emirates NBD since July 2009. In this capacity, he is primarily responsible for the investment products and portfolios of the bank’s clientele of high net worth individuals.

Prior to joining Emirates NBD, Dugan served as Managing Director and Chief Investment Officer at Merrill Lynch Global Wealth Management in Europe, the Middle East and Africa (EMEA).

Dugan's vast 25-year experience in wealth management also includes leading positions in global financial institutions, such as Barclays Wealth, where he spearheaded the research and investment strategy department, and JP Morgan, where his team was awarded the ‘Best Global Balanced Group in Europe’ by Standard and Poor’s.

If your investment is a work of art, at least you can enjoy it while waiting for prices to rise liquid, easily sold form of investment. For commodities, investors can invest in exchange-traded funds that are investment funds that track the price of commodities, which means you don’t have to take physical delivery of a commodity. We would generally recommend that investors buy ETFs based on a broad basket of commodities.

Hedge funds typically adopt an investment approach that looks to conserve capital and can form a part of a balanced

portfolio. Hedge funds invest in many different conventional asset classes but have the flexibility of going short in the market when they believe it is going to fall.

Some hedge funds are now in a form that offers daily or weekly opportunities to buy and sell the funds, rather than the one to two year lock-ins that were very prevalent in the past.

Property investment remains a generally illiquid investment that investors have in recent years held too much

Growing with interest ounded in 1967 as Bank of Oman, Mashreq is one of the largest banks in the UAE. The financial institution has played a pioneering role in the industry, particularly in retail banking. Among its many firsts were the launch of traveller’s cheques, credit cards and ATMs. As a leading financial institution in the UAE, Mashreq aims to be world class in every facet of its business including its social responsibility to the community it serves.

Towards this goal, the bank pays particular attention to recruiting, training and retaining

F

UAE national employees.

At an operational level, 2010 has yielded a number of milestones which will continue to assist the growth and development of Mashreq, both locally and regionally.

In March 2010, Mashreq announced the launch of Mashreq Al Islami, its Islamic banking division, which is available to customers throughout all of its 55 branches in the UAE. The division is advised by the world’s most respected Sharia Supervisory Board.

The bank continues to strengthen its presence in Abu

In the period 2008 to 2009, many investors got stuck holding too much of their wealth in illiquid alternative investments just as they were trying to raise cash

exposure to. Property is best invested in with a long-term view in mind.

Alternative investments are not for everyone. However, as

part of a well-diversified portfolio of assets they can help to improve the return of a portfolio without taking significantly more risk. l

Dhabi with the launch of its first Mashreq Gold Centre in the Capital, and the opening of new branches in Abu Dhabi and Al Ain, totalling 13 branches.

In line with its commitment to offer the most suitable financial solutions to its customer, Mashreq launched its unique debt-counselling service, Mashreq Assist in September 2009. More than 5,000 customers received support from Mashreq Assist.

The service was established to help individuals and SME clients facing repayment challenges to provide them with vital support and advice when they need it most.

In 2009, Mashreq expanded its regional footprint, opening

offices and branches in Cairo and Kuwait, with plans to develop further in the area through 2010 onwards.

Mashreq is also committed to providing a range of credit card offerings by teaming up with recognised partners such as Air Arabia and Grand Cinemas to offer a unique combination of premium banking and lifestyle services.

Continuing this theme, Mashreq also set up a Business Platinum debit card aimed at small to medium-sized enterprises - the first of its kind in the UAE. l

7DAYS

Banking l Developing Dubai l 25

Managing expectations Dealing with client portfolios has its ups and downs, says Deon Vernooy, Senior Executive Officer of asset management at Emirates NBD

What exactly do you and your business unit do?

We have 50 people working for us and 50 different nationalities

Q A

It’s very simple - we manage people’s assets for them.

Of course, we have a number of levels of involvement, but as investment managers our focus is on managing regional assets for people, so we manage regional equities, regional real estate and regional fixed income portfolios for our clients.

We also give our clients access to the best international management and manage directories ourselves.

We structure our products around the management and access that we provide, so if someone wants to have a global equities portfolio, we will give them access to the top five or six managers in the world.

And we also manage Islamic investment products for people.

So how does it work?

And how does asset management work on the ground?

Q

We have 50 people working for us, made up of 50 different nationalities. The team is structured in a number of different key functionalities, so at the core is the investment

A

management team. These are the portfolio managers and the analysts that look at the markets and decide where to place assets on a day-to-day and minute-to-minute basis.

The key people there are the portfolio managers or the fund managers and they are supported by the analysts, the people who really go and look out for the best propositions out there and advise the fund managers who take the final decision and responsibility for the portfolio that is managed for the client.

The investment management team is divided up into the equities team, the fixed income team and global team and the real estate team.

You are probably a good fund manager if you get it right 60 per cent of the time

Alongside them, we have the product development and product management team, so they are responsible for designing the whole product.

Let’s say for example, we want to have a regional equity fund, they will go and look at which countries should we invest into this products, what are the parameters of the product, how much risk do we want in the product and then they look at the whole legal structure around it.

The product team is responsible for setting up the whole product and managing it, but not the underlying asset.

Talk us through the funds? Where do the investments go because obviously real estate has been a very volatile area recently?

Q

We have 15 public funds mutual funds - and then of course we also have private funds with so-called segregated clients - clients who come and say ‘Look I don’t want to invest into your public funds and get mingled with a number of other investors, I want to have my assets separately’.

Within the 15 public funds there are different types. We have some very low-risk money market funds and then some very high-risk equity products.

And in between we have more balanced sort of products.

That covers a whole range from the more conservative products and the money market products, the fixed income products, both Islamic and conventional and then you have the buzz-type products that hold some equities, some properties, some cash, some hedge funds possibly and then on the more risky side we have the equity products.

A

How difficult has the job been over the last couple of years for the investment managers?

Q

It has been very difficult and managers have to look to the future and make up their mind about investments and

A

Deon Vernooy, Senior Executive Officer at Emirates NBD certain types of assets. You are probably a good fund manager if you get it right 60 per cent of the time - that would make you a good fund manager.

[But] we are doing OK. We don’t track it on a day-to-day basis for formal measurement purposes but we do know, for example, that compared to last year 55 per cent of our products out-performed their benchmark.

You have varying types of client from high net worth individuals to governments - how have the dynamics of client that you have seen coming through the door changed over the last couple of years?

Q

I think the region when we started here was very unsophisticated in terms of requirements from investment products and in terms of knowledge.

So I think it has improved to some extent over the past five or six years with institutions such as the Dubai International Financial Centre regulating it and also they have the big global names.

A

What more improvement do we need to see?

Q A

More from the regulatory perspective - as client managers we work in a sort of regulated environment - we are still in a part of the world where we have limited access to the market outside of the region, and so a lack of liquidity as a result of the limited access to foreign investment in the Middle East.

The worst part of the job is undoubtedly to speak to clients when they have seen a negative return on their portfolio, especially in this part of the world where, people don't appreciate their money becoming worth less

What is the best and the worst part of your job?

Q A

The worst part of the job is undoubtedly to speak to clients when they have seen a negative return on their portfolio, especially in this part of the world where people don’t appreciate their money becoming worth less. I have some memories of clients where I have had to go back and say I am sorry that your portfolio was 100 last time, but now it is only worth 80.

I think we followed the plan that we both decided on but I am sorry to tell you that we have lost 20 per cent. That does not go down well. That is the worst part. The really good part is when you work out a plan and it goes really well. Most of the people who work in asset management are professionally qualified but they also find excitement from the day-to-day work in the markets and the challenges that brings. l

7DAYS

Developing Dubai l 27

M Markets Dubai’s investment scene is changing as NASDAQ Dubai and the Dubai Financial Market share systems to make trading easier and the emirate continues to grow its commodities sector through the Dubai Multi Commodities Centre. Tea, cotton, diamonds and gold are all up for grabs as Dubai takes advantage of its geographical position to help move goods from East to West and the sluggish pace of trading in the shares of household names such as DP World and Emaar Properties starts to pick up again

7DAYS

Expert Opinion Markets l Developing Dubai l 28

All that glitters The rise and rise of commodity investment in the Middle East istorically, investors have focused their investments on stocks, mutual funds, bonds and real estate; however commodities is rapidly becoming a favoured alternative and the Middle East is leading the way.

Commodities could provide investors with the yield they were looking for but, more importantly, it’s the negative price correlation to bonds and

H Pradeep Unni Senior Research and Head Trader, Richcomm Global Services, DMCC Pradeep Unni has a decade of experience in research and real time trading.

He handles a huge portfolio of discretionary and non-discretionary clients.

His views are regularly quoted in international and local media (print and online). He tracks gold, silver, currencies and oil on a day-to-day basis.

and a rise of 311 per cent on a year ago.

Being one of the leading members of the DGCX, this sustained growth and addition of new currency contracts in response to rising demand for FX products, has resulted in a massive

Currency futures on the exchange saw a rise of 311 per cent year-on-year to reach 82,750 contracts in July

Richcomm Global Services Richcomm is a leading commodity services company based in Dubai, registered with the Dubai Multi Commodities Centre (DMCC) and a member of the Dubai Gold and Commodities Exchange (DGCX).

It’s management team combines extensive experience in some of the world’s largest financial institutions, with a range of knowledge in the regional market.

Richcomm Global provides tailor-made global commodity risk management solutions to clients and aims to utilise its expertise to ensure client needs and risks are identified and managed efficiently within an agreed mandate.

Key to its success is in-depth research and analysis of market fundamentals. The company’s clientele is highly diversified, from retail investors, corporates to institutions. It offers both discretionary and non-discretionary services.

equities that help investors to diversify their portfolios through hedging.

Commodity trading is now seen as a separate asset class with good growth potential, and with global interest in commodity trading far exceeding that of equities, trading in commodities simply cannot be ignored.

The growth of commodities and currencies markets in Dubai has been phenomenal and there are increasing numbers of investors opting to buy into the products traded on the Dubai Gold and Commodities Exchange (DGCX), which is the leading exchange in the region.

This growing investor interest is obvious from the growth in volumes. At the end of July 2010, year-to-date volumes crossed the one million mark and stood at 1,090,645 contracts, an increase of 46 per cent on last year.

Currency futures on the exchange saw a rise of 311 per cent year-on-year to reach 82,750 contracts in July. The Indian rupee futures, the only one of its kind outside India, saw its second straight record month in July with 23,514 contracts traded; almost double the volume in June

surge in clientele interests (both corporate and retail).

With Dubai being a key trading centre with a huge expatriate population, most firms and investors are exposed to multiple currency risk in their trade transactions.

These foreign exchange risks can be effectively managed through hedging with the help of contracts traded on the exchange. Such price risk management has previously been unavailable in the Middle East.

As Dubai emerges within the Middle East as a global finance hub, the derivative industry comprising of commodities and currencies is likely to see massive growth and the ideal location of the UAE between the time zones of Europe and the Far East is adding to the pace.

Additionally, tax advantages in the region, guaranteed settlement and reduced counter-party risk provided by Dubai Commodities Clearing Corporation (DCCC), as well as extended trading hours, are turning the exchange into a leading venue for hedging and investing. l

The rise of currency futures trading on the DGCX

Futures Contracts At the end of July 2010, year-to-date volumes on the Dubai Gold and Commodities Exchange crossed the one million mark and stood at 1,090,645 contracts, an increase of 46 per cent on last year

A futures contract is an agreement to buy or sell an underlying asset on an agreed future date and for a price fixed in advance.

The underlying asset of a futures contract can be a commodity, foreign currency, equity, interest rate, real estate or any other asset class and the contracts are traded exclusively on exchanges, with standardised contract specifications in a regulated environment.

The Dubai Gold and Commodities exchange offers a variety of commodity and currency futures, all denominated in US Dollars, including:

Gold Futures Dubai has a long-standing history and an established trade in precious metals.

DGCX launched its trading operations with the DGCX gold futures contract.

Silver Futures Dubai is also an important geographical location for the silver industry and international silver trade. The silver futures contract was the second contract launched on DGCX.

WTI Light Sweet AND Brent Crude Oil Futures DGCX offers futures contracts on the world's two leading energy benchmarks: Brent and West Texas Intermediate Light Sweet crude oil. Both contracts are cash settled and thus involve no delivery risk.

They are available for trading to regional and international market participants.

Crude oil is one of the world's most widely used commodities and is amongst the most liquid futures contracts. Crude refers to petroleum in its raw form - it becomes useful after refining, which produces numerous oil-based component products,

including petroleum gas, diesel, lubricants, heating oil, lubricating oils, aviation gasoline and asphalt, among others.

Currency Futures Pairs DGCX is the only exchange in the Middle East to offer currency futures contracts.

The exchange offers four currency futures paired to the US Dollar: Euro, British Sterling, Indian Rupee and Japanese Yen. From June 2010, DGCX started three new currency futures pairs: Australian Dollar, Canadian Dollar and Swiss Franc (all paired to US Dollar).

The Indian Rupee futures contract was the first of its kind in the world when it launched in 2007.

Today, it remains the only Rupee/Dollar contract tradable outside of India and available to international participants.

7DAYS

Markets l Developing Dubai l 29

Dubai trading on the boil The Dubai Tea Trading Centre has just opened a new facility to cope with the emirate’s burgeoning trade he Middle East and adjacent regions account for approximately 25 per cent of global tea imports and Dubai is already the second largest export destination for both Indian and Sri Lankan tea.

With tea consumption growing in the region along with considerable demand for stocks and value addition, there is an opportunity for Dubai to substantially strengthen its role as a focal point for this trade.

The Dubai Tea Trading Centre (DTTC) has been conceived as a vehicle to facilitate this process.

DTTC, which is a subsidiary of the Dubai Multi Commodities Centre (DMCC), is a dedicated facility in Dubai where international tea producers and merchants can hold stocks of tea that will be readily available to meet the immediate requirements of importers in the Middle East and adjacent regions.

Enabling availability of a variety of teas from multiple origins, DTTC offers convenience to tea purchasers, while promoting the interests of exporters. It also offers the option of blending and packing in both tea bag and loose tea retail formats.

DTTC members include tea producers, exporters, regional and international buyers, blenders, packers, machine manufacturers and raw material suppliers.

The DTTC presently stocks teas from 13 producing countries - Kenya, India, Sri Lanka, Indonesia, Malawi, Rwanda, Tanzania, Zimbabwe, Ethiopia,

T

The latest figures published by the DTTC show that a record 6.2 million kilos of tea was transacted in the first six months of 2010

Vietnam, Nepal, China and Iran.

In keeping with its mandate to further increase the tea trade in and through Dubai, the DTTC also facilitates sales with buyers in the GCC countries, Iran, Iraq, Jordan, Morocco, Pakistan, Afghanistan, UK and the CIS countries and has plans to expand its services to other Middle East and European markets.

In early 2009, DTTC unveiled its new centralised tea storage, blending and value addition services as part of its expansion plans to accommodate the growing activities of the Centre.

The 23,731sqm facility in Jebel Ali Freezone includes office space for regional and international tea companies, and offers services across the entire value chain of the tea industry ranging from storage, tea tasting, temperature controlled and blending, packaging facilities as well as networking opportunities leading to increased trade.

The new centre has the

capacity to store up to 5,000 metric tonnes of bulk teas at any given time. In addition, up to 2,400 metric tonnes of CTC teas and leaf teas can be blended per month. DTTC's new facility also has the capacity to pack up to 250 metric tonnes of tea in tea bags every month and up to 900 metric tonnes of loose tea in retail format per month.

In addition to providing market infrastructure, DTTC

The Middle East and adjacent regions account for approximately 25 per cent of global tea imports and Dubai is already the second largest export destination for both Indian and Sri Lankan tea also enables tea traders to access finance through the services of the Global Multi Commodity Receipt (GMR).

This new facility - a one-stop

solution for the tea industry will further boost the volume of tea traded through the emirate, contributing to the ongoing diversification of Dubai's

dynamic economy. The latest figures published by the DTTC show that a record 6.2 million kg of tea was transacted in the first six months of 2010. l

A share in international markets ASDAQ Dubai is the international stock exchange between Western Europe and East Asia. Since it opened in 2005, it has helped to link the Middle East’s capital markets with the rest of the world.

The exchange is unique in the GCC because its standards are comparable to those of leading international exchanges in New York, London and Hong Kong.

NASDAQ Dubai’s structure enables regional companies to receive regional and international investment. It also offers issuers

N

from outside the region the chance to carry out a primary or secondary listing and seek investment from the GCC. The exchange’s advantages include allowing a ‘bookbuilding’ initial public offering (IPO), meaning that companies can raise the market value of their shares when they go public.

Restrictions on other regional exchanges often lead to lower valuations. The exchange also allows as little as 25 per cent of a company’s share capital to be floated, which means its

original owners can retain control of it even after listing.

The majority owner of NASDAQ Dubai is Dubai Financial Market, which owns two thirds of the shares. Borse Dubai owns one third. NASDAQ OMX, the New York-based international

exchange group, is a shareholder of DFM. NASDAQ Dubai is located in the Dubai International Financial Centre, a financial free zone. It is regulated to international standards by the Dubai Financial Services Authority (DFSA). l

The exchange allows as little as 25 per cent of a company’s share capital to be floated

7DAYS

Markets l Developing Dubai l 30

Cottoning on to new markets Since its launch eight years ago, the Dubai Multi Commodities Centre has explored new avenues of trade, from oil and gold to tea he Dubai Multi Commodities Centre (DMCC) was established in 2002 with a mandate to provide the physical, market and financial infrastructure required to set up a commodities marketplace in Dubai, spanning a wide range of commodities industries.

In order to offer comprehensive services to members, the Centre’s activities are broadly categorised into three main areas: freezone, which oversees the licensing and services for both commodities-specific DMCC members and businesses operating within Jumeirah Lakes Towers (JLT); DMCC Property Business Unit, which looks after the physical infrastructure within the JLT development; and DMCC development agency that seeks to create value-added services and projects.

DMCC’s activities span a range of commodities including gold, diamonds, pearls, coloured stones, tea and cotton, as well as facilitating finance for commodity trade.

Since its inception, DMCC

T

has pioneered numerous projects, which have had a significant impact on the Middle East commodities sector.

The Dubai Gold and Commodities Exchange (DGCX), a fully automated, electronic derivatives exchange offers an efficient electronic platform for the trading, clearing and settlement of an extensive portfolio of products including gold, silver, currency pairs, energy and steel and has several firsts to its credit having launched the world’s first Rupee Futures and Steel Rebar Futures contract in 2007.

The Dubai Diamond Exchange acts as a single market interface providing traders and manufacturers access to the growing Middle Eastern

A record 7.5 million kilos of tea were traded through the Dubai Tea Trading Centre in 2009, despite adverse weather conditions reducing global production

diamond retail market while providing a secure home for international players in the world’s third largest diamondconsuming region.

Dubai Tea Trading Centre (DTTC) offers a complete range of services to international tea producers and buyers, including business centre, storage, blending solutions, professional advisory and tea-tasting services.

Building upon Dubai’s ‘City of Gold’ status, DMCC integrates the refining, manufacturing and

trading of gold in Dubai.

In addition, it facilitates the development and expansion of the regional precious metals market, and promotes the highest global standards in product and service development, while encouraging greater transparency.

DMCC developed Dubai Good Delivery (DGD) standard in line with its ambitious drive to promote international standards for the local and regional trade.

The DGD standard for Gold and Silver, which fully complements the London Good Delivery standard, improves the tradability and distribution of these precious metals, enhances the credibility of approved refineries, and facilitates trade finance activities.

DMCC is consolidating Dubai’s position as a key link in the global cotton supply chain between Central Asia, particularly Uzbekistan and the cottonconsuming economies in the wider Asian market through initiatives such as the Dubai Cotton Centre (DCC).

A wholly owned subsidiary of

Stocking up on partners NASDAQ Dubai and the Dubai Financial Market get closer in a bid to boost trading ubai’s two stock exchanges - NASDAQ Dubai and Dubai Financial Market (DFM) - have developed closer links with each other in 2010, for the benefit of

D

investors and everyone else involved in their markets.

DFM bought a majority stake in NASDAQ Dubai in May. Then in July the exchanges put in place a successful outsourcing agreement, which is a landmark in exchange consolidation in the GCC. Under the outsourcing, all trading of NASDAQ Dubai shares is now routed through DFM’s trading platform.

Other functions such as settlement also go through DFM’s systems. This is designed to make trading NASDAQ Dubai shares a more straightforward process for the more than 500,000 investors, most of them individuals, who already trade shares listed on DFM. For example, they can now use the

The success of the outsourcing project positions Dubai as a leading international capital markets hub, providing investors with excellent liquidity and issuers with a choice of regulatory frameworks

same investor number to trade on both exchanges.

These regionally based investors are now linked in one liquidity pool with the interna-

DMCC, the DCC was established to facilitate cotton trade between Uzbekistan and the international trading community, small and medium-sized fractions and end users. It enables financing, accessibility, and daily prices to be offered to consumers.

In addition, the DCC also facilitates trade finance for cotton inventory purchased by traders and stored in Dubai through its indigenously developed Global Multi Commodities Receipt. l

tionally based fund managers, including some of the world’s largest, that are already active investors in NASDAQ Dubai-listed shares. This combination of different types of investor is unique in the region. It is a strong platform for a recovery in trading volumes on Dubai’s share markets, followed by further development and innovation.

DFM and NASDAQ Dubai shares are now displayed together on the DFM web site at www.dfm.ae.

NASDAQ Dubai shares also continue to be displayed separately on the NASDAQ Dubai web site at www.nasdaqdubai.com.

All the advantages of NASDAQ Dubai’s international regulatory standards and practices meanwhile remain in place, even after the outsourcing. The exchange continues to be based in the Dubai International Financial Centre (DIFC) and is regulated by the Dubai Financial Services Authority (DFSA). It retains its own listing regime, which means it still offers distinct advantages for issuing

By March this year, less than a year after it started trading, the Dubai Cotton Centre had facilitated the re-export of 45,700 metric tonnes of raw cotton fibre with a total value of $70 million

companies.

NASDAQ Dubai also retains its own members, ie brokers who may trade directly on the exchange. These include most of the world’s large investment banks, as well as many of the largest UAE brokers that trade on the DFM. Trading of equity derivatives continues to take place on NASDAQ Dubai's own trading platform and systems. l

More than 500,000 investors, most of them individuals, trade shares listed on DFM

7DAYS

Developing Dubai l 31

R Retail Around the world, people have been tightening their purse strings in the wake of the global recession, but Dubai remains a prime location for shopping.

Sales at the three-month Dubai Shopping Festival rose 17 per cent in 2009, compared to the year before, and three new malls opened their doors to customers. Even the luxury sector is finding its feet once more, according to Abraham Koshy, Group General Manager of luxury retailer Rivoli Group, while supermarkets, such as Spinneys and Choithrams, continue to grow

7DAYS

Retail l Developing Dubai l 32

A consumer paradise Dubai’s retail sector has weathered the crisis well and the city is still the place to shop

he global economic crisis has impacted all sectors including retail. Reduced consumer confidence and consequently reduced spend has meant poor bottom line figures for retailers across the world, whilst global retail sales continue to drop considerably.

Dubai though has managed to keep the momentum going.

Although the city was affected by the crisis, the retail industry in the emirate is weathering the impact fairly well.

Reflecting back on the last two years, we have seen huge investments, such as the Dubai Mall, changing the shopping landscape of the city as well as numerous new store openings.

This clearly signals that retailers are positive about Dubai as a retail destination and are going ahead with their planned expansion programmes.

Considering that Dubai has developed to become the business hub within the region, the retail industry’s contribution to the overall economic growth of Dubai is significant.

The Government has acknowledged the importance of this industry sector and is providing the ideal platform for investments with a one-of-a-kind infrastructure and consumer attractions such as the popular annual shopping events such as Dubai Shopping Festival (DSF) and Dubai Summer Surprises ( DSS).

T

Majid Saif Al Ghurair Chief Executive Officer, Al Ghurair Private Company Majid is the Chief Executive Officer of Al Ghurair Private Company, one of the largest familyowned conglomerates in the UAE, with businesses spanning a broad variety of industry sectors, including retail, industrial manufacturing and real estate.

Majid serves as the Chairman of the Board of Directors for the following companies: Shuaa Capital PSC Gulf Finance Corporation PJSC Drake & Scull International PJSC. He is also a member of the Board of Directors of: Emaar Properties PJSC Mashreq Bank and National Cement Co. Majid is also a Board Member in Government bodies such as Dubai Statistics Centre & Dubai Economic Council; an active member in international organiaations such as the World Economic Forum & Young Global Leaders.

On the retail front, Majid is the President of BurJuman and Reef Mall.

He was also involved in the formation of the Middle East Council of Shopping Centres (MECSC) and currently he is the chairman of MECSC as well as the Dubai Shopping Malls Group (DSMG).

Considering that Dubai has developed to become the business hub within the region, the retail industry’s contribution to the overall economic growth of Dubai is significant

Luxury stores at Burjuman centre, Dubai The industry’s growth is understandably marked by an increase in competition.

Retailers need to adapt to this new situation by fully understanding the needs of their customers and meeting them with innovative products and services.

Dubai is a key gateway and attracts visitors from all over the world. The opportunities for the retail sector are many. For example, the city saw a strong increase of affluent Russian clientele a few years ago, and is now experiencing a similar interest with Chinese tourists.

Dubai as a tourist destination has today become the benchmark for shopping. The overall offer is comparable to the best in the world and has helped to make Dubai a veritable shopper’s paradise.

From a consumer side, Dubai simply offers an extraordinary mix of outlets from worldwide brands. We are not limited to local fashion or French couture as you would maybe find in Paris, Dubai offers everything.

Department stores such as Saks Fifth Avenue, Harvey Nichols, Bloomingdales or Galeries Lafayette are the perfect example of stores that cater to more than one kind of customer with a variety of brands.

As for individual outlets, things need to be reconsidered.

With competition rising tremendously amongst retailers, instore selections need to be assorted and chosen very carefully. Customers are completely aware of the fact that everything is available almost everywhere in Dubai.

Retailers who provide the different customer segments with individually tailored services and successfully fulfil their individual needs will stay on top of the game.

A defined selection of products offering customers something unique can therefore be the key to success. Brands who have mastered the art of matching product quality and choice with professional customer service are proving to generate a better and stronger ROI.

The Government has acknowledged the importance of this industry sector and is providing the ideal platform for investments with a one-of-a-kind infrastructure and consumer attractions such as the popular annual shopping events such as Dubai Shopping Festival and Dubai Summer Surprises

Currently, in spite of a global slowdown the outlook is positive. Due to overall accessibility, an excellent infrastructure as well as decreased costs for office space and housing allowances for staff, Dubai has actually profited from the economic crisis. Today the emirate is an even more attractive location for prospective retailers.

Due to Dubai’s geographic location and international interest towards the emirate as a place for business opportunities, Dubai is given the opportunity

to penetrate new markets such as China and India for investments. Considering the numerous strengths of Dubai, I am certain that we will continue to be able to encourage business people as well as visitors to invest in our retail industry, be it by actually doing business with the emirate or simply by visiting and shopping.

Furthermore, new areas are being opened on a regular basis offering retailers new locations for outlet space.

The potential for retail in Dubai is therefore fantastic. l

7DAYS

Retail l Developing Dubai l 34

Still shopping ‘til we drop While much of the world is watching its wallet in the wake of the global recession, there’s no sign of a slowdown in Dubai’s retail sector

Sales at the emirate’s malls rose by 17 per cent during the 65-day shopping festival in 2009, with total revenues at 23 shopping malls across Dubai reaching $406 million, up from $346 million at the same shopping malls in 2008

study from the Dubai Chamber of Commerce and Industry in August found that, in spite of the exceedingly challenging economic environment, shopping malls continue to expand in the UAE. In 2009, three new malls opened their doors to Dubai’s local and tourist shoppers, the Dubai Mall, the Arabian Centre and Dubai Marina Mall. In addition, the biggest mall under construction in the world - Mall of Arabia, with 929,000sqm of leasable space, is expected to open later this year.

The annual Dubai Summer Surprises (DSS) event, which is aimed at stimulating Dubai’s retail and tourism sectors in the slow summer months, continues to have an effect, according to the industry.

A

Major UAE economic and retail sector indicators Indicators

2008

2009

2010f

2011f

Nominal GDP, USD (bn)

251.9

268.7

300.7

323.6

Real GDP growth %

7.4

1.3

2.4

3.4

GDP per capita, USD

53,422

57,580

64,423

67,983

Consumer spending per capita, USD

22,089

22,982

23,441

24,379

Retail sales, Annual growth rate%

14.7

4.0

3.6

7.2

Source Dubai Chamber based on data from BMI; f = forecast

Mall of the Emirates, Dubai

GDP growth rate of the UAE’s wholesale retail trade sector and total GDP %

Sales at the emirate’s malls rose by 17 per cent during the 65-day festival in 2009, with total revenues at 23 shopping malls across Dubai reaching $406 million, up from $346 million at the same shopping malls in 2008. Retailers have also told the chamber that their sales during the 2010 DSS were up on 2009 levels, though no figures are available for this yet.

According to some analysts, while UAE nationals actively contributed to retail sales, the purchasing power of the UAE’s expatriate residents was the fundamental source of the success of the retail sector.

Average household consumption in the UAE in 2009

stood at $14,400 per annum, with this figure expected to rise in the coming years ahead, the chamber said.

“The successful marketing drive for Dubai as a global leisure and shopping destination has had a major impact on the country’s retail outlook,” it added.

Tourism is a central factor stimulating retail growth, with Dubai expecting more than 50 million tourists in 2010, according to the Department of Tourism and Commerce Marketing (DTCM).

While a tightening in credit conditions, a decrease in job security, an increase in consumer savings rates and a fall in tourist visitors in the UAE since the onset of the economic slowdown has led to a challenging retail market, the outlook remains upbeat.

Indeed, observers have suggested that consumer confidence has risen robustly since the record highs of 2008.

“What’s more, in the immediate term, the success of the Dubai Metro since its inauguration in September 2009 has certainly supported the retail sector. With some train stations located inside or adjacent to major shopping malls, retailers are hoping to see sales rise considerably,” the chamber study said.

Hamad Buamim, Director General of Dubai Chamber of Commerce pointed out that the success of the retail sector lies in the many advantages it offers to investors in Dubai. He high-

lighted the availability of modern infrastructure, including the worldclass transportation system that facilitates the easy access of the consumers and tourists to various shopping malls and tourist centres that enhance the competitiveness of the retail sector.

“Dubai is now a global destination for international brands, trademarks, goods and services thanks to the excellent business environment that attracts the multicultural consumers.

The biggest mall under construction in the world - Mall of Arabia - with 929,000sqm of leasable space, is expected to open this year

It’s the appeal of Dubai which directly helps in enhancing the role of the retail sector and its contribution to the development of the emirate,” he said.

The UAE’s shopping mall growth is expected to grow significantly by 2010, according to the Dubai-based Middle East Council of Shopping Centres.

Increasing consumer confidence in the months ahead is expected to prompt a pick-up in consumption levels and see the value of retail sales grow by 3.6 per cent in 2010.

Hence, the wholesale retail trade sector, which has been growing at an impressive average annual rate of 18.5 per cent from 1995 to 2009, is expected to continue to grow in the short-term.

Overall, the presence of a significant number of retail complexes in the UAE is indicative of the thriving economy, according to the Dubai Chamber.

“As the UAE recovers from the effects of the global economic downturn, a pick-up in consumption levels as households have higher disposable incomes (on the back of falling inflation), an easing in credit availability as well as an expected influx of tourists in the second half of this year and in 2011, will all encourage cash flow within the retail sector,” it said. l

7DAYS

Retail l Developing Dubai l 35

A super market to be in The food retail sector has its hands full keeping consumers happy in the desert. But, with a firm focus on customer care and product selection, it’s a challenge relished by leading brand Spinneys

It is important to understand how every culture reacts to your strategy. Developing that understanding and working to satisfy that is a challenge, but very rewarding when you succeed

iving in the desert has its challenges, not least for the food retail industry, which depends on selling fresh products.

Established in 1961 in Dubai, Spinneys is one of the leading supermarket chains in the UAE. Owned by UAE national, Mr Ali Albwardy, it has built a strong reputation for quality, freshness and customer service - values that present a unique challenge in such a multicultural market.

Imagine trying to satisfy all of your customers in a market where nearly 80 per cent of them are expatriates, hailing from a multitude of different countries and cultures.

What each one sees as premium or special may be different from the next. Will your British customer be happy with the same range as a South African or a Filipino?

“As in other markets, it all starts with the definition of your chosen target market. Once you have defined that, when confronted with a multicultural society like ours, it is important to understand how every culture reacts to your strategy,” CEO Jannie Holtzhausen explains.

“Developing that understanding and working to satisfy it is a challenge, but rewarding when you succeed. It is more challenging than a homogenous market, but more interesting too.”

L

There are the different laws and regulations of the unique UAE market, which can pose obstacles for the potential exporter, whether that is ensuring a product is halal or has Arabic labelling. And then there is the challenge of selling fresh food in a region where very little grows, particularly with the rise of the ‘green’ consumer.

Food safety, quality, freshness and service have been the main drivers at Spinneys since the company’s inception and this has translated itself into the tagline for the brand - The fresher experience. To ensure that customer needs are met, Spinneys constantly monitors shopper trends.

“Our customers are the most important stakeholders and the lifeblood of our business and we understand that good customer service is about bringing customers back and sending them away happy enough to pass positive feedback to others,” Holtzhausen says. “We listen closely and try to react quickly one of the key drivers for consumers today is health and wellbeing. Our buyers are constantly looking for items that fit into this category, whether it is organic, the next super fruit or ‘free from’ products we search the international scene for the right product.

“We are sensitive to our carbon footprint but must be practical about our ability to provide food as well. We use passenger planes for air shipments, load our freight as economically as possible and do a lot of preparation in Dubai to help with transportation of food.”

Spinneys sells products from around the world, many of which are shipped within 24 hours of picking.

The UK in particular is an important market, both for fresh and ambient lines. Spinneys has invested in infrastructure to support products accessing the market and believes in long-term relationships. Suppliers need to understand the distance and fragmentation of the market as well as the cost of exporting.

That said, there are many success stories for British products - for example Thorntons,

Fresh ideas, customer focus and dedicated buyers - the way to serve a multicultural market which identified a gap for a range of confectionery called Two Chicks - a premium product containing egg whites, targeted at health-conscious consumers.

UAE customers are well travelled and looking for the highest standards in terms of quality and customer service.

They expect to find a range of products that satisfies all their needs, no matter what their cultural background is.

“Our buyers work closely with suppliers ensuring the highest quality products and also lots of unusual ingredients that are not freely available.

Much of my time and that of our buyers is spent with the farmers, growers and suppliers, building relationships based on trust and respect,” Holtzhausen says.

This helped the company remain on top of its trade, with 39 stores countrywide.

The sector is healthy, there are some very well-managed food retail businesses in the UAE who understand their market well. I believe the events of the last two years will turn out to be for the long-term good of the industry

“We stay as informed about our competition as we can, but put more focus on what we can do to improve service, product selection, quality, convenience, food safety and innovation for our customers.”

Looking ahead, the future is bright - for Spinneys and the rest of the UAE grocery market.

“When an economy grows as rapidly as the UAE’s did, focus is

on growth, in the slowdown focus shifts to efficiency, service and motivation.”

Holtzhausen says.

“I believe the sector is healthy, there are some very well-managed food retail businesses in the UAE who understand their market well and I believe the events of the last two years will turn out to be for the long-term good of the industry.” l

7DAYS

Retail l Developing Dubai l 36

The magic moment Abraham Koshy, Group General Manager of luxury retailer Rivoli Group, says firms must strike while the iron is hot

How have you been affected by the global downturn?

Q

I think the entire industry and the economy are going through a downturn and we are not exempt from that situation, but I think we have fared reasonably well in comparison to other markets and other people in our business. Last year was definitely a challenging year for us, but if you look at 2010 you see that our numbers are looking much better and our growth is in double digits, which is very encouraging.

A 2009 was definitely a challenging year for us, but if you look at 2010 you see that our numbers are looking much better and our growth is in double digits, which is very encouraging

Did the luxury goods sector do better in Dubai than it did elsewhere?

Q

I would say so, but it depends on the market you are comparing us with. If you look at China, they’ve definitely done better than us because it’s a growing economy, everyone knows that, China has not been affected by the downturn. But compared to other major cities such as London or Paris or other cities in Europe or the US, I’m sure Dubai has done better than those markets.

A

Were luxury goods the first to feel the pinch when consumers found that they had less spare cash, or do you think luxury goods are aimed at a target audience that doesn’t get affected by recessional pulls?

Q

The initial reaction is definitely to cut down on your luxury purchases, that’s the knee-jerk reaction because luxury you don’t need. But there are people that are used to certain brands and a certain lifestyle and they don’t really change their habits. So yes, they would be more prudent in their purchases but eventually they will come and shop for those brands they’re seeking.

A

Rivoli opened a number of new stores in 2009.

Why were you opening new stores in a year you say was not a very good year for your company?

Q

Growth and opportunity are constantly being looked at and it is always part of our agenda. Even in the midst of this crisis there are still opportunities and we need to keep our eyes open and take advantage of that. If you look at our company, we embarked on retail when the entire economy was going through a crisis during the Gulf War. We saw an opportunity at that stage and we went ahead.

So yes, there is a downturn and everyone’s affected but there are opportunities. We see the glass as half full rather than half empty.

A

Is part of the opportunity you see the fall in the cost of renting premises?

Q

The rentals are now more realistic and that is one of the considerations, but that is not the only consideration. The decisions we make are not on a short term basis, they are more on a long-term basis.

A

Are you budgeting for retail rents to return to where they were before or do you think they are likely to stay lower for a while?

Q

We are in negotiations constantly with our partners in real estate and we worked out a formula where both of us will benefit when the market improves. So if our business improves, they will definitely

A

benefit with higher returns on rentals.

There is a base rental that is agreed and then as the market improves then the rental will increase. I think this is quite common these days. It has not always been like that, now it is because people are under pressure to ensure that everybody tightens their belt because everyone is trying to ensure that we get out of this downturn and the developers are very cooperative.

Will there be more store openings in 2010?

Q A

Absolutely, in fact this year we have already opened several stores and that continues.

In terms of new locations over 2010, we will be looking at 20 new openings in the region.

Here in Dubai, there is a new luxury extension being added to Mall of the Emirates, and we are opening there. We are also opening at Al Qasr, a hotel location.

A lot of people say that Dubai is synonymous with luxury. Do you have a big presence here because of that? Do people come out here expecting luxury stores?

Q

Dubai is the centre and the gateway to the Middle East and over the years all the key national brands have come to Dubai. The emirate has a reputation and has grown to be a key market comparable to New York or London or Paris.

A

Abraham Koshy, Group General Manager Rivoli In certain pockets of the world I think they are definitely seeing an upturn.

If you look at Asian economies, that’s where the possibilities are at this stage. But there are certain markets that are still experiencing a downturn.

Most brands are now focused on markets such as China, certain markets in the Middle East, India and so on.

A

Where do you see the UAE economy heading in the next couple of years?

Q

I personally feel that this is a temporary situation and Dubai will come out stronger because the government have done what is absolutely correct.

The infrastructure is in place and they’ve made huge invest-

A

ments to ensure that Dubai maintains its leadership position. Yes there has been a slowdown, but slowly this will improve and long term, I have no doubt that Dubai will maintain its position.

Some people say in a way the downturn is almost a good thing because Dubai was rising a little too fast and this is more of an economic correction, would you agree with that?

Q

I would agree 100 per cent, in the sense that it was certainly growing a bit too fast and now it’s a reality check and everyone is consolidating their position and now, they are doing things much more prudently. l

A

Do people come to Dubai for luxury items because of a lack of tax?

Q

Dubai continues to be a duty-free market and if you compare our pricing to other European markets or the US, there is a distinctive advantage and that’s one of the reasons people prefer to shop in a place like Dubai.

A

Do you see that the luxury sector is on way back up across the world or just in Dubai?

Q

In terms of new locations over 2010, we will be looking at 20 new openings in the region. Here in Dubai, there is a new luxury extension being added to Mall of the Emirates, and we are opening there. We are also opening at Al Qasr, a hotel location

7DAYS

Retail l Developing Dubai l 37

More than a mall Welcome to the world’s largest shopping and entertainment hub

Dubai Mall hosted more than 37 million visitors within the first year of opening in late-2008 and projects an estimated 45 million visitors in 2010 alone

f there is one true shopper’s paradise on earth, it couldn’t come any bigger than 1,200 of the world’s most coveted brands under one roof.

The Dubai Mall, which holds the honour of being the world’s largest shopping and entertainment destination, has redefined the way businesses approach retail.

The flagship of Emaar Malls Group, the shopping mall subsidiary of Emaar Properties, the Dubai Mall is the flagship development and one of four key shopping and leisure destination developments by the company.

The others, equally popular and catering to distinct niches, include Dubai Marina Mall, Souk Al Bahar and the Gold and Diamond Park.

The expansion of Emaar into shopping malls and retail was in line with the company’s development ethos of creating integrated lifestyle communities.

Today, shopping malls are not centres for shopping alone.

They are lifestyle destinations too, where family and friends meet, dine and entertain.

I

The success of Emaar Malls Group in driving Dubai’s business dynamics lies in creating powerful magnets for retail, leisure and tourism.

Testament to this impressive success is the footfall of The Dubai Mall, which hosted more than 37 million visitors within the first year of opening in late2008 and projects an estimated 45 million visitors in 2010 alone.

The Dubai Mall offers an unparalleled retail mix combined with world-class dining, entertainment and leisure attractions that revolutionises the concept of the shopping mall experience.

Located next to it, Souk Al Bahar, with 100 stores, including more than 22 food and beverage outlets, is an Arabesque shopping and entertainment development located in Downtown Dubai.

The Dubai Mall, sprawling over a total area of 12.1 million sq ft, an internal area of 5.9 million sq ft and 3.77 million sq ft of gross leasable space, has rewritten the rules of retailing in Dubai. It brought in global behemoths Galeries Lafayette and

As well as shops, there’s the record-breaking aquarium at The Dubai Mall Bloomingdale’s - both opening in the Middle East for the first time - as anchor stores.

However, shopping is only part of the adventure at the mall. A centerpiece of the mall’s leisure attractions, which are managed by Emaar Retail, is Dubai Aquarium and Underwater Zoo, housing more than

33,000 aquatic animals. It also holds the Guinness World Record for Largest Acrylic Panel.

A spectacular attraction for little ones is KidZania, an awardwinning children’s ‘edu-tainment’ mini-city and SEGA Republic is a two-level, 76,000 sq ft high adrenaline indoor theme park for the young and the young at heart.

The Dubai Mall which sprawls over a total area of 12.1 million sq ft, an internal area of 5.9 million sq ft and 3.77 million sq ft of gross leasable space, has rewritten the rules of retailing

Dubai Festival City

Malls of the Emirate

Opened: IKEA in November 2005, main shopping area in 2006, continued construction ever since Retail square footage: 2 million total when completed in 2015 Cost: More than dhs11 billion Number of stores: 400+ Anchor stores: IKEA, HyperPanda, Plug-ins, ACE Hardware Wow-factor attraction: Festival City is a retail and lifestyle resort on a series of waterways created off Dubai Creek.

Dubai has been called the ‘shopping capital of the Middle East’ and it’s no surprise given its huge square footage of retail space. Here are just a few of the shopping havens the city has to offer…

iFly at Mirdif City Centre

Mirdif City Centre

Mall of the Emirates

Opened: March 2010 Retail square footage: 1.75 million Number of stores: 430+ Cost: dhs3 billion Anchor stores: Carrefour, Debenhams, Home Centre Wow-factor attraction: iFly Dubai an indoor skydiving centre

Opened: September 2005, currently undergoing expansion Retail square footage: 2.4 million before expansion Number of stores: 476 Cost: dhs3 billion, expansion cost: dhs500,000 Anchor stores: Harvey Nichols, Carrefour Wow-factor attraction: Ski Dubai - an indoor ski slope with 242,000 square feet of real snow

The Dubai Mall also features the Olympic-size Dubai Ice Rink and Reel Cinemas, the largest megaplex in the city.

The Dubai Mall also acts as a gateway for those wanting to visit the world’s tallest building, Burj Khalifa. Tickets to the 124th floor At The Top experience are available exclusively there.

These successful malls are powerful development models that power Emaar Malls Group’s investment outlay of over dhs15 billion in malls with 10 million sq ft of retail property in operation or under development in the emerging markets of the Middle East, North Africa, the Indian Subcontinent and South Asia. l

Ibn Battuta Mall Opened: April 2005 Retail square footage: 1.2 million Number of stores: 275 Cost: dhs800 million Anchor stores: Geant, Debenhams, Fitness First Wow-factor attraction: The entire mall is the world’s largest themed mall, based on the Arab traveller and adventurer Ibn Battuta

7DAYS

Retail l Developing Dubai l 38

Some food for thought LT Pagarani, Chairman of Choithrams, says good money management is the bedrock for the retail group - one of the leading supermarket chains in the UAE

Choithrams is planning to expand even though we have only just emerged from a financial crisis. Where is that confidence from?

Q

It's important to get staff much more conscious about the financial implications of operations and get them involved in helping keep costs down.

It can be as small as switching off a light or helping us change our packaging

The plotting of our retail outlets tends to be along certain corridors. For instance, within Dubai we have the Jumeirah Beach Road and the Sheikh Zayed Road corridors, where you will find our stores.

We have expanded into new areas, the Springs and other Emaar lifestyle communities.

And we have propositions from Bur Dubai to Karama.

When we made an assessment of where to expand to, we looked at where people are and where they might be moving to and we positioned ourselves accordingly.

We also invested in future outlets in terms of being able to manage the whole trading cycle, and that includes the rent, because with rent prices, there are peaks and troughs, but if you have an outlet for the long term then you are able to predict on a long-term basis what your fixed costs are.

For instance, one of the pluses in our new JBR outlet is that we are lucky to be tenants of a corporate landlord. Then, in the Dubai Marina outlet we have bought that outlet and so we

A

have been able to work on for car parking, for example.

Was the group affected by the financial crisis and what has it done to deal with that?

Q

Well Choithrams as a group has made a position of being quite militant on the management of credit.

I am very glad that we have been like that. Since day one, on treasury management, trust management and collection, we have to be very studious because liquidity, bank facilities, their impact have all been factors we have to consider.

We have had to build things so that we are insulated if we need to be. But I cannot say that we were all waiting for the financial crisis to arrive and therefore were prepared, it was not like that.

A

Are things actually that bad anyway in your sector - after all the UAE market actually grew ten per cent in 2009?

Q

Thank goodness. One of the telltale things about supermarket and food retail is the movement into our sector of other players that do not have a food or supermarket background. They are entering the market and selling food products and that is to do with the fact that their sector is a little more bleak.

A

So do you think it will grow at the same pace this year?

Q

I think it should be on a par with 2009, but perhaps not on a par with where we were in 2008.

A

Do you think there is a danger in Dubai that there could be a saturation of grocery stores because population growth has slowed down?

Q

I do think there is a risk of oversupply. The market is a wonderful mechanism, because when there is an over-supply,

A

LT Pagarani, Chairman of Choithrams: ‘It’s important to stay in touch with all your staff’ it adapts and the strongest endure and then the others get taken over.

What sort of revenue growth do you expect this year?

Q

I can’t predict what the growth will be but I can talk about sales and the factors that are affecting revenue - I think the cost of delivery is key here, particularly the cost of fuel.

It’s something that we all face in this sector.

Rents have stabilised, however on the other side of that, while rents might have stabilised, service charges have become astronomical.

The market is a wonderful mechanism because when there is oversupply, it adapts and the strongest endure while the others get taken over

A

What affect will this have on your revenues?

Q A

We have to look at other ways of increasing the bottom line and the best way is to look at product range.

You know you can have a category such as rice, you can have a category such as honey and you can have a category such as tea. But making sure you offer a consumer a choice and saying this is quality and premium, and it might be at a higher price as an option and then ensuring there is a second or third option at a lower price.

I think getting staff much more conscious about the financial implications of operations and getting them involved in helping keep costs down.

It can be as small as switching off a light to helping us switch our packaging.

We spend for instance, close to dhs3.5 million on carrier bags [a year]. We are working really hard on bringing that down and the shopper has to help on that and we can bring some of those things down and actually pass on the benefits to the customer.

Do you get a chance to work with people any more now that you are the chairman?

Q

It is not a lofty role! It is very important that you do not lose contact, that is vital to leading. It’s also vital that you understand all of the roles, because what would you be leading if you did not work your

A

way up the hierarchy to lead all of the players?

What sort of things make a good business leader?

Q A

I think getting the mix right, the mix is delegating, running but not doing every job, having clear objectives - one of them as we have said is the expansion plan.

And if there are things that come and they disturb that [plan] then you are ready to revise or adapt it but not abandon it. That is very important.

In a sense there is an emotional dimension to it, having the right voice and being able to express it, having the right spirit.

Effort of course is very important and you have to not ask other people to do things that you wouldn’t do yourself.

And a bit of meditation quiet time to contemplate and take stock.l

7DAYS

Developing Dubai l 39

M Manufacturing The UAE’s economy is usually defined by the contributions from oil and its glamorous tourism industry, with few knowing the large and growing proportion that manufacturing contributes to the country’s gross domestic product. In Dubai, the Jebel Ali Freezone is home to more than 200 factories, including the new $40 million chocolate factory built by Mars GCC this year. The emirate’s location attracts international companies to set up facilities to serve markets in the region, as well as further afield

7DAYS

Manufacturing l Developing Dubai l 40

Mars and the chocolate factory Confectionary giant satisfies Dubai’s sweet tooth with its new UAE factory ars GCC has been present in the region for more than 40 years. It is responsible for sales and marketing of Mars products across all GCC countries including Yemen with sales to North Africa and the Levant regions.

The Mars GCC factory was established in 1993 to become one of the Middle East‘s leading chocolate manufacturers producing a complete range of Galaxy chocolate in a state-of-the-art chocolate-molding factory.

Due to the growing demand for its products, Mars GCC opened its new factory in Dubai on May 26 this year to produce Snickers and Mars chocolate bar products. This new facility will double Mars GCC chocolate manufacturing capacity by 2015 while meeting market demand and serving the community by providing employment opportunities. Mars will continue to be the leading regional manufacturer of chocolate products in the Middle East.

The new factory represents an investment of more than $40 million.

In total Mars has invested more than $100 million in its manufacturing units since 1998.

Mars takes a long-term strategic approach whenever it starts to operate in a new mar-

M

The new factory represents an investment of more than $40 million.

In total Mars has invested more than $100 million in its manufacturing units since 1998 ket. The company’s business philosophy in any market is to build a business with a longterm commitment. For that reason Mars stages its development in any market through various expansion phases.

As an example the opening of the new filled bar chocolate factory is the result of Mars’ continuous investment in our brands which has led to the success of products such as Snickers and Mars bars. Today the demand volumes for these products have triggered the need for local production.

The new factory was also built with the objective of making the impact on the environment as low as possible. Mars’

existing factory and its new property both use solar energy systems to reduce CO2 emissions by 120 tonnes each year.

Another key area of focus was to increase the capacity of the site wastewater treatment plant to ensure that all wastewater is recycled and reused.

Thus a new Wastewater Treatment Plant was built as part of the factory expansion project that now recycles more

than 65sqm of wastewater every day. In addition, windpower motors were installed that will reduce CO2 emissions by 64 tonnes per year.

One of the challenges the project encountered was to maintain the Mars standard of safety among multilingual contractors to ensure the company maintained its high standard of Lost Time Accident Safety on the site. LTI is a safety

performance measure that demonstrates the high level of safety awareness within Mars.

To ensure Mars standards were maintained, daily, weekly and periodic safety audits, inspections and risk assessments were carried out during the project.

Mars GCC has been experiencing double digit growth since 1998. The UAE expansion will ensure it maintains its leadership position in the market. l

Manufacturing a new revenue stream Dubai’s position globally and logistically, make it an attractive location for a factory

Jebel Ali free zone by more than just international interest. The country’s geographical position and the huge investment in Dubai as a

for the year 2009 in the UAE were valued at dhs769.2 billion ($209.6 billion), with the export and re-export of oil products accounting for dhs256.5 billion ($69.9 billion), according to the Ministry of Economy’s UAE Economic Report 2009, which was released in May 2010.

“The report highlights the contribution of the various non-oil sectors with manufacturing, construction, retail, real estate, financial services and tourism, among others, being significant contributors.

The contributions of different sectors to UAE GDP in 2009 29.4% 16.2 % 10.7 % 9.0 % 8.2 % 8.0 % 7.1 % 5.8 % 1.8 % 1.7 % 1.6 % 0.5 %

Oil Manufacturing Construction Wholesale, Retail & repairing services Real estate Government services Transportation, storage & communication Financial services Hotels and restaurants Agriculture, livestock, and fishing Electricity, gas, and water Household services

“The global economic recovery will further strengthen the performance of the non-oil sectors, and our expected growth

1.7 % 1.8% 5.8 %

6%

A

logistical hub for the region and beyond, make Dubai the perfect place to locate a factory catering to the GCC or indeed, to Asia.

More than 200 factories operate in Dubai’s logistics centre Jebel Ali, which is also home to the emirate’s massive port.

From here, bang in the middle of Dubai’s thriving export and re-export business, manufacturers can reach the emirate’s major export partners – Japan, South Korea, India, Iran and Thailand, among others.

Total exports and re-exports

1.

ccording to His Excellency Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, the manufacturing sector contributed 16.2 per cent of the country’s gross domestic product in 2009.

The number was quite a rise from the 12.2 per cent contribution of the year before and the second largest industry contribution after the oil sector.

While much of the UAE’s, and Dubai’s, non-oil contribution to GDP is growing with investment, manufacturing is boosted

0.5% 29.4%

7.1 % 8.0 % 8.2 %

16.2 %

9.0% 10.7%

rate will be higher than that of other high-income industrialised nations,” Al Mansouri said at the time. l

7DAYS

Manufacturing l Developing Dubai l 41

Brushing up on the big projects The Burj Khalifa, Dubai Metro and Meydan - Jotun has painted them all. But the best part of Erik Aaberg’s job as Vice President of Jotun Paints UAE? His loyal staff

How did Jotun have its best business year in 2009 while others were having a terrible time?

Q

The Dubai Metro was the largest project we have had. All the white-ish structure that reaches along Sheikh Zayed Road is our paint, inside the stations is our paint so that is a total project that is supplied by Jotun that has a value of approximately dhs65 million

Last year, there were still a lot of projects to be completed but we also faced a reduction in sales to the project market in the last quarter of last year and project sales are still going down because there are fewer projects here.

But we have been able to develop our dealer sales and we’ve done well in protective coatings and marine. In protective coatings, we also have fire protection products, which you will see in the Meydan racetrack and they use it in high-rise buildings and for the Metro.

So it was like a peak in the project business last year. We might be more hit this year and in 2011, when there is very few new projects being set up.

A

When do you think it will pick back up again?

Q A

We see that most of the projects that had started, that had come off the ground, will be completed, but we hear about very few new projects coming. I think there will be a couple of tough years ahead of us because there are fewer investors. It’s not only about Dubai’s economy, it’s also about the rest of the world’s economy.

There are fewer people from Europe coming here and investing and many of them were investing because they saw a very fast profit, seeing prices coming up and trying to sell very fast.

Dubai is dependent on investment from other parts of the

world for it to come back again.

Of course we read in the newspapers that there are 44,000 unsold apartments, then it takes some time before developers start to build again.

So we have to tighten the belt a bit for the next couple of years.

What are the things you find most challenging about being in charge and what are the best parts of your job?

Q

Erik Aaberg, says 51 per cent of the company is still owned by the family that started the business in 1926 Jotun is growing, we have had a very nice stretch of organic growth.

A

You need to have a combination of telling people what you expect of them and at the same time giving them the opportunity to grow and develop

We don’t acquire companies very often, we’ve done it a few times but mostly we grow from greenfield and we grow to new markets, we start to export from our existing companies and when we’re big enough, we set up production.

So you’re involved in the growth of the company all the way and of course you employ people who are growing with you. We have a lot of people in Jotun who have been here a very long time.

When we recruit new people, especially younger ones, and they hear that some of us have been working for the company for 20 or 30 years, some of them find that surprising.

But we find that a lot of

employees in Jotun UAE stay a long time. The bond you get with the people that work with you for so many years is strong and since I’ve been in this region, people I recruited in Saudi 17 or 19 years ago, many of them are sitting in key positions in the region.

customers and suppliers.

And then there is boldness.

Norway’s a small country, there are less than five million people there, but Jotun now has factories in 40 countries and operations in more than 50.

We started a paint company

working for a long time here, they know us and they know we can deliver. But for the Burj Khalifa, for example, that was four foreign architects altogether so we had to do a job with that, go to the US to meet them and convince them that we are the

Why do the employees want to stay?

Q A

We have something at Jotun called penguin spirit - you have to stay here for a few hours then you may see or feel the penguin spirit! This comes from the owners - because Jotun is still mostly a family owned company, 51 per cent of the whole group is owned by the family that started it in 1926.

Of course we have different partners in different parts of the world - here in Dubai, we have local shareholders. But back in Norway in the head office, it is this one family and they’re still very much involved.

The son of the founder, who we call the old man, he’s now 82 years old, he travels down to Dubai and sits on the board twice a year. And he travels to Oman, Abu Dhabi and Saudi Arabia because that’s where we have partners.

So we tried to define the values that come from our owners and one of them is loyalty.

Another is care - I think we care for employees, we care for the environment and we care for

Decorative paints has been very big and is still around 50 per cent or more of Jotun’s turnover in Libya in 1962, that was our first foreign venture. We started in Thailand in 1969. We have a factory in Yemen, where you don’t find very many international paint companies.

Has it been a challenge to get big projects in the Middle East region?

Q

Yes, because many of these projects are designed and specified by foreign architects or consultants and a lot of them come from markets where we are not very present such as America, Germany, or the UK. So when companies come here from those regions, they haven’t heard about Jotun, so we have to convince them of our expertise.

Of course those companies and architects that have been

A

best local alternative.

Prices have to be competitive but it’s more what you can offer in peace of mind, such as site inspectors that take care of on-site quality. You need to have good applicators to work with, because we only supply the paint - it’s up to the painters and contractors to get a good result.

Since we have worked in the Middle East and Dubai for 35 years, we have a number of very good, qualified contractors we trust. That’s very important and down to loyalty again - we work together to win projects.

We have secured most of the airport third phase terminal and that’s with contractors we have worked with before. The client knows that if he selects a combination of Jotun and these applicators, he will get a good result. l

7DAYS

Manufacturing l Developing Dubai l 42

A spring in its carbon footstep Branching out from mineral water, Masafi is also full of fresh ideas to protect the environment asafi has been operating since 1976. The firm was launched with a paid up capital of approximately $5.5 million in 1976 as a mineral water company. Over the years, it has built an extremely strong product portfolio and distribution network to consistently deliver to dynamic market requirements.

Today it distributes to countries around the globe and its diversified product portfolio includes Masafi Mineral Water, Masafi Tissues, Masafi Juices, Masafi Flavoured Water and the newly launched Masafi Gourmet.

Over the past few years, the company has been involved in a number of projects to help the environment. It introduced the Oxo Biodegradable films in its shrink-wrap packaging for water bottles in October 2009, becoming the first company in the food and beverage sector across the Middle East to do so.

The Oxo Biodegradable films replaced the conventional plastic wraps, which posed a major challenge to the environment.

While the conventional shrinkwraps are not degradable and can take up to 400 years to break down, the Oxo Biodegradable films degrades, then biodegrades, within two years.

Masafi also introduced environmentally friendly PET lids to its

M

The firm was launched with a paid-up capital of approximately $5.5 million in 1976 as a mineral water company

A year at Masafi OCTOBER 2009: Masafi Juice was nominated among the five finalists in one of the award categories at the Beverage Innovation Awards 2009.

Masafi has aggressively spearheaded its corporate recycling initiative through the last year. As part of the initiative, Masafi collects plastic bottles from UAEbased companies employing 200-plus people for recycling purposes. These bottles are recycled into non-food plastic

The biggest challenge that the industry faces is the rising cost of raw materials.

Masafi is addressing this by in control of the supply chain

mineral water cups in March 2010. With the new PET lids, the mineral water cups became fully recyclable. Earlier, the company used aluminum lids, which were not recyclable. The new PET lids was a major step in environmental initiatives aimed at developing processes, products and technology that support eco-friendly business practices. The new PET lids are totally environmentally sustainable and offer added

health and environment benefits at no extra cost to consumers.

Masafi aims to become a complete fast-moving consumer goods company by 2011, providing world-class products known for pure natural freshness.

The economic slowdown has had an impact on all businesses in varying degrees. But since Masafi offers items that are more or less in the essential category, volumes remain the same and hence growth prospects for the company have not been hampered.

Masafi is realistic about the path ahead. It has not ignored worst-case scenarios when devising strategy and determining ability to adapt.

The downturn seems to be a temporary, albeit protracted phase. As one of the leading

applications. It has signed up over 119 partners and has collected nearly 500 metric tonnes of plastic bottles.

waste within two hours.

Cheese and Labnah & Zaatar.

FEBRUARY 2010: Launches a

APRIL 2010: Launches Masafi Rewards for Life promotion on 1.5 litre Masafi bottles in partnership with National Bonds Corporation PJSC, offering customers a chance to win a total of 100,000 National Bonds Saving Certificates in prizes.

NOVEMBER 2009: Masafi Juice achieved highest juice equity in the UAE since its launch in May 2006, according to a study by AC Nielsen, and announces the launch of a new Cranberry flavour.

NOVEMBER 2009: Masafi won the silver award in the ‘Best Use of CSR’ category at the inaugural GEMAS Effie MENA Awards 2009.

JANUARY 2010: Organises Clean-Up Campaign at Masafi Village in Ras Al Khaimah.

Over 190 Masafi employees took part in the Clean-Up Campaign, collecting more than eight metric tonnes of

revamped non-perfumed kids’ boutique tissue line in a visually-appealing design. In the new design, all Masafi cartoon characters - Toto, Nosy, Jami, Octo, Flip and Hoofy - aim to excite and entertain the kids, dramatising intelligence theories in illustrative imagery for the children.

MARCH 2010: Introduces Oxo Biodegradable films in its shrink-wrap packaging for water bottles in Kuwait.

MARCH 2010: Masafi Gourmet announces entry into Qatar.

Masafi Gourmet offers premium and healthy potato chips in four flavours - Sea Salt, Sweet Chilly, Four

Our current manpower strength is 1,145 employees

MAY 2010: Signs partnership agreement with Khadamat Facilities Management to provide the associated facilities management services to the UAE University Campus in Al Ain. JUNE 2010: Masafi announces partnership with Modhesh World 2010 – the region’s biggest indoor edutainment venue and main attraction

players in the industry, Masafi believes in continuous innovation and therefore is always evolving and looking at new opportunities.

The biggest challenge that the industry faces is the rising cost of raw materials. Masafi is addressing this by being present or by being in control of the supply chain.

From the industry perspective, it is paramount that innovation in terms of processes, products and communication become paramount.

of Dubai Summer Surprises [DSS]. Masafi has also launched a co-branded special label with the DSS mascot Modhesh on its 500 ml bottles.

7DAYS

Developing Dubai l 43

T Tourism Dubai’s tourist industry experienced a difficult period following the global financial crisis, but unlike other markets, it continued to grow and is now seeing rapid recovery. Hotels such as Emaar’s Address hotels in Dubai Marina and Downtown Dubai and the Amwaj Rotana in Jumeirah Beach Residence were constructed over the height of the downturn and have opened their doors in the last 12 months. The year-round sunshine, luxury hotels and retail experience continues to draw visitors, who also come to enjoy the wide array of golf courses and sporting events the emirate has to offer

7DAYS

Expert Opinion Tourism l Developing Dubai l 44

Room for growth Dubai’s hospitality sector has rebounded post recession with a new outlook and a perceptible shift towards ‘lifestyle hotels’

Guido brings to the region more than 27 years of international experience in the hotel industry.

In his role, Guido is responsible for the operation of all Starwood properties in the Middle East (this currently includes 50 hotels and resorts) and leads the development of Starwood’s brands in the rapidly expanding region.

Guido started his career with Starwood in 1983 and has since then held various management positions in Bahrain, Morocco, Germany, Belgium and Portugal.

Prior to his current appointment, Guido was the Area Manager for Starwood Hotels in Portugal and General Manager of the prestigious Sheraton Algarve hotel and Pine Cliffs resort.

A Belgian national and holder of licentiate in Germanic Philology from the University of Ghent in Belgium, Guido has continued his specialisation in Norwegian Language, literature and history at the University of Oslo.

T

Twelve month moving averages - Occupancy, Average Rate and RevPar January 2008-September 2009 *Souce: STR Global

Guido De Wilde Vice President, Regional Director Middle East, Starwood Hotels & Resorts Worldwide, Inc.

he hospitality industry is a true reflection of the economy, especially for countries that derive a significant share of their gross domestic product (GDP) from tourism.

The global economic crisis, obviously, left its impact across the hospitality sector worldwide.

Corporate travel budgets were slashed and individuals cut their spending or simply pulled back on their travel plans.

For Dubai, the past 18 to 24 months have been trying times.

But surprisingly, while development in the global hospitality sector at large went into stagnation, Dubai continued to open and invest in hotel projects. Many hotels opened their doors in the city over the past two years, with the number of hotels and hotel apartments growing to 540.

The number of properties is expected to grow by another seven per cent this year.

Dubai was also among the few locations worldwide to show significant demand in the hospitality sector, also reflected by the performance of the Dubai International Airport, recording more than 40 million arrivals during 2009. Never one to rest on its laurels, the city recently opened its second, even larger international airport, Al Maktoum International Airport.

The city’s hotel occupancy rates remain strong. According to Smith Travel Research, the occupancy for the first six months of the year grew from 69 per cent in 2009 to 73 per cent in 2010.

Many hotels opened their doors in the city in the past two years, with the number of hotels and hotel apartments growing to 540

In the face of the challenges that seem to sweep across the hospitality sector, these figures are indeed encouraging.

The reasons for these positive trends stem from subtle shifts in the way the sector functions.

The first is a change in source markets, with more tourists coming from China and India rather than from Europe, which has traditionally been a key feeder market for Dubai.

China is expected

Guido also holds a degree in marketing from the Institute of Social Sciences, The Hague.

His love for languages and educational background means that Guido is a multilingual manager who enjoys communicating in seven different languages, which include Dutch, English, French, German, Portuguese, Swedish and Norwegian.

InterContinental Hotel, Dubai Festival City

to be one of the world’s largest outbound tourism markets by 2020, with a predicted 100 million outbound trips a year.

As the Chinese travel, they are going to stay with the brands they know from home, which will have a meaningful effect on the business in Dubai and globally.

India and China combined are home to 40 per cent of the world’s population, and between them, they are averaging eight per cent growth in gross domestic product. Dubai is strategically located for both of these markets – with more than two billion people living within four hours flight time.

Promotions and attractions have also resulted in increased numbers of visitors to Dubai, as the emirate became a more affordable destination with a competitive pricing structure.

The third significant shift is on the supply side - with more hotels, more rooms, more choice, and more destination brands to lure leisure and business travellers.

More international brands mean more marketing of Dubai as a destination. Dubai’s airline Emirates has emerged as a true star among global carriers and now serves more than 100 destinations, making the emirate more accessible than ever and connecting people in all corners of the world to Dubai.

The airline, backed by the sterling efforts of the Dubai Department of Tourism and Commerce Marketing, has been instrumental in fuelling the

Hotels, like the Westin Dubai, have seen continued demand success of the hospitality sector.

Together, they have built Dubai into the leisure and tourism destination brand we know and love today, and made sure that this once little-known city is now a household name.

While the hospitality sector has always described itself as striving to offer a ‘home away from home experience,’ the level of ‘officialdom’ and formal tone of doing business has been the norm at most hotels. That definitely is changing.

The region’s hospitality sector has crossed over effectively to target ‘Generation Y’ or ‘Gen Y’ with a more lifestyleorientated approach.

Poised to be the biggest consumer group in history, Gen Y comes with a new and distinct take on design, technology, service and sustainability.

While new brands such as our Starwood’s W Hotels and Aloft are modern, innovative and youthful and cater exactly to the interests of the Gen Y guests.

A report by Ernst and Young on ‘Global Hospitality Insights: Following the Lifestyle Trend’ defines lifestyle hotels as those developed in partnership with global hotel brands or high-fashion names or those that integrate regional and cultural attributes to their core concepts. Lifestyle hotels may also focus on sustainability and green issues.

The report very well could have been about Dubai’s current

India and China combined are home to 40 per cent of the world’s population, and between them, they are averaging eight per cent growth in gross domestic product.

Dubai is strategically located for both of these markets - with more than two billion people living within four hours flight time

hospitality dynamics, and reflects Starwood’s approach to designing life-trends into our brands – for example with Element’s approach to sustainability, or the Westin’s industryfirst initiative, providing a smoke-free environment.

In addition to global partnerships, the city’s hospitality sector has successfully integrated the region’s cultural ethos and many of them are champions of sustainable development and play an active role in the community.

These trend-setting drivers will have a far-reaching impact on the industry’s prospects while providing added-value to the guests of whichever generation. l

7DAYS

Tourism l Developing Dubai l 46

New Address on the block Emaar checks in with portfolio of Dubai hotels maar Hospitality Group, a subsidiary of Emaar Properties, owns and manages a diversified portfolio of hospitality assets including the five-star premium hotel brand, The Address Hotels and Resorts, Arabian Ranches Golf Club, Nuran Serviced Residences, Dubai Polo and Equestrian Club, Hayya! Health Clubs and the Dubai Marina Yacht Club and associated marinas.

Emaar’s expansion into the hospitality industry was a natural progression of its focus on creating integrated lifestyle communities. The hotel and leisure facilities bring family and friends together assuring warm and thoughtful hospitality marked by superior guest service.

The Address Hotels and Resorts brand, with its five properties in Dubai, brings a fresh identity to hotels in the region, offering a bouquet of experiences focused on offering tangible guest benefits and exceptional service. A compelling success story in the hospitality sector of the region, The Address brand is now making strong global inroads – taking Dubai’s trackrecord in hospitality to international markets.

The Address Downtown Dubai, located in Downtown Dubai, was the first

E The Address Hotels and Resorts has plans to expand into Budapest, Egypt, France, Indonesia, Jordan, Marrakesh, Saudi Arabia, Shanghai, Syria, Turkey, London, Los Angeles and New York

of the group’s hotels to open and has consistently maintained high occupancy rates.

The hotel also hosts Neos, the highest sky lounge in Dubai, which offers breathtaking views of Downtown and the city, and is regarded as a choice destination for the city’s movers and shakers to unwind.

For visitors and residents who are looking for a perfect blend of classical themes and the unmatched Arabian tradition of welcoming hospitality, The Palace - The Old Town, also in Downtown Dubai, is the place to be. It offers restaurants and lounges with direct views of The Dubai Fountain.

The third property has the unique draw of being directly linked to The Dubai Mall, the world’s largest shopping and entertainment destination.

The Address Dubai Mall offers exemplary benefits for all - in particular shopping fans. For the first time in the city, the hotel introduced the concept of ‘Fashion Advisors’ who assist guests in personalised haute couture shopping.

It’s conveniently located for guests on holiday or business, and is just 15 minutes away from Dubai International Airport and within walking distance of Souk Al Bahar, an Arabesque shopping mall and entertainment destination located in the heart of Downtown Dubai.

Overlooking an impressive

Lofty ambitions tarwood Hotels and Resorts is one of the leading hotel and leisure companies in the world, with 1,000 properties

S

across nearly 100 countries. A fully integrated owner, operator and franchisor of hotels, resorts and residences, Starwood’s inter-

New Addition: The Aloft in Abu Dhabi

nationally renowned brands include St Regis, The Luxury Collection, W, Westin, Le Méridien, Sheraton, Four Points

by Sheraton, and the recently launched Aloft and Element.

In the Middle East, the company currently operates 50 properties and has plans to expand its portfolio by 40 per cent by the end of 2015, with all nine of its brands present in the region by 2013. Of its 50 properties, Starwood has 21 properties in the UAE alone, which combined offer more than 5,000 rooms.

Starwood’s existing portfolio in the Middle East is led by bestin-class Le Méridien, Westin and Sheraton hotels.

The Address Downtown Dubai, and below left, The Address Dubai Marina marina, and linked to Dubai Marina Mall which features 160 outlets offering fashion, general retail and international food and beverage options, The Address Dubai Marina is a one-of-its-kind modern business destination.

Residents of this chic part of the city find it a great place to unwind with access to the enter-

The enhancement of the Sheraton brand continues to be a focus, with an investment of $1.5 billion committed to opening new Sheraton hotels and renovating existing properties in the Europe, Africa and Middle East (EAME) region by 2012.

Underlining Starwood’s commitment to the Middle East region, the hotel group recently announced plans to debut the design-led W Hotels brand in the UAE with the signing of W Abu Dhabi, set to open in 2013.

W Abu Dhabi will be the second W in the Middle East following W Doha in Qatar, which opened in mid-2009. Starwood also has plans to open W Hotels in further high-profile regional destinations such as Amman in Jordan and Marrakesh in Morocco.

In addition to the expansion of existing brands, Starwood will continue to debut new brands in

tainment and other lifestyle components of Dubai Marina.

An ideal escape from the hustle and bustle of the city is The Address Montgomerie Dubai, a golf retreat offering perfect harmony. The property is famous for its 18-hole, par 72 championship course featuring unique characteristics such as a

Of its 50 properties in the Middle East, Starwood has 21 in the UAE alone, which combined offer more than 5,000 rooms the region. Just last year, the company introduced its midmarket brand Aloft to the Middle East with the opening of Aloft Abu Dhabi.

Following the success of this innovative new hotel brand, Starwood has already announced plans to open another Aloft Hotel in Riyadh, Saudi Arabia in 2013.

As the demand for midmarket hotels continues to rise, Starwood will also introduce its

hand-shaped bunker on hole 17, a mammoth 656 yard 18th hole, as well as 81 bunkers and 14 lakes.

Over the next few year The Address Hotels and Resorts has plans to expand into Budapest, Egypt, France, Indonesia, Jordan, Marrakesh, Saudi Arabia, Shanghai, Syria, Turkey, London, Los Angeles and New York. l

environmentally friendly brand, Element Hotels to the Middle East in 2012, with the opening of Element Abu Dhabi.

Consistent with Starwood’s market-leading position, the majority of its development in the Middle East is focused on the luxury and upper upscale segment. The company has already signed deals to open five new hotels in the Middle East under its bespoke luxury brand, St. Regis. Earlier this year Starwood’s renowned Luxury Collection brand made its debut in the Middle East with the conversion of the iconic Grosvenor House Hotel in Dubai.

Starwood currently employs 145,000 people globally. A key focus for the company as it expands in the Middle East is to provide new career opportunities in the region and hire talent from local markets. l

7DAYS

Tourism l Developing Dubai l 48

The big driver Dubai’s already got sunshine, sand and surf, but for sporting enthusiasts, the desert also boasts world-class golf courses ith sunshine all year round, pristine fairways, immaculate greens and world-class facilities, Dubai has a growing reputation as one of the leading golf destinations in the world.

In just 22 years, an entire industry has been established with one organisation responsible for laying the foundations - Dubai Golf.

For Dubai Golf, the owner-operators of Emirates Golf Club and Dubai Creek Golf and Yacht Club, it all started in 1989. In that year, the Ruler of Dubai, HH Sheikh Mohammed bin Rashid Al Maktoum, launched the first Dubai Desert Classic on the Majlis Course at the Emirates Golf Club.

Since those early days, the organisation has not looked back, with Dubai Golf now developing and managing quality golf courses, real estate, leisure and hospitality projects at two much-loved sporting venues in the Middle East.

Both the

W

Northern Island star Rory McIlroy is a regular on the emirate’s courses

Emirates Golf Club and Dubai Creek Golf and Yacht Club offer a way of life with leisure experiences from recreation and hospitality facilities to awardwinning dining. Whether you are a member, local visitor or international tourist, the clubs are special places to unwind.

The Emirates Golf Club’s championship Majlis Course has recently been voted one of the top 100 courses in the world by Golf World Magazine.

The equally challenging Faldo Course has this year become the only fully floodlit 18-hole course in the region, catering for those golfers who can only play in the evenings.

With recreation facilities that include tennis, swimming and a fully equipped gym with fitness classes, soon to be joined by an onsite spa, it’s not all about golf, the club is a living community offering a respite from the hectic pace of life in Dubai.

Likewise Dubai Creek Golf and Yacht Club has developed into a thriving golfing and marina destination, incorporating an 18-hole championship golf course, extensive golf academy, six restaurants and bars, a gymnasium, a tropical leisure swimming pool, the Park Hyatt Dubai hotel, 92 residential executive villas, as well as a 121-berth marina.

Dubai Golf’s aim is to continue

Life on the beach otana currently manages properties all across the Middle East and North Africa including luxury hotels in Abu Dhabi, Dubai, Al Ain, Sharjah, Fujairah, Ras Al Khaimah, Beirut, Kuwait, Syria, Sudan, Hurghada and Sharm El Sheikh.

New properties are currently under development in Bahrain, Egypt, Iraq, Kurdistan, Lebanon, Oman, Qatar, Saudi Arabia, Syria and the UAE. Operating as Rotana, it opened its first property in Abu Dhabi in 1993 and is today one of the leading hotel management companies within the Middle East and North Africa.

Rotana’s aggressive expansion

R

plans have seen the company grow from two properties in 1993 to a planned total of 70 by 2014.

There are several further properties expected to open in the near future and new projects in the pipeline, confirming the company’s intention to have a Rotanamanaged property in all the major cities throughout the Middle East and North Africa within the next five years.

Rotana was approached to manage a new property on the Jumeirah Beach front and the group saw it as a great opportunity to widen its offering in Dubai.

The Amwaj Rotana Jumeirah

The Dubai Creek Golf and Yacht Club - just one of Dubai’s world-class courses to be among the most prestigious and sought after golfing destinations in the world, ever present on the ‘must play’ list of courses in the region. Having clearly set very high standards for itself both on and off the course, Dubai Golf remains focused on pursuing excellence in every aspect of golf and resort living, and is

In just 22 years, an entire industry has been established with one organisation responsible for laying the foundations - Dubai Golf

committed to promoting Dubai as one of the world's leading tourist, leisure and sporting destinations.

Speaking about Dubai Golf's role in developing golf tourism in the emirate, Julian Danby, Senior Manager - Commercial and Business Development for Dubai Golf commented: “As the pioneers and founding fathers of golf in Dubai, having literally sown the seeds for the game to develop through creating the first grass course in the region, we've tirelessly promoted Dubai as an international golf destination for many years.

The Dubai Desert Classic hosted at Emirates Golf Club has played an enormous role in promoting golf to overseas markets and now in its 22nd year it continues to do so.

Aside from tournament golf throwing the spotlight onto Dubai's golfing delights we continue to engage with golf tour operators globally through

Julian Danby Senior Manager of Commercial and Business Development for Dubai Golf maintaining high presence at key trade exhibitions and by supporting various tourism initiatives led by DTCM. There is no doubt tourism numbers globally have reduced over the last two years, but we are currently witnessing a strengthening trend in golf tourism and as we continue to build on our presence overseas - especially in emerging markets such as China and India - we will undoubtedly see strong growth in 2011.”

When Rotana was offered the chance to launch a new hotel on the popular Jumeirah Beach, it jumped at the opportunity Beach is situated in the Jumeirah Beach Residence area in New Dubai. This world-class property offers 301 superb rooms, suites and one presidential suite, all with modern designs overlooking the Arabian Gulf.

Amwaj Rotana features a number of dining venues and the most up-to-date technology in its three meeting rooms. It also offers a ballroom with private access, business facilities, a state-of-the-art fitness centre, outdoor temperature-controlled swimming pool, Jacuzzi, sauna and steam rooms.

“As with any project, there are challenges in meeting deadlines with contractors and

suppliers, processing the licences, and so on and the same was true for the Amwaj Rotana,” the group says.

“The project opening was also approximately three years delayed due to contractual matters. But the project delay turned out to be an advantage, as it gave us the opportunity to fine-tune the hotel.”

Amwaj Rotana was launched in mid-June this year and is already doing better than forecasted. The demand for the Jumeirah Beach Residence area is high. Average occupancy since opening has been roughly 50 per cent and that number is steadily increasing.

Rotana currently manages properties all across the Middle East and North Africa including luxury hotels in Abu Dhabi, Dubai, Al Ain, Sharjah, Fujairah, Ras Al Khaimah, Beirut, Kuwait, Syria, Sudan, Hurghada and Sharm El Sheikh

7DAYS

Tourism l Developing Dubai l 50

Prime location In a city full of top-class hotels, it takes a lot to stand out from the crowd.

It helps to have an outstanding setting, says Christian Pertl of IHG

ubai is an incredible city that is constantly evolving.

The competition here is intense and this forces hoteliers to constantly look at how we can add value for our guests.

I am really proud that in a comparatively short time InterContinental Dubai Festival City has been recognised as an exceptional hotel and location for world-class meetings, events, and leisure.

We believe our properties at Dubai Festival City perfectly complement the emirate’s vibrant growth. With the hospitality industry, it’s all about delivering experiences - whether this is in the form of personalised ‘in the know’ knowledge, activities, or business meetings with a truly authentic local touch, or through exploring the lifestyle of a destination.

Being part of a successful and thoughtful mixed-use development, we have created a destination with office and event space, rooms and suites, residential, schools, shopping and entertainment, dining, and golf right at our doorstep.

Opening three new properties on one individual site represented a huge investment, and is a graphic demonstration of IHG’s confidence in expansion with particular emphasis on hotel-enhanced mixed-use developments.

With the rapid growth of

D

Christian Pertl Director of Sales and Marketing at IHG Dubai Festival City

hotels in Dubai, the market has started to change.

With more choice for the consumer, the competition will increase the level of service offered to guests in order to retain their business. We look at this positively as it will simply bring more people into Dubai.

The government is investing a lot on infrastructure and international level sporting events, and establishing the city as a congress destination.

Also initiatives such as the launch of low cost carriers flydubai is a great initiative, together with bringing more budget hotels online, to drive tourism from other sectors previously not focused on.

Dubai is a booming destination with a central location for MICE and leisure travellers, and only shows signs of further growth in the coming years.

The main target groups of InterContinental Dubai Festival

We believe our properties at Dubai Festival City perfectly complement the Emirate’s vibrant growth

City are corporate groups, meetings and conferences and leisure travellers.

Location, location, location…

Within the context of the mixeduse development, our hotels are uniquely placed at the heart of Dubai Festival City’s shopping, dining and entertainment district.

One of the biggest advantages we at IHG Dubai Festival City have is being part of a development that allows our guests to choose from a variety of accommodation options, signature dining venues, leisure activities, and meeting spaces. Our properties have something for everyone leisure facilities for the business traveller, business facilities for the leisure traveller, and all connected to one another.

We have the flexibility and resources available for creating some stunning leisure packages and alternative options for corporate customers as well.

For example, InterContinental Dubai Festival City offers a Stay and Play package, inclusive of two rounds of golf or SPA treatments at the hotel.

At Crowne Plaza Dubai Festival City, we just launched a new B+B+B package (Bed, Breakfast and Brunch) tying in the infamous Belgian Beer Cafe with our spacious rooms to provide the perfect weekend getaway right in the heart of the city).

Al Badia Golf Club

InterContinental Hotels Group Dubai Festival City As the largest hotel operator in the Middle East and Africa, the InterContinental Hotels Group enriched their portfolio in 2008, in conjunction with the Al Futtaim Group, with the opening of the 498-room InterContinental, 316-room Crowne Plaza, and the 212-extended stay InterContinental Residence Suites, and an impressive 3,800sqm Event Centre, all within one of the country’s most iconic mixed-use developments, Dubai Festival City.

In July 2009, InterContinental Dubai Festival City also took over management of the iconic Al Badia Golf Club and 18-hole championship golf course. This award-winning club house offers additional dining venues and meeting spaces for both indoor and outdoor functions, and an open-plan concert venue. And the golf course designed by master golf architect Robert Trent Jones II is both one of the most challenging and beautifully landscaped in the country.

Each property has been specifically designed to cater to different guest’s requirements and needs, with the three developments reflecting the growing demands of the tourism industry within Dubai, which continues to experience phenomenal growth year on year.

Guests of one property have access to the services and facilities of all other properties located minutes away from each other.

7DAYS

Developing Dubai l 51

T Transport Dubai strives to be the regional centre for trade and finance and towards this goal, the city is focusing on improving its transport infrastructure. The aviation industry is a big earner for the economy and a vital part of the emirate’s identity as a bridge between East and West. Its flagship carrier Emirates Airline, which continues to astound the industry with its huge aircraft orders, is a household name all over the world, while the city also caters to the low-cost traveller with its budget carrier flydubai. Meanwhile, the city itself boasts some of the most modern road infrastructure in the Middle East, as well as the region’s first urban railway, the Dubai Metro

7DAYS

Transport l Developing Dubai l 53

Passing through and paying up The transport sector in Dubai is bolstered by the emirate’s location, bridging East and West, bringing constant investment in infrastructure even through the downturn

illions of people and tonnes of goods pass through Dubai every year. From the beginning of its economic expansion outside of oil revenues, Dubai has seized on its geographical position as a place for people and produce to stop off on the way West to East or East to West with huge investment in its transport infrastructure.

Dubai International Airport now outstrips New York’s JFK in terms of capacity, according to September figures by aviation intelligence gatherer OAG in its Frequency and Capacity Trends Statistics Report. There will be 5.2 million seats available in September at Dubai International, compared with 4.9 million at JFK. Dubai saw a 14 per cent increase in seat capacity year-on-year, while the Middle East rose 11 per

M

Drewry projects that container throughput will increase globally by an average of 7.2 per cent a year between 2009 and 2015 Vessels calling to Rashid and Jebel Ali port by type (2007-09) Type

2009

2008

2007

Containers vessels

6,553

7,146

7,653

881

1,452

1,564

-

3

19

381

560

555

General cargo vessels General cargo/container vessel Bulk carriers Car carriers Tankers

441

669

795

1,699

1,375

1,268

Livestock carriers

18

15

22

Passengers ships

212

289

419

Country crafts Others Total Source: Dubai Trade (Dubai World)

893

739

799

4,255

4,215

4,592

15,333

16,463

17,686

Dubai International Airport now outstrips New York’s JFK in terms of capacity.

There will be 5.2 million seats available in September at Dubai, compared with 4.9 million at JFK

cent in capacity and frequency for September, both within and to and from the region.

During the recession, the airport - and the number of passengers passing through it have continued to grow.

According to Dubai Airports, which owns and operates Dubai International and the new Al Maktoum Airport, passenger traffic at Dubai International reached a record in July this year when it handled over four million people.

And, while the new Al Maktoum Airport just opened in June this year for cargo traffic, construction continues at the site near the logisitics hub at Jebel Ali, on what is scheduled to be the world’s largest airport when it is completed, even as Dubai International undergoes expansion.

But aviation is not the only mode of transport in Dubai that seems to defy global economic conditions. The emirate is equally famous for its huge ports - Jebel Ali Port and Port Rashid.

DP World, which controls these ports and 48 others worldwide, recently became the third largest port operator in the world, according to independent maritime advisor Drewry’s Annual Review of Global Container Terminal Operators.

Port Rashid, one of Dubai’s major hubs for cargo The news came shortly after the Dubai World Subsidiary announced encouraging financial results for the first six months of 2010, despite the global downturn for container transport in 2009.

“Global economic trends meant that container throughput at the world’s ports fell for the first time ever in 2009, by almost ten per cent,” Drewry said in its report.

However, DP World reported that consolidated throughput for the first half of this year rose seven per cent compared with 2009 to 13.2 million TEU (a measure used for capacity in container transportation), helping drive revenue up five per cent to $1.46 billion.

In the UAE, which includes both Dubai ports as well as Mina Zayed in Abu Dhabi and Fujairah Port, volumes of 5.5 million TEU were handled in the first six months, three per cent ahead of the same period

Containers discharged and loaded at Rashid and Jabel Ali ports (2007-09) Type

2009

2008

2007

Discharged Containers Imports

1,776,892

2,166,476

1,879,054

Transit

2,513,790

2,600,352

2,404,786

Empty Units

1,236,006

1,140,174

1,055,465

Subsidiary Total

5,526,688

5,907,002

5,339,305

Loaded Containers Exports Transit

949,685

975,946

923,171

2,524,531

2,599,887

2,398,603

Empty Units

2,123,153

2,344,456

1,991,930

Subsidiary Total

5,597,369

5,920,289

5,313,704

11,124,057

11,827,291

10,653,009

Grand Total Source: Dubai Trade (Dubai World)

last year, DP World said.

And expansion is also under way in the ports of Dubai, with DP World’s flagship Jebel Ali Port set for growth.

Work on expanding capacity at the existing port has been ongoing, and there is also a proposal for a Terminal 3 on a manmade offshore island, which could help boost capacity to

In the UAE, which includes both Dubai ports as well as Mina Zayed in Abu Dhabi and Fujairah Port, volumes of 5.5 million TEU were handled in the first six months, three per cent ahead of the same period last year

50 million TEUs over the next 30 years, although consideration of the proposal is on hold in the wake of the global recession.

All this expansion may have seemed unwise during the worst of the downturn, but now that recovery is on its way, global growth is predicted once more.

Drewry projects that container throughput will increase globally by an average of 7.2 per cent a year between 2009 and 2015, and the International Air Transport Association announced strong global demand for air travel in July this year, up 9.2 per cent from the year before.

7DAYS

Transport l Developing Dubai l 54

Full steam ahead The Dubai government continues to invest heavily in the city’s infrastructure and projects such as Dubai Metro are already paying off

On its first anniversary on September 9, the Roads and Transport Authority (RTA) announced that 30 million passengers had used the Metro

ubai could not lay claim to being a regional centre for trade and finance without a strong infrastructure, which is why investment in the city’s roads and transport has always been top of the agenda.

This heavy investment has resulted in a modern road system that is one of the best in the Middle East, as well as the region’s first urban railway system, the Dubai Metro.

In 2005, when the idea was first conceived, the demand for a new form of transport in the city was clear.

Traffic was often hugely congested, exacerbated by

D

One of Dubai Metro’s state-of-the-art stations

ongoing government projects to improve the roads that inevitably lead to disruptions.

The envisioned Dubai metro system would glide above or below all that traffic, offering commuters from Abu Dhabi and Sharjah the option to park and ride at the edge of the city.

Of course, in the middle of construction, the global financial crisis struck, slowing the project to the point of rumours of its demise and resulting in the delayed opening of just one of the lines with less than half of its stations operational.

Since then, a further 11 stations have opened on the

Red Line, but the Green Line, originally due to open at the same time, is now delayed until next August.

Today, with much of the city’s roadworks completed, leaving behind widened roads and smooth traffic flow, and as project delays leave just 21 stations open, some predicted the Metro would be under-used, but that has not been the case.

On its first anniversary on September 9, the Roads and Transport Authority (RTA) announced that 30 million passengers had used the Metro, a number the authority expects to see rising in its second year of operation.

Dubai’s continued investment in infrastructure is likely to see even more residents and tourists in the emirate.

Its second airport, Al Maktoum Airport, which is due to be the world’s largest when fully open, started accepting cargo flights this year. Mean-

while, Dubai International Airport saw more than 40 million passengers in 2009 as tourism worldwide recovers, post crisis.

The Metro has opened up the city for businesses and their employees, particularly for expatriate workers who have no desire to purchase a car for the length of their contracts in Dubai. This coupled with the improved roads and lower rents should once more put Dubai at the top of the list for any business looking for a foothold in the Middle East.

“The daily ridership of the Dubai Metro jumped from 54,683 passengers in October 2009 to 116,340 passengers last June, recording a growth rate of 212 per cent,” Chairman of the Board and Executive Director of the RTA, Mattar Al Tayer, said as the Metro celebrated its first birthday.

If those are the figures in a Dubai slowed by the global recession, imagine the numbers in a recovered Dubai. l

The daily ridership of the Dubai Metro jumped from 54,683 passengers in October 2009 to 116,340 passengers last June, recording a growth rate of 212 per cent

7DAYS

Transport l Developing Dubai l 55

Representatives of Dubai Municipality and the Dubai Rapid Link consortium sign a dhs12.45 billion contract for the final design and construction of the planned driverless Metro

HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, inaugurates the construction works of the Dubai Metro

05

08

JULY

DECEMBER

06

09

MARCH

MAY

The RTA announces the first batch of companies to win naming rights for the new stations, including companies such as Nakheel, Majid Al Futtaim Malls and Etisalat. The RTA raises dhs1.804 billion from the rights bidding

The RTA announces it has successfully tendered 92 per cent of the retail outlets and ATM sites in Dubai Metro’s Red and Green Line stations

09.09.09 The first concrete pile of the elevated track of Dubai Metro is cast between the 6th and 7th Interchanges of Sheikh Zayed Road

06 JULY

09 SEPTEMBER

09 The RTA announces that the tunnelling excavation of the Red Line has been completed ahead of schedule

Al Wugeisha 1 completes 80 per cent of its tunnelling

OCTOBER

Dubai Metro is used by 1,740,578 passengers in its initial month of operation since its maiden journey on September 10 across the ten stations on the Red Line, according to the RTA

10

Burj Khalifa station officially opens as the tower itself is inaugurated with a bang of fireworks and festivities

07 JANUARY

07 JULY

JANUARY

Non-stop progress The metro system in Dubai is only a year old, but it’s already changed the face of the city. It’s a key addition to the emirate’s infrastructure and a valuable support for business and tourism

The Dubai Metro viaducts reach 10km, more than 20 per cent of their full length

07 OCTOBER

The first batch of Dubai Metro carriages arrives in Jebel Ali Port

08

10 FEBRUARY

10

08 AUGUST

Ten million commuters travel on the Metro in its first five months, the RTA announces

APRIL

Seven new Metro stations are opened: Emirates Airlines Station, Airport Terminal 1 Station, Al Karama Station, Emirates Towers Station, Dubai Internet City Station, Marina Station, and Ibn Battuta Station

10

Three Metro stations open: GGICO Station, Trade Center Station, Noor Islamic Bank Station

MARCH MARCH

The first footbridge for the Dubai Metro is constructed on Sheikh Zayed Road

HH Sheikh Mohammed bin Rashid Al Maktoum launches the Dubai Metro and hops onboard to take the train through the ten stations ready for operation

MAY

08

Sheikh Mohammed bin Rashid Al Maktoum launches the technical trial run of the Dubai Metro on the test track stretching SEPTEMBER 11km from Jebel Ali Station to Ibn Battuta Station

As the Metro celebrates its first birthday, the RTA announces that the system has seen 183 per cent growth SEPTEMBER in passengers from October 2009 to August 2010

10

7DAYS

Transport l Developing Dubai l 56

Small costs, big ambitions Ghaith Al Ghaith, flydubai CEO, talks about keeping the costs down as his budget airline rapidly expands

The formation of the company was in March 2008 - a great deal has happened since then, does it feel like a long time ago?

Q

We have the most regulated market in this region

From a couple of years ago it was just an idea and a very simple sort of business case concept and we went from there to what we are now, operating nine aircrafts to 23 destinations

No, it feels like a really short time. I think that is the point.

It sounds like a short time but if we look at what has been achieved during this time it is very interesting. I mean from a couple of years ago it was just an idea and a very simple sort of business case concept and we went from there to what we are now, operating nine aircraft to 23 destinations.

A

What sort of experience did you take from Emirates to flydubai because the business model is different?

Q

Emirates actually set up the airline, because when the decision was made that the airline would be established, the government decided to give the set up of the airline to Emirates and I was appointed to be the guy in charge of the airline.

But to go from there to where we are now has all been done with the help of the Emirates people. I think what is very important for us and what we have taken from the Emirates model is the high level of professionalism. You cannot do things unless they are done with the highest level of thought and technology and the best that you can have in the industry and people. We tried to learn that from the Emirates model and apply it to us in a different context.

A

Ghaith Al Ghaith, CEO of flydubai When you signed the $40 billion aircraft deal in Farnborough, there was an option as part of it to expand to longer range, is this on the cards?

Q

We could look in the future at the 900 model, which could give you an extra 32 seats. Each aircraft can go further but our model will continue to be four-and-a-half hours because we have to look at the effectiveness of travelling longer versus the cost because when you travel a longer distance you have to take into account the sleeping of the crew in an overnight trip and it is an extra cost and that doesn’t fit the model of a budget airline.

A

Flydubai has seen incredible expansion since it started, do you think there will be anything that will slow down this expansion?

Q

We always say that we live in a city in a region that is different than other places and the potential is huge.

If you look at Europe [compared to here], people travel a lot more often than they do here

A

in general. So there is a lot of potential, the thing that will expedite the potential here will always be the flexibility that you have in the routes. In this part of the world it is not easy for people to travel, for example it might be OK for you to go to Qatar and Bahrain because you are a UAE resident but there are other countries that you cannot go to because you would require a visa. And if you are European, you cannot always travel freely in this region. And then the biggest problem is also having open skies - we have the most regulated market in this region.

Can you tell us more about an interesting customer model where people can purchase various extra services?

Q

People can purchase a variety of services which we shave off to give people the cheapest possible price.

People can buy their bag space, they can buy their food, their drinks and we are introducing something new purchasing movies onboard.

That will be a very interesting move for the facilities that

we can offer in the company, different than any other airline in the region and it will give us the opportunity of capitalising on the requirement because we do feel that there is a need to purchase entertainment and we will provide it within the flight.

If oil prices get any higher and increased fuel charges are triggered, do you think that would hold back the budget aviation sector and would you then have to pass those costs on to the customer?

Q

Fuel is an integral part of the airline so that will always be reflected in the price of the ticket.

Your prices have to be high

A

enough to cover your costs and to make a profit and if you don’t do that, you will stop being in business. That element on the price will always be there, for example, if someone tomorrow introduces a tax on travel that is extra, the airline has to reflect that in their fares.

We already had one example of expensive fuel in the past when oil prices went to $150 per barrel, what we take from that time is that demand for air travel did not reduce, which allowed airlines to weather the storm.

Now if the same scenario happens and the price increases and the demand stays where it is, there is no issue.

The problem is if demand goes down.

A

We already had one example of expensive fuel in the past when the oil price went to $150 per barrel, what we take from that time is that demand for air travel did not reduce

7DAYS

Developing Dubai l 57

S Sport Tiger Woods, Roger Federer, Rafael Nadal and Frankie Dettori are all well-known by Dubai’s sports-mad population with the emirate a magnet for sporting legends. From the world’s richest horse race, the Dubai World Cup, to the ever-popular Dubai Rugby Sevens and the Dubai Tennis Championships, the city plays host to many world-class events.

The emirate’s goal of becoming a sporting capital shows no sign of slowing. In golf, the European Tour’s Order of Merit was renamed the Race to Dubai, with the winner now crowned every November at the Dubai World Championship. And with the Dubai Desert Classic a regular on tour since 1989, Dubai will host more European Tour tournaments than England this year. 2010 also sees the FINA World Swimming Championships dive into Dubai and the Louis Vuitton Trophy sailing regatta dock in the city to add to its already impressive list of events

7DAYS

Expert Opinion Sport l Developing Dubai l 58

A sporting chance for profit Dubai’s reputation as a hub of international sport action grew from the support of key believers

Donal Kilalea Partner and CEO of Promoseven Sports Marketing Donal has more than 26 years experience in the Middle East market.

He led Fortune Promoseven Advertising in Dubai from 1986 to 1999, and built it from a team of six to a team of 160, winning major accounts, including Coca-cola, NIVEA, Land Rover, Marks & Spencer, Reckitts, Sony for the Middle East and the launch of the Jumeirah Beach hotel and Burj al Arab.

He created Promoseven Sports Marketing, the leading sports marketing agency in the Middle East, in 2003.

In this capacity, he was part of the marketing team for Asian Games Marketing including the sponsorship and television for the Asian Games that took place in Doha in 2006.

Dubai hosted the largest rugby 7s tournament in the world in terms of numbers in 2008 with more than 110,000 attendees

ubai is a duty-free port and trading city and this entrepreneurial spirit runs through all of its economic sectors, including the development and growth of sport.

Dubai is an international city welcoming expatriates from far and wide, and it was natural that the expat population brought the city sports from their home. These included everything from rugby to baseball and cricket to golf - played on the sand!

These sports received strong support from the ruling family of Dubai, who made land available on which they could be played.

This in time led to the rise in the 70s and 80s of sports clubs and leagues for expats.

Simultaneously, there was also the development of a number of football and sports clubs for the national population to ensure that sport became part of their lifestyle too.

But the growth of some of those sports into international sporting events showcasing Dubai was due to a number of factors that came together.

One of those factors was that although all these sports had land granted to them, the clubs still had had to be economically sound if they were to survive.

Those sports that were not popular did not survive.

The other factor was the realisation by key organisations in Dubai in the 1980s of the power of sport - that sponsorship could not only enhance their brand exposure and that of Dubai, but could support local sports in terms of legacy.

Two particular organisations spotted the opportunity - Emirates Airline and Dubai Duty Free.

D

Aled Thomas of Wales scores the winning try against Argentina during the 2009 Rugby Sevens World Cup final in Dubai Both companies, among others, were instrumental, in the large-scale support and development of sport locally and through that, internationally.

They each embraced key sports, realising the potential marketing opportunity for themselves and for Dubai. By doing so, they - and the sports they supported - became unofficial ambassadors for the emirate.

With this infusion of brand support, the local sports and their associated events had to become more professional as there had to be a return on investment (ROI) in terms of brand awareness and exposure.

The sports grew to become more and more important as tourism tools and of course for branding. Success bred success!

If a sporting event did not provide an ROI, then they did not attract sponsorship and thus they did not succeed.

Consider the Emirates Airline Dubai Rugby 7s that

started on sand 41 years ago and is now one of the top two 7s tournaments in the world.

The 7s was started by some enterprising expatriates and it grew steadily as Dubai grew and the number of expatriates grew. But more than 23 years ago, Emirates Airline became involved in the 7s and this had

than 110,000 attendees, but it was also host to the IRB World Cup 7s in March 2009.

Dubai was chosen over others as the IRB recognised it as the sporting hub of the Middle East and at the centre of a population in excess of 120 million sport fans.

In addition, Emirates as a company has also supported

ATP/WTA calendar, attracting the top 20 male and female players in the world every year.

Dubai Duty Free (DDF) saw that tennis had a following in the UAE and that it had the potential to grow, not only locally but also to be a strong brand ambassador for DDF and the city.

Through the investment of

The Dubai Duty Free Tennis Open, started 18 years ago in temporary stands, is now among the top tournaments on the ATP/WTA calendar, attracting the top 20 male and female players in the world every year

a marked affect on the event.

Emirates invested in the facilities, and with that, the 7s was able to grow and rise in stature not only locally, but also internationally.

Thus when the International Rugby Board (IRB) decided to make an international 7s series incorporating several cities in the world, Dubai was a natural choice and is one of the leading cities in the IRB 7s series today.

Dubai not only hosted the largest 7s in the world in terms of numbers in 2008 with more

other key sports including football, powerboat racing, cricket and horse racing on a local level and consequently, these sports have also grown in international stature. Examples include the Dubai World Cup in horse racing and the FIFA Beach Soccer World Cup, which took place in Dubai in 2009.

Another prime example is the Dubai Duty Free Tennis Open that was started with temporary stands 18 years ago and is now one of the top 500 points tournaments on the

DDF and the success of the tournament, the construction of a state-of-the-art tennis stadium soon followed, all aiding the development of tennis in the UAE in terms of infrastructure and administration.

The growth of sport in Dubai is inextricably linked to the premise that sports need marketing sponsors to survive and in fact to prosper. Without those early supporters, and their vision for themselves and Dubai, the events and championships would not be here today.

7DAYS

Sport l Developing Dubai l 60

With a plush new home and the largest prize purse of any horse race in the world, the Dubai World Cup is one of the most famous sporting events on the planet

Meydan held its first Dubai World Cup this year

Racing has a new home The race is not just the richest for the winner of the $10 million purse, it’s also a big winner for the Dubai economy.

According to the Dubai Racing Club, the meeting is now worth a staggering $26.25 million

or more than 20 years, Dubai has hosted what is probably its most famous sporting event and, as of this year, the richest horse race in the world - the Dubai World Cup. With a $10 million purse in 2010, the race is the creation of the Ruler of Dubai, HH Sheikh Mohammed bin Rashid Al Maktoum, who also owns Darley Stud and Godolphin Racing, one of the world's leading thoroughbred breeding and racing operations.

The race is not only the richest for the winner of the $10 million purse, it’s also a big winner for the Dubai economy. According to the Dubai Racing Club, the meeting is now worth a “staggering” $26.25 million.

The race’s popularity jockeys and horses fly in from all over the world to compete – and the huge boon this gives to the tourist industry and the economy in general warrant a lot of investment.

And in 2010, the race was held for the first time at Meydan racecourse, the newly

F

finished course at Dubai Racing Club’s “iconic horse-racing city” of Meydan.

The $2.7 billion Meydan City project was announced in March 2007 and despite the construction delays caused by the advent of global economic crisis, the racecourse itself finished on schedule this year.

The full Meydan City masterplan included the racecourse, a grandstand, hotel and training area, the Metropolis business district and the Horizons and Godolphin Parks residential

districts. In February, one month before this year’s Dubai World Cup, the chairman of the project said that some of these plans would be deferred for now.

“We have focused on the business park, Horizons and the grandstand, racing district and hotel zone, and we shall monitor the other phases that are still offplan, and those that have not been officially launched,” Saeed Humaid Al Tayer, chairman of Meydan Group and the Emirates Racing Association, said at the time.

“We had various plans that we have elected to defer a little bit, but a majority of these zones are well under way.”

However, rumours that the racecourse itself had been delayed proved unfounded as the first horses took to the turf in January this year at the Dubai International Racing Carnival, which runs until the beginning of March and has prize money of more than $35 million.

The Dubai World Cup event attracted a record number of entrants this year. A total of

1,951 entries were received from 23 countries for the revamped eight-race programme, culminating in the World Cup itself.

With capacity for 60,000 in the new grandstand, the races were run before the largest ever crowds at a Dubai World Cup and the opening ceremony was graced with 6,725sqm of moving projected images over 15 projection screens and 40km of pyrotechnics by The Gruccis of New York.

Undoubtedly, the big purses on offer have spurred the development of horse racing in Dubai, but Dubai Racing Club also puts the sport’s growth in the emirate down to “the burgeoning status of Dubai as an international crossroads and global transport hub, and a first-class tourist destination, evidenced by more than 50,000 racegoers attending the Dubai World Cup meeting every year”. l

7DAYS

Sport l Developing Dubai l 61

Setting sail for more competition With the debut hosting of the prestigious Louis Vuitton Trophy just weeks away, Dubai is already eyeing more yachting events rom November 13 to 17, Dubai will follow Nice, Auckland and La Madalena to become the fourth and final city to host the prestigious Louis Vuitton Trophy (LVT), a professional sailing regatta developed by the world’s top sailing teams.

The event, sponsored

by Emirates Airline and the government of Dubai, will bring not only teams from the USA, Sweden, France, Italy, Germany,

F

boats. It is the perfect venue with a 300-berth marina, a fully equipped race department, helipad and plenty of space to allow all the logistical requirements of a large-scale event.

An event village will be created incorporating a heritage centre, shops, food and beverage outlets, live radio and two huge screens for people to watch the action live from the shore. With more than 600 competitors and people involved, plus spectators,

The event will bring not only teams from the USA, Sweden, France, Italy, Germany, Russia, UK and New Zealand, but also intense global media interest and revenue returns of an estimated $11.5 million

With an event budget of around $5 million funded by the three main parties, the benefit to Dubai will be a combination of tourism, positive PR and revenue

Russia, UK and New Zealand, but also intense global media interest and revenue returns of an estimated $11.5 million as well as highlighting Dubai as a unique and diverse destination.

The Dubai International Marine Club (DIMC) will host the 14-day competition, which will see ten teams competing in a series of match races, using four 85’ Americas Cup Class

VIPs, schools and businesses attending, it will get very busy.

With an annual calendar packed with watersports events, DIMC has two decades of experience, however, the logistical demands for the Louis Vuitton Trophy and the 85 boats will be supported by Emirates Team New Zealand who will provide the extra equipment needed.

Fifty-plus support boats will

be required ranging in size from 6m to 47m. Some of these will be imported but most will be sourced locally.

Dubai Sports Television will be joining the team as the sole broadcaster locally to provide the much needed technical support for the international TV production, which will reach millions of homes and include Virtual Eye technology to provide

a clear picture of the racing.

Planning for the regatta started 16 months ago in Auckland when the sailing teams formed the World Sailing Teams Association (WSTA) and discussions led to the development of the Louis Vuitton Trophy. Team New Zealand, who have been sponsored by Emirates Airline since 2004, form part of the WSTA, and as

Tackling a top event By 2006, with a full venue capacity of 32,000 at the old Exiles ground, the tournament had officially tripled in size since 2001

t was back in 1970 that a handful of expats gathered around a sandy pitch for what would be the first ever Dubai Rugby 7s.

Never in their wildest imaginations could those few players have dreamt the tournament would evolve into the worldrecord breaking event it is today.

It was the Staffordshire Regiment who were crowned the inaugural Dubai Rugby Sevens Champions that day back in 1970.

“A handful of us went down and, in spite of the conditions, we managed to do quite well.

I

The conditions were very unusual. There was no grass or vegetation anywhere in Dubai at the time and the pitch comprised a graded and raked area with touchlines marked out in oil or Bitumen,” explained Charles Smethurst, one of the players in the Staffordshire Regiment team.

“We relished the opportunity to play a game we loved in such unusual circumstances.

“It was a welcome diversion

from the often tedious routine of garrison life in the Gulf.”

The tournament experienced tremendous growth in the 1970s with new innovations appearing year by year. With the then newly launched Emirates Airline coming on board as sponsors of the tournament in 1987, things went from strength to strength and the first matches to be played on grass took place in 1995.

This was followed a year later by Dubai hosting a qualifying round of the Rugby World Cup 7s and by 1999, the tournament had been included in the eight-leg International Rugby Board (IRB) 7s World Series - a series which was launched by the IRB to develop top-class competition between the best 7s players in the world.

Yves Carcelle, chairman and chief executive of Louis Vuitton commented: “It is clear that Dubai deserves an event of this category, given the support that the emirate has put behind sailing in the last few years.”

With an event budget of about $5 million, the benefit to Dubai will be a combination of tourism, positive PR and revenue.

Looking beyond this event,

discussions have already opened between BMW Oracle, the holder of the 33rd Americas Cup, and DIMC regarding the 34th Americas Cup. While it is likely that the event will be held in San Francisco in 2013 or 2014 the rounds leading up to it will be held in leading watersports venues around the world, of which Dubai is well and truly one.

Dubai’s Rugby 7s has grown from a tiny expat gathering to a global record-breaker

By 2006, with a full venue capacity of 32,000 at the old Exiles ground, the tournament had officially tripled in size since 2001

Dubai proved to be one of the most popular events in the series and by 2006, with a full venue capacity of 32,000 at the old Exiles ground, the tournament had officially tripled in size since 2001. The rapid expansion continued from there, with Emirates constructing a new

home for the 7s, with the support of the government of Dubai.

The move to the larger venue proved to be a resounding success, with the spirit of the previous venue encapsulated in a bigger and better setting, which boasts an impressive six pitches.

The move in 2008 saw the tournament break a world record for the largest crowd at any 7s event, with capacity crowds of 50,000 packing into ground on both the Friday and Saturday of the tournament.

What makes the Dubai 7s truly unique is that apart from the incredible international action on Pitch 1, more than 160 invitational sides take part in 11 other tournaments on the surrounding pitches, producing a festive, family atmosphere for all the players and spectators.

7DAYS

Sport l Developing Dubai l 63

Pooling talent in Dubai The FINA World Swimming Championships are coming to the emirate later this year - an international event for a truly multicutural city to be held at a brand new state-of-the-art sports complex irst, fast, fun and fanfriendly - that’s what the FINA World Swimming Championships (25m) will be all about when the event hits Dubai from December 15 to 19.

It’s a first because never before has a major swimming event involving all the top nations taken place in the Middle East - a fact that has meant a massive undertaking to get the venue and infrastructure in place.

But in the four years since swimming’s global governing body FINA awarded the Championships to Dubai, (by just one vote ahead of Istanbul), the Dubai Government, the Dubai Sports Council under the patronage of its President Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai, and the UAE Swimming Association, have come together with just one goal - to deliver an event of excellence.

A key part of achieving that goal is the venue and the one developed for these Championships is spectacular.

Situated on the Dubai Bypass road behind Global Village, the Dubai Sports Complex has risen from the desert to form an amazing landmark that is intended to rival Beijing’s famous ‘Bird’s Nest’ stadium.

It also represents a fantastic

F

The Dubai Sports Complex is not only the world’s largest and most state-of-the-art aquatics centre, it is also a multi-sport venue able to host hard surface sports at a global level including tennis and basketball

Dubai beat off competition from Istanbul to host the event legacy from the event. The Dubai Sports Complex is not only the world’s largest and most state-of-the-art aquatics centre, it is also a multi-sport venue able to host hard-surface sports at a global level including basketball and tennis.

The racing, once it gets under way, will be fast and fun - you can guarantee it.

The match-ups will take place in a 25m pool - swimming’s equivalent of Twenty20 cricket - and the new venue will offer a great view of the action.

The Championships have plenty of history, too. Since the first world short course event in Palma de Mallorca in 1993, the event has taken place all over

the world, including Rio de Janeiro and Shanghai, every alternate year - apart from 1999 and 2000 when they took place two years in a row.

They have been graced by some of the finest athletes in

The diverse and multicultural aspect of Dubai is one of the city’s greatest strengths in hosting these Championships. Dubai is a fantastic melting pot of nationalities and many of them will be represented at the newly built Dubai Sports Complex

Courting success Dubai’s tennis championships is one of the highlights of the sporting calendar, attracting the biggest names from both the men and women’s game he tagline for the 2010 Dubai Duty Free Tennis Championships summed up perfectly what has become one of the top events on the circuit - ‘Many legendary battles, one legendary tournament’.

Outside of the Grand Slams, Dubai has in recent years become one of the favourite stops for many of the world’s top tennis players.

Owned and organised by Dubai Duty Free, the annual tournament consists of a WTA women’s week followed by an

T

ATP men’s week of action.

The tournament has become synonymous with top-class tennis and has showcased some of the most glamorous locations on the planet.

Few could forget the 2005 photo shoot with Andre Agassi and Roger Federer going headto-head on top of the iconic Burj Al Arab’s helipad.

Since the inaugural ATP tournament in 1993, the Dubai Duty Free Tennis Championships has consistently attracted the world's best players. Just a

glance at some of the past winners of both the men’s tournament and the women’s (which began in 2001), reveals an impressive who’s who of the tennis elite, with the likes of Goran Ivanisevic, Roger Federer, Rafael Nadal and Novak Djokovic all having claimed the men’s title and Martina Hingis, Justine Henin and Venus Williams the women’s.

“We expect to be one of the best in the world,” said Colm McLoughlin, the Managing Director of tournament owners

the history of the sport, including Michael Phelps of the US, Australia’s Ian Thorpe, Jenny Thompson, also of the US, and Zimbabwe’s Kirsty Coventry.

The diverse and multicultural aspect of Dubai is one of the city’s greatest strengths in hosting these Championships.

Dubai is a fantastic melting pot of nationalities and many of them will be represented at the Dubai Sports Complex. From the swimming big guns including the US, China, South Africa, Australia and the European nations through to tiny Mauritania, the first national federation to post its intention to send athletes, the chances are your country will be here so it’s a great excuse to turn up and scream for your team.

It truly is an international Championships and that is also reflected in the team charged with making it all happen.

and organisers Dubai Duty Free.

“That’s just part of the thinking here, it’s part of the vision, it doesn’t matter whether it is our airport retail operation at Dubai International Airport (Dubai Duty Free is the largest single duty free operation in the world with sales of $1.14 billion in 2009) or sport, Dubai ensures that certain standards are met and exceeded where necessary...

Our player entry year on year, where we now attract the majority of the world’s top ten in both the men’s and women’s tourna-

Led by former Olympic and Commonwealth Games medalist Lynne Bates from Australia as chief operating officer, the current operations team comes from ten countries speaking seven different languages.

And one of those staff members is Natalya Pankina from Russia, now retired as a competitor but as recently as 2007 someone who swam the English Channel in just over eight hours.

There will be local interest as well. The UAE swimming team will be present, led by Obaid Ahmed Obaid Al Jasimi, a twotime Olympian from Athens and Beijing, while 17-year-old Serbian Velimir Stjepanovic, a Dubai resident for the past 12 years and fresh from two medals at the Youth Olympics in Singapore, will be seeking to make his presence felt on one of the biggest stages of all.

The Dubai 2010 Mission Statement is: “To create an event of excellence showcasing the best athletes in the world in the ultimate environment for the world, and on behalf of the UAE and the peoples of Dubai.”

What does that mean?

Energy, fun for all ages and a venue full of noise and colour.

And the big question? The US topped the medal table at the last Championships, in Manchester two years ago, so who will dominate in Dubai in 2010?

ments, shows just how far we have come in less than 20 years.”

“The championship has proven over the last 18 years to be one of the most popular events on the ATP World Tour, having won numerous ATP awards,” said Brad Drewett, CEO of ATP International.

“The players love coming to Dubai."

Roger Federer and Andre Agassi on top of the Burj Al Arab