UAE offers ‘significant’ potential for investors

Posted on: April 13, 2006

Written by Select Property

DUBAI — The future potential of the Middle East, and the UAE in particular, remains significant, according to a report from the US-based Stanford Group Company, and is encouraging its clients to invest here.

The report says: “It is clear that the GCC is in the midst of an economic boom as they reaped $300 billion in oil revenues last year which has, in turn, helped to convert desert towns into some of the fastest growing cities in the world. There should be various opportunities for the savvy investor.”

Not only has high global demand for crude oil production remained high fuelling economic growth but trade liberalisation has also resulted in economic expansion, although some areas are growing faster than others, says the report. It specifically focuses on the UAE as it is forecast to expand six per cent in real terms this year. Industrial growth is expected to be the mainstay of the economy while domestic and foreign investment in new projects remains strong. The report also points to the maturing of the stock markets, which have surged as much as $1.4 trillion in the past 12 months, more than double the $526.3 billion at the end of 2004, as a positive factor.

Another reason for optimism, states the report, is the fact that the Middle East is one of the fast growing regions in the world in terms of net worth. Expansion is forecast to average 9.1 per cent during the next five years compared to 3.8 per cent in Europe and 6.8 per cent globally. High net worth assets are estimated to top $1 trillion. The report says: “Even though high interest rates are prevalent across the region, the fact remains that money in the region far outpaces investment opportunities.”

The Stanford Group also believes that Qatar and Bahrain offer good investment possibilities. The fact that Bahrain has recently completed a free trade agreement with the US in record time, thanks to a strong regulatory framework and good planning, is a good sign, the report says. And the Bahraini government also believes there are good investment opportunities there, says the report. Moreover, its fiscal and current account are expected to remain in surplus through 2007 and beyond, and non-oil exports will continue to strengthen.

Among the factors positively influencing the region is the signing earlier this month of eight agreements covering economic, trade, telecommunications and other fields, between China’s Hu Jintao and Yemen’s Ali Abdullah. The Stanford Group also says the region was given another stamp of approval when the rating agency Standard and Poor’s lifted the long-term foreign currency ratings of both Bahrain and Saudi Arabia to A+ and A respectively. Finally, the company believes that the opening up of negotiations between Japan and the GCC on a free trade deal this year will establish an even greater pact with the energy sector. In 2005 the six-nation group of monarchies accounted for more than 75 per cent of Japan’s oil imports in 2005, says the report.

Source: Khaleej Times