Real Estate
The business shall concentrate on constructing, renting, selling, and managing real estate.
Real estate is a booming business in Dubai. The demand for housing has continued unabated for many years. This is due to some positive factors like population growth, increase in incomes, availability of finance, buyers’ preferences, and future expectations (Dubai Chamber of Commerce & Industry 1).
The population of Dubai has been rising steadily since 1975 with cumulative annual growth rate (CAGR) of 6.9 percent. The estimated population of Dubai by 2010 was 1.845 million people. Therefore, on average, the number of people in Dubai increases by 0.108 million people per year. This figure shows that Dubai has massive investment opportunities for real estate developers because of the increasing number of people who need new residential units.
Dubai requires at least 43,233 housing units annually to accommodate its growing population. Therefore, investors must cater for employees in Dubai, investors, people attending events and conferences, business travellers, and people who visit for education and treatment reasons. Dubai’s GDP grew by CAGR of 13 percent between 2000 and 2006. At the same time, the real per capita income also increased by four percent during the same period. This growth in income in Dubai shows that the demand for housing units shall increase. Dubai Strategic Plan estimated that the country would achieve 11 percent GDP growth between 2007 and 2015. The growth in income is mainly in upper and middle classes, who are the main target market for real estate developers. According to Al Qamzi, the demand for housing units shall increase after 2012 due to the creation of jobs and increased economic activities among people in Dubai (McGinley 1).
Dubai has favourable costs and readily available financing for investors planning to venture into real estate. The cumulative monthly growth rate (CMGR) was 5.5 percent between 2005 and 2006. Financing options are available from both commercial banks and mortgage financing institutions at varying rates (banks charge between seven to eight percent while mortgage companies charge slightly higher than banks).
On the negative side, Masood Al Awar, the CEO of Tasweek notes that the real estate market in Dubai has not recovered from the negative effects of the global financial crunch. However, some parts of Dubai have maintained price stability since 2011. This price stability is also available in the residential segment. However, demands for office units declined by two percent due to low activities in key areas, such as Business Bay and the Dubai International Financial Centre (Awar 1).
Job agency for skilled labourers
This business shall provide skilled labourers from both local and overseas markets to employers in Dubai and other GCC countries.
For a long time, Dubai has depended on foreign skilled workers for running its economy. For instance, in 2011, Neil Parmar reported that there was a major concern due to shortage of skilled workers in Dubai despite the notable improvement in economic activities (Parmar 1). This means that an employment agency that focuses on supplying professional and skilled workers to Dubai shall curve a niche business opportunity. Before the global financial crisis of 2008, Dubai required about 250,000 skilled and professional workers annually to keep its economic growth rate. This was according to Manpower survey. According to labour market experts, Dubai has not been able to supply adequate professionals for its economic growth. Mr. Arkless notes that there is a talent shortage in the UAE. This is because of continuous diversification to other sectors like financial, logistics and information technology as opposed to the energy sector (Parmar 1).
The IMF showed that Dubai’s economy was gaining strength after the recession and the non-oil sector would grow by 3.25 percent in the year 2011. This implies that demands for low skilled workers are on the decline in the non-oil sector. Firms are now focusing on professionals with different sets of skills in various areas like health, engineering, finance, and other specialised areas. Experts have noted that the new job market in Dubai is utterly different, and workers must possess problem and organisational leadership skills.
Investors interested in starting a job agency in Dubai must acknowledge the government’s efforts to improve the situation. Dubai government offers discounted labour cards to “encourage the hiring of many skilled workers and Emiratis” (Parmar 1). However, agencies must formulate their strategies to enhance employment of professionals. Dubai Economic Council notes that Dubai and other GCC economies cannot thrive with low skilled employees for long because the effect of such productivity is negligible in a dynamic labour market (Dubai Economic Council 1).
Potential investors in the area of job agencies must also note the government’s regulation of the sector. For instance, in order to eliminate malpractices, only Emiratis shall operate labour agencies. Under such ordinance, the agency has two roles, which include mediating or recruiting employees and supplying them to firms or employers (Gobash 1). This law also requires that partners and signatories of the agency must be Emirati so that the agency can get a licence. The aim is to guarantee and protect rights of employees during and after recruitment.
Export of dates
This business shall concentrate on exporting dates to potential markets as well as selling dates to local consumers.
The Dubai Chamber of Commerce and Industry noted the highest export and re-export figures in history during 2011 (Basit 1). This shows that the export sector is the major driver of Dubai’s economic growth. Between 2010 and 2011, Dubai recorded a growth of 14.5 percent that represented Dh246 billion. Dubai exporters also explored new opportunities in countries like Ethiopia, Turkey, Brazil, Netherlands, and Australia.
For any aspiring investor, a date export business has boomed in Dubai in the recent past. According to date traders in Dubai, demands for dates are on the rise due to increasing populations. At the same time, date traders have come up with new ideas such as promotion, which has helped traders to export increased tons of dates to other countries (Ligaya 1). Date is also an important food during the month of Ramadan.
The UAE date export has grown by 507.3 percent between 1990 and 2005. This represents an average of 457.7 thousand tons during that period. At the same time, the country has increased the date production from 535.95 to 859.16 tons between 1999 and 2005. The average rate of production for the period was 749 thousand tons.
Date traders have seen opportunities in diversification. For instance, they want to explore new products from dates such as “date bars, date juices, and date energy drinks” (Ligaya 1). The aim of this approach is to make both local and export markets increase consumption of dates. According to Vivek Sharma, a date dealer at Bateel, his company recorded a growth of 20 percent. However, sales originated mainly from new stores in the local market.
A study by Elashry, Gheblawi, and Sherif concluded that Dubai had a massive potential to enhance date exports to other markets in the world (Elashry, Gheblawi and Sherif 123). However, price elasticity in the world markets posed a challenge to date dealers in Dubai. Therefore, date exporters and policymakers have to review import prices against competitors in other markets. Dubai has potential to increase date exports to “Indian, Sri Lankan, Indonesian, Pakistani, and Jordanian markets” (Elashry, Gheblawi and Sherif 123).
The Dubai Chamber of Commerce and Industry has streamlined and improved its services for exporters. The country has political stability, stable financial services, and favourable laws for exporters. These conditions provide a good foundation for exporters in Dubai.
Travel Packages
Some of the travel packages for new business may include tourism hospitality services like restaurants and hotels, tourism infrastructure in areas like events, shopping, sports, camel racing, festivals, and visits and tourism transportation services, which include air, road, and other preferred travel services.
Only airline companies and few travel agents focus on travel packages. This is a niche market for investors who can focus on inbound tourists’ travel packages.
The Dubai Chamber of Commerce and Industry showed that the tourism sector grew by an estimated average of 2.7 percent in the year 2011. The long-term forecast for the sector indicated that all activities related to tourism such as staying, spending, arrivals, and demands would increase in the year 2012 (Mashni 1). In addition, the year 2012 also recorded a good growth for the sector (Shaher 1; Rahman 1).
The report showed that most tourists (74.7 percent) used their money on leisure activities. About 25.3 percent of tourists were on business conferences and related activities (Rahman 1). Therefore, the travel package business should focus on where most tourists spend their money.
The business should focus on inbound travellers from long-established markets like Europe, Middle East, and Asian countries because they indicate strong growths. At the same time, the business must also consider emerging markets in Africa and Latin America. Though new markets contribute a small portion to inbound tourists’ numbers, this shall improve according to the forecast. UAE has also been successful in tourism campaigns, which have appealed to new markets.
A potential investor must acknowledge the presence of challenges in the tourism sector, which affect travel packages business. These include intense competitions from other markets and the need to provide a diverse range of packages for different segments of the tourism market. This ensures that Dubai shall attract tourists of all ages. There is also a challenge of collaboration within the tourism sector and with other stakeholders. There are also issues of short stay by some tourists.
Stakeholders must encourage tourists to stay for long so that tourists can increase spending habits to facilitate the growth of the sector. This can only happen when tourists find suitable travel packages. Therefore, tourism sector and travel packages have great potential for investors in Dubai. The government’s effort to attract new visitors from new markets shall also facilitate the growth of the sector. The business can also grow by establishing regional cooperation with other tourism agencies to position the travel package company as an ideal service provider for tourists from various segments of the market.
Works Cited
Awar, Masood Al. UAE real estate sector faces surplus and fluctuating demand in H1 2012 – Tasweek. 2012. Web.
Basit, Abdul. Dubai exports and re-exports hit record in 2011. 2012. Web.
Dubai Chamber of Commerce & Industry. “Demand Prospects of Dubai Real Estate.” The Economic Bulletin 4.34 (2007): 1-6. Print.
Dubai Economic Council. Labour Market in the UAE. 2010. Web.
Elashry, Mohamed, Mohamed Gheblawi and Sheri Sherif. “Analysis of Export Demand for United Arab Emirates’ Date in World Markets.” Bulgarian Journal of Agricultural Science 16.2 (2010): 123-134. Print.
Gobash, Saqr. Only nationals can run private labour agencies. 2011. Web.
Ligaya, Armina. Fruit of the desert makes its date with history. 2009. Web.
Mashni, Rima Ali Al. Dubai Chamber study indicates strong growth in the UAE’s tourism sector. 2012. Web.
McGinley, Shane. Dubai real estate demand to increase in 2012 – official. 2012. Web.
Parmar, Neil. Wanted: skilled workers for UAE. 2011. Web.
Rahman, Inayat. UAE tourism sector set for robust growth. 2012. Web.
Shaher, Shady. Dubai: Tourism up. 2012. Web.