Dubai’s population is expected to bounce back in the second half of this year, according to leading business experts, who have cautioned against panic over the coronavirus-fuelled expat exodus from the last 12 months.
Figures revealed by S&P Global Ratings earlier this week showed that the emirate’s population dropped by 8.4 percent last year, the steepest decline in the Gulf region, as expatriate workers were forced to leave amid the economic upheaval caused by the Covid-19 pandemic.
Scott Livermore, ICAEW economic advisor and chief economist at Oxford Economics, told Arabian Business: “The important thing to remember is that the exodus is not because Dubai is closed or turning away from expats and, in fact, recent policy has shown that Dubai and the rest of the UAE see the important contribution expats make to the economy. This could mean expats end up playing a more important and sustained role in the economy than prior to the crisis.”
The drop in Dubai – the Middle East’s hub for business and tourism – compares with a four percent decline for the six-nation Gulf Cooperation Council, according to S&P estimates.
Livermore (pictured below) added that he believed expat numbers will rebound alongside economic growth – the UAE economy is expected to grow by around 2.5 percent this year according to a 2021 Global Investment Outlook Report published by First Abu Dhabi Bank (FAB), the country’s largest bank.
However, he admitted the population decline could impact neighbouring GCC countries in the near term, particularly in key sectors.
He said: “These include potential labour shortages in sectors such as hospitality in the recovery phase; weaker retail demand; heightened excess supply in real estate markets and continued downward pressure on prices and rents; and shortages and price pressures in provision of key personal and domestic services.”
Scott Cairns, managing director of Creation Business Consultants, told Arabian Business he expected Dubai’s population decline is likely to “taper off” towards the third quarter of the year.
He believed the loosening of restrictions in the United Kingdom, targeted at June 21, will see “a flurry” of expats moving and transferring their businesses to Dubai.
Cairns (pictured below) said: “With over 5,000 British companies operating in the UAE, we expect to see a steady increase in British companies in Q3.
“There is still demand to relocate to the UAE. The current clients we are in discussions with are looking forward to the opportunity to live in a sunnier, safe climate and relocate their families to Dubai.”
He added: “With the UK looking now to recoup some of the economic stimulus money they have expended over the last 12 months, there are obvious rumours regarding tax hikes in the country. “From a business perspective, many solopreneurs, entrepreneurs, and SME’s are looking towards living and operating in a zero percent corporate and personal tax jurisdiction. Within the UAE, the many available free zones offer affordable solutions for SME’s to move their business and families here and the ability to obtain residency.”
The emirate has introduced a series of reforms in recent months aimed at attracting expats to the city including the retirement visa, relaxing foreign ownership rules, implementing a remote working initiative and easing strict rules over co-habiting and alcohol consumption.
Cairns added: “One of the proactive initiatives of UAE’s response to attracting direct foreign investment include the full ownership for mainland companies. In the lead up to Expo 2020 we would expect to see the construction, retail, travel, and hospitality sector pick up at a greater rate.”
Hisham Farouk, CEO of Grant Thornton UAE, said Dubai is no different to other areas all over the world and pointed to London in the UK, which has seen its first population decline in decades. And while real estate and tourism may have been particularly hard hit by the pandemic, he said that “by no means does this mean that the market as a whole is on a decline”.
He told Arabian Business: “Sectors such as e-commerce and tech enabled companies are making a shift to the positive, which in turn will attract top talent. There are now fantastic government-led initiatives such as 100 percent ownership and citizenship which further encourages businesses to trade in and from Dubai. As a firm, we see a large number of acquisition and transactions which show positive activity in the market.”
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