UAE makes headway with revival plan after oil slump
Since the financial crisis hit the global economy in 2008, UAE has made great progress towards minimising its dependency on hydrocarbons.
The country has successfully managed to diminish the influence of oil industry over the economy by bring down its contribution to GDP from 79 per cent in 1980, to only 30 per cent in 2014.
According to Ministry of Economy’s annual report, the country leaders have set a road map for post-oil strategies in 2016 with a major focus on human capital, economic diversification, knowledge, and innovation.
However, it is going to take a lot more effort and concentration on foreign ownership, investment, as well as private sector engagement, in order to reach the end of an area based on existing natural resources.
While the UAE government investments reached a record of AED34 billion in 2015, the foreign direct investment (FDI) has also increased roughly with 10 per cent year-on-year since 2011. As a direct result of the emirates’ constant endeavour to facilitate the business process, it has opened sectors that were once available only to government entities and encouraged transparency and regulated the real estate market over the time.
Real estate reforms
UAE’s real estate sector has been acclaimed as one of the pillars of the post-oil survival strategy to provide a diversified and socio-economic environment for property investors. The main focus is to create a less volatile environment for the real estate market that is highly sensitive to global economic shocks and prone to instability:
“New regulations affecting escrow accounts, land and property registration, strata law, the licensing of real estate activity and new fees will help support a better regulated market as they will improve transparency and help protect consumers as well as investors”, it showed in a report published by JLL MENA.
The real estate market is not the only sector that UAE should focus on, tourism and hospitality industry fall in the same category. According to Sultan bin Saeed Al Mansouri, the UAE’s Minister of Economy, the tourism sector will contribute with 5.4 per cent of GDP annually over the next 10 years to attain AED236.8bn by 2026.
While UAE is setting sail towards adopting a model of economic diversification, other countries are following. GCC countries, as well as members of the Commonwealth of Independent States (CIS) are looking up to the UAE as a trend-setter and an implementer of a successful paradigm, driving the economy away from one that solely based on oil revenues.