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RESEARCH
DUBAI’S TRANSFORMATION AS A GLOBAL HUB
THE HUBREPORT 2018
32
OVERALL, DUBAI’S STATUS
AS A GLOBAL HUB WILL
CONTINUE TO STRENGTHEN
GIVEN ITS EXTENSIVE
CONNECTIVITY, STRONG
ECONOMIC PROSPECTS,
LOW TAX SYSTEM AND SAFE
HAVEN STATUS WHICH ARE
ALL UNDERPINNED BY WORLD
CLASS AMENITIES AND
INFRASTRUCTURE
Dubai’s transformation and development as a city over the last decade is certainly unmatched on a regional basis and arguably even on a global basis. In the 2015 edition of The Hub Report Knight Frank highlighted how Dubai had established its position as a regional hub; a juncture between East and West, with its economy centred on the growth in logistics, tourism, financial and business services – all encompassed within a luxurious lifestyle destination. Since then Dubai has long surpassed (figure 1) its regional peers and its global hub status, and the UAE’s, is now undisputable. To highlight this, Knight Frank has compared seven key global hub cities, across four sectors and a range of indicators to showcase Dubai’s global standing. INDUSTRIAL AND LOGISTICS As part of the UAE’s economic diversification plan (UAE Vision 2021) and Dubai’s Industrial Strategy 2030, the development of the industrial sector is seen as strategically important goal for the sustained long term success of economy. Over the 10 years to 2017 the sector recorded anaemic growth of 10.7% in Dubai compared to the Hong Kong (42.0%), Singapore (59.6%) and Shanghai (85.8%). To support the sector’s growth Dubai has invested heavily in transport and infrastructure improvements over these years, which as a result is now ranked the third best in the world. Dubai’s expected industry growth rate of 57.4% over the 10 years to 2027, is expected to
outpace those in our selected global hub cities.
FINANCIAL AND BUSINESS SERVICESThe domestic financial and business services sector grew 55.6% in the last decade with only Shanghai (114.3%) outperforming Dubai. Over this time period Dubai has seen itself become a recognised global financial centre; with The Dubai International Financial Centre recently being ranked among top 10 global financial centres in The Banker’s International Financial Centre rankings. These achievements are underpinned by a zero tax environment/ low rate of tax for financial and oil companies. Currently it takes just eight days to start a business which is marginally longer than the United States (six days) and the UK (five days), although it is four times more than Hong Kong’s figure. Finally the UAE has a well-regarded ease of doing business ranking, which has moved up from 26th to 21st out of 190 countries over the last year. Continuing developments in improving business legislations and a maturing market means that this score is likely to continue to improve.
HOSPITALITY In the hospitality sector, the total number of hotel room keys per person is significantly higher at 29.9 per 1,000 people in Dubai, compared to our selected hub cities. Although this is not a surprise given the disparity in populations between
Dubai and these cities. It does however highlight the number of keys which have been delivered over the last two years, at which point the figure was recorded at 27.9 and when Dubai had 200,000 fewer people. The surge in the number of keys delivered has primarily been driven by increasing demand, from both new and existing source markets. Dubai International Airport, the world’s largest airport by international traffic, recorded 83.7 million passengers in 2016, up 26% from 2014.
RESIDENTIAL Finally, in the residential sector, Dubai’s market has experienced a slowdown since 2015 with prime prices falling by 3.8% in the year to Q3 2017, among our selected cities only London (-4.6%) has seen greater price falls. We are seeing prices beginning to moderate is some prime areas, however, across submarkets where significant levels of supply are forecast to be delivered we are likely to see an increasingly fragmented market develop in terms of price performance. Despite this Dubai has remained attractive to investors and occupiers alike, in the 18 months to June 2017, 217 nationalities purchased real estate in Dubai.
Overall, Dubai’s status as a global hub will only continue to strengthen given its extensive connectivity, strong economic prospects, low tax system and safe haven status all underpinned by world class amenities and infrastructure..
THE HUB REPORT 2018 | RESEARCH
The Dubai Frame
KEY FINDINGS
DUBAI AND THE UAE’S REGIONAL COMPARISON – KEY INDICATORS
Indicator Dubai Rank of next highest GulfCooperation City or Country
Ease of doing business (Rank) 21st Bahrain - 66th
Number of days required to start a business 8 days Oman - 6 days
Sea Ports, output, in millions of twenty-foot equivalent unit
15.7 (Jebel Ali ) 7.6 (Saudi Arabia)
International passenger numbers (Millions) 83.7 (Dubai International Airport) 37 (Hamad International Airport - Qatar)
Source: Knight Frank Research
FIGURE 1
54
PRIME INDUSTRIAL RENTS (US$/SQ M/ANNUM)
THE HUB REPORT 2018 | RESEARCH
MANUFACTURING & LOGISTICS
INDUSTRIAL & LOGISTICS PROPERTY SECTOR
INDUSTRY GROSS VALUE ADDED % CHANGE, CONSTANT PRICE LOCAL CURRENCY QUALITY OF OVERALL TRANSPORT INFRASTRUCTURE, 2017-2018 (7=BEST)
INDUSTRY OUTPUT AS A PROPORTION OF TOTAL GDP, 2017 SEA PORTS, GLOBAL PORT OUTPUT, IN MILLIONS OF TWENTY-FOOT EQUIVALENT UNIT
AIR TRANSPORT, FREIGHT, (MILLION TON-KM, 2016)
Sources: Knight Frank Research, Oxford Economics
Sources: Knight Frank Research, Oxford Economics
Source: Knight Frank Research
Note: Industry consists of the extraction, manufacturing, utilities and construction sectors
Source: Knight Frank Research
Sources: Knight Frank Research, JOC, Ports Australia
Sources: Knight Frank Research, World Economic Forum2007-2017 2017-2027 (Forecast) Sources: Knight Frank Research, World Bank
Hon
g Ko
ng
Sing
apor
e
New
Yor
k
Lond
on
Paris
Sydn
ey
Duba
i
Shan
ghai
Shan
ghai
New
Yor
k
Duba
i
Hon
g Ko
ng
Sing
apor
e
Lond
on
Sydn
ey
Paris
4
1 2 3 4 5 6 7 8 9 10 11
32
1
7
5
9 108
6
11
ABU DHABIAUH - Abu Dhabi International Airport, DXB - Dubai International Airport, DWC - Al Maktoum International Airport (Dubai World Central)
Data is latest available, currency conversion used is as the average of Q3 2017 period
349
229
127 123 115 113 103 101DUBAI
100%
80%
60%
40%
20%
0%
-20%
Sydn
ey
Hon
g Ko
ng
Paris
Sing
apor
e
Lond
on New
Yor
k
Duba
i
Shan
ghai
Shanghai New York Hong Kong London Paris Sydney Dubai Singapore
4.9 5.2 5.5 5.7 6.0 6.6 6.6 6.9
Singapore
United Arab Emirates
Hong KongUnited States of America
FranceUnited Kingdom
Australia
China
Australia
France
United Kingdom
Singapore
Hong Kong
United Arab Emirates
China
United States
1,902
4,155
5,604
6,423
11,409
16,750
21,305
37,890
4.2% 7.3% 8.0% 11.6% 13.0% 15.2%
15.7 19
.6
30.9
37.1
2.3
4.1 6.3
N/A
20.0% 28.0%
ABU DHABI AND DUBAI OVERVIEWABU DHABI DUBAI
Location Khalifa Industrial Zone Abu Dhabi
(KIZAD)Abu Dhabi Airport
Free ZoneIndustrial City of
Abu DhabiMussafah Dubai Airport
Free ZoneDubai Maritime
CityAl Quoz Dubai Industrial
ParkJAFZA Jebel Ali
Industrial AreaDubai South
Established 2010 2006 2004 1998 1996 2007 1973 1997 1985 1995 2006
Status Free zone Free zone Non Free zone Non Free zone Free zone Non Free zone Non Free zone Non Free zone Free zone Free zone Non Free zone / Free zone
Total area (km2) 100 12 40 N/A 0.7 2.3 27 52 56 22 146
Average lease rate - warehouse (USD/m2/annum) 117 234 122 110 108 - 132 117 136 102 94 - 161 68 - 95 84
Time to airport
30 mins to both Abu Dhabi
International and Al Maktoum
International Airports
Located next to Abu Dhabi International
Airport
15 mins to Abu Dhabi
International Airport
17 mins Abu Dhabi
International Airport
Located next to Dubai
International Airport
35 minutes to Dubai
International Airport
25 minutes to Dubai
International Airport
15 minutes to Al Maktoum International
Airport
25 minutes to Al Maktoum International
Airport
15 minutes to Al Maktoum International
Airport
Located next to Al Maktoum International
Airport
76
FINANCIAL & BUSINESS SERVICES
OFFICE PROPERTY SECTOR
SingaporeHong Kong
United States of America United
Kingdom AustraliaUnited Arab
Emirates FranceChina
Dubai
Singapore Hong Kong
Shanghai Sydney
London
New York
413
429
432
457
475
476
501
521
528
557
579
752
Sources: Knight Frank Research, Oxford Economics
Source: Knight Frank Research
Sources: Knight Frank Research, Oxford Economics Sources: Knight Frank Research, World Bank
Sources: Knight Frank Research, World BankSource: The World Bank2007-2017 2017-2027 (Forecast)
Data is latest available, currency conversion used is as the average of Q3 2017 period
Note: A percentage of foreign banks and oil companies' income in the UAE is taxable, otherwise 0%.
Note: Central Business District rate
24% 30% 33% 34% 39% 39% 43% 48%Hong Kong
United Kingdom United States United Arab Emirates China
Singapore Australia France
Shanghai
Shan
ghai
Dubai
Duba
i
Sydney
Sydn
eySingapore
Sing
apor
e
Paris
Paris
London
Lond
on (W
est E
nd)
New York
New
Yor
k
Hon
g Ko
ng
Hong Kong
$532$751$757$843
$920
$1,444
$1,501
$2,499 1.7%
4.7%
4.9%
6.4%
3.1%
5.8%
12.3
%
14.0
% Dubai South
Dubai Investments Park
Barsha
Deira
Business Bay
TECOM C
Jumeirah Beach Road
Sheikh Zayed Road (West)
The Greens
Trade Centre District
JAFZA
Dubai Healthcare City
191
205
274
282
282
283
312
348
356
393
410
412
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
12
3
4
5
6
7 8
9
10
11
12
13
14
15
16
17
18
1920
21
22
2324
Bur Dubai
Marina
Dubai Media City
TECOM
Silicon Oasis
Downtown Jebel Ali
DAFZA
Sheikh Zayed Road (East)
Dubai Design District
Dubai Internet City
Downtown Burj Khalifa
DIFC
THE HUB REPORT 2018 | RESEARCH
FINANCIAL AND BUSINESS SERVICES, GROSS VALUE ADDED, % CHANGE
PRIME RENTS, Q3 2017 (US$/SQ M/ANNUM) PRIME VACANCY RATES, Q3 2017 INDICATIVE RENTS IN DUBAI, Q3 2017 (USD/SQ M/ANNUM)
FINANCIAL AND BUSINESS SERVICES AS A PORTION OF TOTAL GROSS VALUE ADDED (%)
TOTAL BUSINESS TAX RATE (% OF COMMERCIAL PROFITS) EASE OF DOING BUSINESS RANKINGS, 2018
DAYS REQUIRED TO START A BUSINESS, 2017
New York
Paris
Dubai
London
Sydney
Hong Kong
Singapore
Shanghai183.58%114.30%
97.50%35.39%
55.53%34.88%
43.18%45.03%
37.31%31.27%
29.35%55.93%
23.29%17.75%
14.29%25.21%
23days
2days
3days
5days
6days
3days
4days
United Arab Emirates
Hong KongSingapore China
United Kingdom
United States of America
Australia
France
16% 17% 20% 23%31%
44% 48%
62% 25
67
1421
3178
8days
Paris
98
5.3
TOURISM
HOSPITALITY SECTOR
Source: Knight Frank Research Source: Knight Frank Research
Source: Knight Frank Research Sources: Knight Frank Research, Mastercard Global Destinations Cities Index Source: Knight Frank Research Data only available for 5-star hotels
Data only available for 5-star hotelsIncludes hotels and serviced apartments 2015 data
New York
Paris
Shanghai
Dubai
London
Singapore
Sydney
New York
Hong Kong Shan
ghai
Hon
g Ko
ng
Paris
Sing
apor
e
Sydn
ey
Lond
on
Duba
i
New
Yor
k
70%
70%
77%
81%
84%
85%
86%
87%
THE HUB REPORT 2018 | RESEARCH
HOTEL KEYS PER 1,000 POPULATION, 2016
AVERAGE LENGTH OF STAY (NIGHTS), 2016 AVERAGE OCCUPANCY (%) AVERAGE DAILY RATE (US$)
INTERNATIONAL PASSENGER TRAFFIC (MILLIONS), 2016 MAJOR SOURCE MARKETS AND TOTAL NUMBER OF OVERNIGHT VISITORS (MILLIONS), 2016
41.9
58.7
59.1
65.9
66
70.5
75.7
83.7
Sydney Airport (SYD)
Singapore Changi Airport (SIN)
John F. Kennedy International Airport (JFK)
Charles de Gaulle Airport (CDG)
Shanghai Pudong International Airport (PVG)
Hong Kong International Airport (HKG)
Heathrow Airport (LHR)
Dubai International Airport (DXB)
29.9Dubai
17.6Paris
16.6London
13.1New York
11.4Singapore
10Hong Kong
7.9Sydney
1.3Shanghai
2.1Paris
3.6 7.4London
7.9Sydney
2.7Shanghai
3.3Hong Kong
3.4Singapore
Dubai
$165$165 $166 $174 $174
$192 $194$259
12Dubai
12.5Singapore
6.4Shanghai
8.8Hong Kong
3Sydney
18.7London
11.8New York
15.6Paris
Australia
Brazil
Canada
China
France
Germany
Hong Kong
India
Indonesia
Italy
Japan
Malaysia
New Zealand
Oman
Saudi Arabia
South Korea
Spain
Taiwan
United Kingdom United States of America
Data to year end March 2016 Top five visitor groups
1110
RESIDENTIAL PROPERTY SECTOR
LIFESTYLE
Hours of sunshine per year
Number of international schools
Average cost of a litre of petrol (US$)
Mercer quality of life ranking (2017)
Distance to the airport (km)
Source: Knight Frank Research Source: Knight Frank Research (Data as at Q3 2017)
Source: Knight Frank Research
Top marginal rate
Dub
ai 3,481
16
$0.46
74
10
Hon
g K
ong 1,936
150
$1.90
71
36
Lond
on 1,410
12
$1.62
40
24
New
Yor
k 2,535
9
$0.73
44
28Pa
ris 1,662
13
$1.17
38
5
Shan
ghai 1,978
17
$1.06
102
47
Sing
apor
e 2,022
11
$1.44
25
28
Sydn
ey 2,592
3
$0.80
10
8
THE HUB REPORT 2018 | RESEARCH
2.3% New York
13% 39.6%
-4.6% London
8% 45%
11.3% Paris
-2% 22.5%
-3.8% Dubai
14% 0%
5.6% Hong Kong
4% 15%14.9% Shanghai
83% 22.5%
11% Sydney
58% 22.5%
3.2% Singapore
0% 22.5%
5% year change Personal income tax
XX% City
XX% XX%
Prime residential price change, year on year to Q3 2017
HOW MANYSQUARE METRES DOESUS$1M BUY YOU?
Data as at 2016
41 sq m Singapore
49 sq m Sydney
56 sq m Shanghai
138 sq m Dubai
19 sq m Hong Kong25 sq m New York
28 sq m London
47 sq m Paris
PRIME GLOBAL CITIES INDEX
1312
THE HUB REPORT 2018 | RESEARCH
EDUCATIONPROGRAMME FOR INTERNATIONAL STUDENT ASSESSMENT (PISA) RESULTS, 2015 (MEAN SCORE)
FORECASTED GROWTH IN NURSERY & K-12 MARKET SEGMENT
QUALITY OF EDUCATION, 2015/2016 (7=BEST)QUALITY OF PRIMARY EDUCATION, 2015/2016 (7=BEST)
PRIMARY EDUCATION ENROLLMENT RATE, 2015/2016 TERTIARY EDUCATION ENROLLMENT RATE, 2015/2016
FORECASTED DEMAND OF STUDENT SEATS, DUBAI,
STUDENT ENROLLMENT- PRIVATE VS PUBLIC, DUBAI (2015/2016)
Source: World Economic Forum Competitiveness RankingsSource: OECD
Sources: Knight Frank Research, Oxford Economics
Source: KHDA
Source: World Economic Forum Competitiveness Rankings
Source: World Economic Forum Competitiveness Rankings
Source: World Economic Forum Competitiveness Rankings
Australia
2007 2012 2017 2022 2027
China France Hong Kong Singapore United Arab Emirates
MathematicsScienceReading
OECD Average
United Kingdom
United States
494 531
493 54
8 564
427 49
2
47051
0
518
495 523 55
6
437 50
9
496
503
494
499 527
535
434 49
8
497
490493493
Mathematics Science Reading
Population ages 0 to 19
Total populationAges 0 to 19 as percentage of total
Private sector Public sector
299,622
1,975,318
15%
18%
20% 20%19%
2,744,987 2,994,735 3,232,332 3,418,227
504,224 592,017 636,766 646,284
Chi
na
Fran
ce
Uni
ted
Stat
es
Aust
ralia
Uni
ted
King
dom
Hon
g Ko
ng
Uni
ted
Arab
Em
irate
s
Sing
apor
e
United Arab Emirates
China
France
United Kingdom
Hong Kong
Singapore
Australia
United States
4.3
Chi
na
Uni
ted
Stat
es
Uni
ted
King
dom
Fran
ce
Hon
g Ko
ng
Uni
ted
Arab
Em
irate
s
Aust
ralia
Sing
apor
e
6.15.45.45.04.94.94.9
4.2
5.0 5.2 5.3 5.3 5.5 5.5 6.1
93.7%Hong Kong
91.4%United States
91.2%United Arab Emirates
97.4%Australia
98.3%China
98.5%France
99.9%United Kingdom
100.0%Singapore
HISTORICAL GROWTH OF PUBLIC VS PRIVATE SCHOOLS, DUBAI
Sources: Dubai Statistics Center, KHDA 2015/2016 Source: KHDA Private sector Public sector
2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016
4.3%6-YEAR CAGR
0.3%6-YEAR CAGR
78
146 148153 158
169 173
7977 77 78
79
CURRICULA, DUBAI (2015/2016)
CURRICULUM PRIVATE SCHOOLS STUDENTS STUDENTS SHARE
UK 65 84,612 32%
Indian 32 78,716 30%
US 31 48,493 18%
Private MOE 11 14,353 5%
IB 11 15,161 6%
French 5 5,902 2%
Others 18 18,062 7%
TOTAL 173 265,299 100%
Source: Knight Frank Research, KHDA
60,000
DUBAI FOCUS
10%29,437
90%265,299
additional seats by 2020
16.8%
26.7%
58.3%
61.9%
66.8%
82.7%
86.3%
94.3%
1514
THE HUB REPORT 2018 | RESEARCH
HEALTHCARE
DUBAI HISTORICAL HEALTHCARE BED GROWTH FORECASTED GAP IN BEDS BY SPECIALTY
HEALTHCARE SPENDING AND RESOURCES, US$ OVERALL HEALTH RANKING, HEALTH & PRIMARY EDUCATION, 2015/2016 (7=BEST)
DOCTORS PER 1,000 PEOPLE (LATEST AVAILABLE)
HOSPITAL BEDS PER 1,000 PEOPLE (LATEST AVAILABLE)
MEDICAL TOURISM RANKING
Sources: OECD, World Bank
Sources: OECD, World Bank, WHO and Singapore Ministry of Health
Source: Dubai Health Authority Source: Dubai Health Authority
Source: Medical Tourism Index
Sources: OECD, World Bank, HealthFacts Hk 2017, Singstats 2017
Source: World Economic ForumAll data pertains to year 2016 (or the nearest year)
Excludes traditional / Chinese medicine practitioners
Private sector shows double digit growth and increasing market share
All data pertains to year 2015 (or the nearest year)
Chi
na
$733$1,611
$2,204$2,752
$4,193 $4,600
Uni
ted
Arab
Em
irate
s
Hon
g Ko
ng
Sing
apor
e
Uni
ted
King
dom
Fran
ce
Aust
ralia
Uni
ted
Stat
es
$9,892
$4,708
Dubai
Singapore
United Kingdom
United States
Australia
China
Hong Kong
France
Australia
China
France
Hong Kong
Singapore
Dubai
United Kingdom
United States
Chi
na
Hon
g Ko
ng
Sing
apor
e
Uni
ted
Stat
es
Uni
ted
King
dom
Fran
ce
Duba
i
Aust
ralia
1.9
1.8 1.9 2.3 2.6 2.8 3.3 3.4 3.5
2.52.62.8
3.8
3.95.3
6.1
3Singapore 12
Australia 17United
Kingdom 24France 26
Hong Kong 29United States 33
United Arab Emirates
6.8
6.5 6.56.4 6.4 6.3 6.3
40China
6.2
rank
Glo
bal
Des
tinat
ion
envi
ronm
ent
Med
ical
tour
ism
in
dust
ry
Qua
lity
of fa
cilit
ies
and
serv
ices
scor
e
rank
rank
rank
scor
e
scor
e
scor
eN/A
23
7.0
N/A
4
16
2
2
N/A
64.78
71.22
N/A
73.56
67.54
74.87
N/A
N/A
21
6
N/A
3
18
2
N/A
Gastroentorology and GI Surgery
Orthopedics and Trauma
Rehabilitation / LTC
Obstetrics and Gynecology
N/A
59.42
66.88
N/A
73.26
61.71
77.3
N/A
N/A
23
13
-
15
22
17
N/A
N/A
68.41
71.92
-
70.79
68.42
70.38
N/A
N/A
21
8
N/A
6
10
5
N/A
N/A
67.17
74.86
N/A
76.63
72.49
76.94
N/A
DUBAI OPPORTUNITY
2020 2025
2016201520142013
1,468 1,707 1,802 2,386 2,434
13.7%CAGR General surgery195 281
298 450
319 490
321 421
399 619
Ranking Score
2012
Important Notice© Knight Frank 2018 - This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears.
Knight Frank UAE Limited (Dubai Branch) Prime Star International Real Estate Brokers (PSIREB RERA ORN: 11964 trading as Knight Frank with registration number 653414. Our registered office is: 5th Floor, Building 2, Emaar Business Park, PO Box 487207, Dubai, UAE.
Knight Frank UAE Limited (Abu Dhabi Branch) is a foreign branch, with registration number 1189910. Our registered office is Unit 103, West Tower, Abu Dhabi Trade Center, Abu Dhabi, PO Box 105374, Abu Dhabi, UAE.
RESEARCHTaimur KhanSenior Analyst+971 56 4202 [email protected]
COMMERCIAL LEASING & AGENCY Matthew Dadd, MRICSPartner+971 56 6146 [email protected]
MENA PROJECT MARKETING & DUBAI PRIME RESIDENTIALMaria MorrisPartner+971 56 4542 [email protected]
HOSPITALITYAli ManzoorAssociate Partner+971 56 4202 [email protected]
EDUCATION & HEALTHCAREShehzad JamalPartner+971 56 4101 298 [email protected]
MEDIA & MARKETINGNicola MiltonHead of Middle East Marketing+971 56 6116 [email protected]
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