RESEARCH THE HUB REPORT 01 DUBAI S TRANSFORMATION AS A GLOBAL HUB
THE HUB REPORT 01 RESEARCH KEY FINDINGS 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 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 01 edition of The Hub Report Knight Frank highlighted how 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 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 s global standing. INDUSTRIAL AND LOGISTICS As part of the UAE s economic diversification plan (UAE Vision 01) and s Industrial Strategy 00, the development of the industrial sector is seen as strategically important goal for the sustained long term success of economy. Over the years to 01 the sector recorded anaemic growth of.% in compared to the (.0%), (9.%) and (.%). To support the sector s growth has invested heavily in transport and infrastructure improvements over these years, which as a result is now ranked the third best in the world. s expected industry growth rate of.% over the years to 0, is expected to outpace those in our selected global hub cities. FINANCIAL AND BUSINESS SERVICES The domestic financial and business services sector grew.% in the last decade with only (11.%) outperforming. Over this time period has seen itself become a recognised global financial centre; with The Financial Centre recently being ranked among top global financial centres in The Banker s 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 to start a business which is marginally longer than the States (six ) and the UK (five ), although it is four times more than Hong Kong s figure. Finally the UAE has a wellregarded ease of doing business ranking, which has moved up from th to 1st 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 9.9 per 1,000 people in, compared to our selected hub cities. Although this is not a surprise given the disparity in populations between 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.9 and when had 00,000 fewer people. The surge in the number of keys delivered has primarily been driven by increasing demand, from both new and existing source markets., the world s largest airport by international traffic, recorded. million passengers in 01, up % from 01. RESIDENTIAL Finally, in the residential sector, s market has experienced a slowdown since 01 with prime prices falling by.% in the year to Q 01, among our selected cities only (-.%) 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 has remained attractive to investors and occupiers alike, in the 1 months to June 01, 1 nationalities purchased real estate in. Overall, 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.. FIGURE 1 DUBAI AND THE UAE S REGIONAL COMPARISON KEY INDICATORS Indicator Ease of doing business (Rank) 1st Bahrain - th Number of required to start a business Oman - Sea Ports, output, in millions of twenty-foot equivalent unit Rank of next highest Gulf Cooperation City or Country 1. (Jebel Ali ). (Saudi Arabia) passenger numbers (Millions). ( ) (Hamad - Qatar) The Frame
THE HUB REPORT 01 RESEARCH MANUFACTURING & LOGISTICS INDUSTRY GROSS VALUE ADDED % CHANGE, CONSTANT PRICE LOCAL CURRENCY QUALITY OF OVERALL TRANSPORT INFRASTRUCTURE, 01-01 (=BEST) AIR TRANSPORT, FREIGHT, (MILLION TON-KM, 01) 1,90 0% 0% 0% 0% 0% 0% -0%.9...0 States..9.. Arab Arab States,1,0, 11,09 1,0 1,0,90 Sources: Knight Frank Research, Oxford Economics 00-01 01-0 (Forecast) Sources: Knight Frank Research, World Economic Forum Sources: Knight Frank Research, World Bank INDUSTRY OUTPUT AS A PROPORTION OF TOTAL GDP, 01 SEA PORTS, GLOBAL PORT OUTPUT, IN MILLIONS OF TWENTY-FOOT EQUIVALENT UNIT.%.%.0% 11.% 1.0% 1.% 0.0%.0%..1. 1. 19. 0.9.1 Sources: Knight Frank Research, Oxford Economics Note: Industry consists of the extraction, manufacturing, utilities and construction sectors Sources: Knight Frank Research, JOC, Ports INDUSTRIAL & LOGISTICS PROPERTY SECTOR ABU DHABI AND DUBAI OVERVIEW 1 9 11 ABU DHABI DUBAI PRIME INDUSTRIAL RENTS (US$/SQ M/ANNUM) 9 11 Location Khalifa Industrial Zone Abu Dhabi (KIZAD) Abu Dhabi Free Zone Industrial City of Abu Dhabi Mussafah Free Zone Maritime City Al Quoz Industrial Park JAFZA Jebel Ali Industrial Area Established 0 00 00 199 199 00 19 199 19 199 00 South Status Free zone Free zone Non Free zone Non Free zone Free zone Non Free zone Non Free zone Non Free zone Free zone Free zone Non Free zone / Free zone Total area (km) 0 1 0 0.. 1 9 9 1 DUBAI Average lease rate - warehouse (USD/m/annum) 11 1 1-1 11 1 9-11 - 9 1 1 11 11 1 ABU DHABI Time to airport 0 mins to both Abu Dhabi and Al Maktoum s Located next to Abu Dhabi 1 mins to Abu Dhabi 1 mins Abu Dhabi Located next to minutes to minutes to 1 minutes to Al Maktoum minutes to Al Maktoum 1 minutes to Al Maktoum Located next to Al Maktoum AUH - Abu Dhabi, DXB -, DWC - Al Maktoum ( World Central) Data is latest available, currency conversion used is as the average of Q 01 period
THE HUB REPORT 01 RESEARCH FINANCIAL & BUSINESS SERVICES FINANCIAL AND BUSINESS SERVICES, GROSS VALUE ADDED, % CHANGE FINANCIAL AND BUSINESS SERVICES AS A PORTION OF TOTAL GROSS VALUE ADDED (%) DAYS REQUIRED TO START A BUSINESS, 01 1.9%.1%.9% 1.% 9.%.9%.1% 1.% % 0% % % 9% 9% % % Sources: Knight Frank Research, Oxford Economics States Arab Sources: Knight Frank Research, World Bank.1%.0% TOTAL BUSINESS TAX RATE (% OF COMMERCIAL PROFITS) EASE OF DOING BUSINESS RANKINGS, 01.%.% 9.0%.9% 1.% 11.0% Sources: Knight Frank Research, Oxford Economics 00-01 01-0 (Forecast) 1% 1% Arab Source: The World Bank 0% % 1% % States of America % Note: A percentage of foreign banks and oil companies' income in the UAE is taxable, otherwise 0%. % States of America Sources: Knight Frank Research, World Bank 1 1 Arab 1 OFFICE PROPERTY SECTOR PRIME RENTS, Q 01 (US$/SQ M/ANNUM) PRIME VACANCY RATES, Q 01 INDICATIVE RENTS IN DUBAI, Q 01 (USD/SQ M/ANNUM) $,99 $1,01 $1, $90 $ $ $1 $ Data is latest available, currency conversion used is as the average of Q 01 period 1.%.1%.%.9%.%.% (West End) 1.% 1.0% Note: Central Business District rate 1 11 1 1 9 1 1 1 0 1 1 19 1 South Investments Park Barsha Deira Business Bay TECOM C Jumeirah Beach Road Sheikh Zayed Road (West) The Greens Trade Centre District JAFZA Healthcare City 1 9 11 1 191 0 1 9 1 Bur Marina Media City TECOM Silicon Oasis Downtown Jebel Ali 1 1 1 1 1 1 1 9 DAFZA 19 01 Sheikh Zayed Road (East) Design District Internet City Downtown Burj Khalifa DIFC 0 1 1 9
THE HUB REPORT 01 RESEARCH TOURISM HOTEL KEYS PER 1,000 POPULATION, 01 1.1 (SYD) 11. INTERNATIONAL PASSENGER TRAFFIC (MILLIONS), 01 1..9 1. 1. 1.9. Changi (SIN) John F. Kennedy (JFK) Pudong (PVG) 1 0. Heathrow (LHR). 11. 1. 1. 1.. (DXB) Data only available for -star hotels..9 Charles de Gaulle (CDG) 9.1 (HKG) 9.9 MAJOR SOURCE MARKETS AND TOTAL NUMBER OF OVERNIGHT VISITORS (MILLIONS), 01 Japan Brazil Malaysia Canada New Zealand Oman Saudi Arabia Germany South Korea Spain India Taiwan Indonesia Italy States of America. Sources: Knight Frank Research, Mastercard Global Destinations Cities Index Data to year end March 01 Top five visitor groups HOSPITALITY SECTOR 0%....9 Includes hotels and serviced apartments 01 data % 1% $1 $1 $1 $19 $9 % % % % $1 $1 $19 0%....1 AVERAGE DAILY RATE (US$) AVERAGE OCCUPANCY (%) AVERAGE LENGTH OF STAY (NIGHTS), 01 Data only available for -star hotels 9
THE HUB REPORT 01 RESEARCH RESIDENTIAL PROPERTY SECTOR PRIME GLOBAL CITIES INDEX.% 1% 9.% -.% % % 11.% -%.% -.% 1% 0%.% 0%.%.% % 1% 11% %.% 1.9% %.% HOW MANY SQUARE METRES DOES US$1M BUY YOU? 1 sq m sq m 9 sq m sq m sq m sq m 19 sq m 1 sq m XX% City Prime residential price change, year on year to Q 01 XX% XX% % year change Personal income tax Top marginal rate Data as at 01 (Data as at Q 01) LIFESTYLE Hours of sunshine per year Number of international schools Average cost of a litre of petrol (US$),1 1 $0. 1,9 $1.90 1, 1 $1., 9 $0. 1, 1 $1.1 1,9 1 $1.0,0 11 $1.,9 $0.0 Mercer quality of life ranking (01) 1 0 Distance to the airport (km) 11
THE HUB REPORT 01 RESEARCH EDUCATION PROGRAMME FOR INTERNATIONAL STUDENT ASSESSMENT (PISA) RESULTS, 01 (MEAN SCORE) QUALITY OF EDUCATION, 01/01 (=BEST) QUALITY OF PRIMARY EDUCATION, 01/01 (=BEST) 9 0 Source: OECD 1 1 9 9 9 99 Arab 9 09 9 0 9 9 States OECD Average Mathematics Science Reading 90 9 9 Mathematics Science Reading.0...... States Arab Source: World Economic Forum Competitiveness Rankings.1..9.9.9.0. States Arab Source: World Economic Forum Competitiveness Rankings..1 PRIMARY EDUCATION ENROLLMENT RATE, 01/01 TERTIARY EDUCATION ENROLLMENT RATE, 01/01 91.% Arab 91.% States 9.% 9.% 9.% 0.0% Arab 1.%.%.% 1.9%.%.% 9.% 99.9% States.% 9.% Source: World Economic Forum Competitiveness Rankings Source: World Economic Forum Competitiveness Rankings DUBAI FOCUS HISTORICAL GROWTH OF PUBLIC VS PRIVATE SCHOOLS, DUBAI CURRICULA, DUBAI (01/01) FORECASTED GROWTH IN NURSERY & K-1 MARKET SEGMENT STUDENT ENROLLMENT- PRIVATE VS PUBLIC, DUBAI (01/01) 1 1 1 1 19 1.% -YEAR CAGR CURRICULUM PRIVATE SCHOOLS STUDENTS STUDENTS SHARE UK,1 % Indian,1 0% 1% 1% 0% 0% 19% Source: KHDA 90%,99 Private sector % 9, Public sector 9 9 0/011 011/01 01/01 01/01 01/01 01/01 0.% -YEAR CAGR US 1,9 1% Private MOE 11 1, % IB 11 1,11 % French,90 % Others 1 1,0 % TOTAL 1,99 0% 1,9,1 99,,,9,99,,,,1, 0, 9,01,, 00 01 01 0 0 Population ages 0 to 19 FORECASTED DEMAND OF STUDENT SEATS, DUBAI, 0,000 additional seats by 00 Sources: Statistics Center, KHDA 01/01 Private sector Public sector Source: KHDA Sources: Knight Frank Research, Oxford Economics Total population Ages 0 to 19 as percentage of total, KHDA 1 1
THE HUB REPORT 01 RESEARCH HEALTHCARE HEALTHCARE SPENDING AND RESOURCES, US$ HOSPITAL BEDS PER 1,000 PEOPLE (LATEST AVAILABLE) OVERALL HEALTH RANKING, HEALTH & PRIMARY EDUCATION, 01/01 (=BEST) $ $1,11 Arab $,0 Hong Kong $, $,19 $,00 $,0 $9,9 States States 1.9.....9..1. 1 1 9 States Arab...... 0. Sources: OECD, World Bank All data pertains to year 01 (or the nearest year) Sources: OECD, World Bank, HealthFacts Hk 01, Singstats 01 All data pertains to year 01 (or the nearest year) Source: World Economic Forum Ranking Score DOCTORS PER 1,000 PEOPLE (LATEST AVAILABLE) MEDICAL TOURISM RANKING 1. 1.9...... States Sources: OECD, World Bank, WHO and Ministry of Health Excludes traditional / Chinese medicine practitioners States Source: Medical Tourism Index rank Global.0 1 score. 1.... Destination environment rank 1 1 score 9... 1.1. Medical tourism industry rank 1-1 1 score.1 1.9-0.9. 0. Quality of facilities and services rank 1 score.1...9.9 DUBAI OPPORTUNITY DUBAI HISTORICAL HEALTHCARE BED GROWTH FORECASTED GAP IN BEDS BY SPECIALTY CAGR 1.% 00 0 19 General surgery 1 9 Gastroentorology and GI Surgery 0 1, 1,0 1,0,, 19 Orthopedics and Trauma 90 1 Rehabilitation / LTC 1 01 01 01 01 01 99 Obstetrics and Gynecology 19 Source: Health Authority Private sector shows double digit growth and increasing market share Source: Health Authority 1 1
RESEARCH Taimur Khan Senior Analyst +91 0 1 taimur.khan@knightfrank.com COMMERCIAL LEASING & AGENCY Matthew Dadd, MRICS Partner +91 1 0 matthew.dadd@me.knightfrank.com MENA PROJECT MARKETING & DUBAI PRIME RESIDENTIAL Maria Morris Partner +91 9 maria.morris@me.knightfrank.com HOSPITALITY Ali Manzoor Associate Partner +91 0 1 ali.manzoor@me.knightfrank.com RECENT MARKET-LEADING RESEARCH PUBLICATIONS EDUCATION & HEALTHCARE Shehzad Jamal Partner +91 shehzad.jamal@me.knightfrank.com MEDIA & MARKETING Nicola Milton Head of Middle East Marketing +91 11 nicola.milton@me.knightfrank.com Office Report Q 01 Inside View 01 The World s Smartest City Abu Dhabi Office Market Review Q 01 UAE Hospitality Report 01 View 01/01 Private View 01 The Wealth Report 01 Knight Frank Research Reports are available at KnightFrank.com/Research Regional offices in: Global Cities 01 Botswana Kenya Malawi Nigeria Rwanda Saudi Arabia South Africa Tanzania UAE Uganda Zambia Zimbabwe Important Notice Knight Frank LLP 01 - 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 LLP 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 LLP 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 LLP to the form and content within which it appears. Knight Frank UAE Limited ( Branch) Prime Star Real Estate Brokers (PSIREB RERA ORN: 119 trading as Knight Frank with registration number 1. Our registered office is: th Floor, Building, Emaar Business Park, PO Box 0,, UAE. Knight Frank UAE Limited (Abu Dhabi Branch) is a foreign branch, with registration number 1199. Our registered office is Unit, West Tower, Abu Dhabi Trade Center, Abu Dhabi, PO Box, Abu Dhabi, UAE.