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Gulf Countries to Tap into Unconventional Investment Avenues to Strengthen Position on Global Business Map

GCC States Maintain Competitiveness Despite All Challenges

Countries of the region have had no specificity of investment over the past period, with several GCC states opting to focus on projects that yield more assured value, according to recent market research. World markets have witnessed myriad investment opportunities that are based on specific purpose planning, with Gulf nations adopting multiple approaches to circumvent losses resulting from adverse economic circumstances the region has faced. Such discretionary approaches have ultimately proved rewarding and helped these countries draw more global investments, particularly in areas of real estate.

In its weekly real estate report, Al Mazaya Holding stated that the growing heated competition between developed and emerging economies have made it difficult for all bar none to secure a share on local, regional and global markets. The report attributed this to the state of economic instability engulfing the world and the growing risks besetting the global investment environment, indicating that the focus on real estate and shares investments is an attempt to steer clear from investing in areas of energy, environment, IT and infrastructure where the governments of the region exercise full control, rendering it difficult for investors to forecast or determine potential returns and cash recovery cycles.

According to the report, real estate investments top Gulf investors’ favourites list of all types of investments, despite the state of uncertainty that loomed over the markets, eclipsing other investment platforms that only got minimal, insignificant portions of the markets. Investment in shares featured growingly high comparatively with the total value of real estate investments. The report pointed to the competitive edge enjoyed by the UAE realty market which tops the region’s list of the most attractive property markets, thanks to its investment-friendly regulations and environment, premium quality property, predictable profitability rates and highly developed infrastructure, which altogether represent a robust lever to improve the country’s competitive position in areas of real estate, globally and regionally.

The report highlighted a state of confusion and conflict in recent investment indicators due to existing unpredictable economic risks that have pushed individuals and institutions to opt for feasible investment opportunities that are easy to implement and predict. Commodity markets, especially metals and minerals, have experienced fluctuations and a severe state of unsteadiness, and were thus classified among unsafe investment options.

In the meantime, currency markets have shown high potential for growth, albeit still classified among the most risky options owing to the prevailing economic and financial fluctuations and the difficulty to predict a turnaround for the global economy. A fact which, the report said, makes it inevitable to continue to search for less risky investment opportunities that may be utilised if necessity arises, such as real estate and infrastructure investments.

The report mentioned that the healthcare sector in the region drew a big share of investments over the past 10 years due to the growing number of elderly people in the region and the consequential increasing health expenditure per capita. The GCC states’ ambitious plans to enhance their competitiveness and lead world countries in this field have sustained a long-term investment strategy in the healthcare industry, added the report.

Over the coming period, the healthcare sector may experience fair growth rates that can be reliable enough for the region’s countries to utilise as a catalyst for economic diversification should innovative approaches be adopted to give non-conventional investors access to medical care services. The report in this regard referred to available economic data purporting that the healthcare market in the region shall grow by as high as 78% by the year 2020 to reach a staggering value of $71 billion, with healthcare investments in areas of infrastructure and IT to top the list.

The report underlined the tendency among the region’s countries to tap into unconventional investment avenues over the coming few years, singling out on this score the IT sector by virtue of its significant role in the development of major economic platforms and in building real momentum by increasing exportable products. Recent data, according to the report, showed that the UAE has posted impressive results, with science and technology investments amounting to $80 billion in total value. These investments, which include renewable energy, civil aviation, aerospace-related enterprises and innovations, are conducive to concomitantly generate businesses in other sectors, consequently augmenting their contribution to the UAE GDP.

The report called upon the private sector to utilise government support for the industrial sector, which is aimed at raising its contribution to the region’s GDP from 10% to 25% by the year 2020. Industrial investments in different fields are expected to exceed $1 trillion, a staggering figure which is likely to provide growing economic impetus, create job opportunities in all sectors – primarily construction material and retail markets – and develop service-producing, finance and transportation sectors.

The report underlined the necessity of endorsing development-oriented laws, regulations and strategies to cope with the growing economic challenges regionally and globally, accelerating efforts to enable the industrial sector to play a greater role in sustaining the GCC countries’ competitiveness and production potential. The GCC states boast a lot of potential that enable them to make great strides in all domains, said the report, citing recent market research.

Conclusion

The report concluded that numerous signs point to a good year ahead, with the region’s economies expected to witness myriad investments opportunities that would yield returns better than those secured in 2016 that would help them rectify their circumstances and forge ahead with their economic diversification programmes. The unprecedented momentum expected for the region’s countries would create several direct and indirect investment opportunities for the private sector, which would increase profitability and enhance its contributions to the GDP.