Economy

Tourism

“Anticipated Surge in Short-Term Rental Demand as GCC Unveils Unified Tourist Visa

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Title: “Unified GCC Tourist Visa Fuels Surge in Demand for Short-Term Rentals in the UAE” However, industry experts anticipate that the largest beneficiary of the unified GCC tourist visa will be the short-term rental segment in the UAE, particularly in Dubai. This sector is expected to experience significant demand due to the abundance of options available to tourists compared to other cities and countries in the region. Dubai Tourism’s latest figures reveal a substantial increase in visitors to the emirate, reaching 12.4 million between January and September 2023, a notable 97% surge from 2022 and 2021. The consistent growth in tourist traffic since 2020, coupled with the introduction of the unified GCC tourist visa, is poised to encourage travelers to explore multiple GCC cities, positively impacting the short-term rental and holiday home market in the UAE. Driven by escalating demand and prices for short-term rental properties, global and local platforms like Airbnb, dubizzle, BlueGround, HomesGetaway, among others, are expected to witness significant increases in new listings in the coming years. Fibha Ahmed, sales director at dubizzle, expressed enthusiasm about the unified GCC tourist visa, likening its potential impact to the Schengen visa in Europe. She anticipates that tourists from other GCC nations may explore various cities within the UAE, including Dubai, resulting in a more even distribution of tourists and influencing short-term rental markets beyond traditional hubs. Dubizzle has recorded a 25% surge in short-term rental listings in the UAE in 2023, with a notable 26% increase specifically in Dubai, indicating a promising trend in the market. The introduction of the new visa is also expected to intensify competition and influence pricing strategies. With an anticipated influx of tourists, short-term rentals may experience higher occupancy rates, leading to potential benefits for property owners and rental platforms. Increased tourism spending on dining, entertainment, and related activities is expected to contribute positively to the local economy, influencing the real estate and rental markets. Depending on demand levels, property owners may adjust rental prices to capitalize on increased tourist arrivals, according to Ahmed. Farooq Syed, CEO of Springfield Properties in Dubai, noted the abundance of short-term rental options available in the UAE, particularly in Dubai, catering to varied traveler preferences. He believes that the GCC tourist visa promises a positive outlook, anticipating a surge in demand for short-term rentals. Short-term rentals have already proven to be a preferred choice for many visitors to the UAE, offering a “home away from home” experience. Syed expects a notable increase in short-term rental rates, particularly during peak tourist seasons and in sought-after locations. The convenience and accessibility offered by the unified GCC tourist visa are likely to attract more tourists to the UAE and Dubai, leading to a surge in demand for short-term rental properties. Property owners and operators may adjust rates, potentially yielding higher investment returns, with the extent of the increase varying based on individual property characteristics, location, and the broader economic landscape.

Tech

Title: “UAE’s Strategic Investment in Generative AI Paves the Way for Sector Development”

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Title: “UAE’s Strategic Investment in Artificial Intelligence: A Profound Vision for Growth” Amit Joshi, Professor of AI, Analytics, and Marketing Strategy at IMD, emphasized the UAE’s significant investment in artificial intelligence (AI) and generative artificial intelligence (GenAI) during a session at the World Economic Forum – Davos 2024. He commended the UAE’s commitment to fostering an environment conducive to AI’s growth and maximizing its benefits across various sectors. Professor Joshi highlighted that the current conditions in the UAE provide an ideal foundation for advancing progress in the AI sector, building on existing investments and policy developments. He stressed the importance of educating senior leaders in both the public and private sectors on the basics of AI and Generative AI, advocating for a policy framework that encourages experimentation while establishing sensible boundaries. “The UAE has already shown vision and thought leadership in investing in GenAI. To maximize this opportunity, it should ensure that senior leaders from both the public and private sector are educated on the basics of AI and Generative AI, and make sure that AI policy allows for experimentation while also setting common-sense boundaries,” said Amit Joshi. Emphasizing the significance of training senior leaders, Joshi underscored the need for a comprehensive understanding of Generative AI, its capabilities, and potential applications to enhance innovation in all sectors. The UAE’s Strategy for Artificial Intelligence aims to elevate government performance, establish a smart digital system, position the UAE as a leader in AI investments, and create new markets with high economic value. As part of its initiatives, the UAE launched the ‘Generative AI’ guide, offering insights into the applications of Generative AI in diverse fields such as education, healthcare, media, and advanced sciences. The guide delves into the challenges and opportunities of various digital technologies, emphasizing data privacy and providing practical recommendations for effective management. Featuring 100 use-cases and applications, the guide serves as a valuable resource for individuals ranging from new business owners and students to job seekers, offering practical insights into AI. Generative AI, a subset of AI, involves training machines to generate original data, including images, music, text, and videos, thereby contributing to innovative content creation beyond traditional AI capabilities.

Tech

Heading: “Beyond the Skyline: Key Milestones in UAE’s Space Exploration Journey”

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Title: “UAE’s Stratospheric Rise: Key Milestones in the Nation’s Space Exploration Odyssey” In recent years, the UAE has emerged as a trailblazer in Arab space exploration, showcasing a unique blend of ambition and innovation that has propelled the nation into the celestial spotlight. With groundbreaking achievements and ambitious projects, the UAE has not merely gazed at the stars but reached out to touch them, solidifying its position as a leader in space exploration. The nation’s commitment to pushing the boundaries of human knowledge and technology is evident through the establishment of various centers and entities dedicated to the research and development of space sciences. The Mohammed Bin Rashid Space Centre, formerly known as the Emirates Institution for Advanced Science & Technology, was founded in 2006, playing a pivotal role in space satellite projects like the Emirates Mars Mission. In 2014, the UAE took a significant step by establishing the UAE Space Agency (UAESA) under Federal Law by Decree No. 1 of 2014, overseeing and managing the nation’s space sector while contributing to the national economy. Curious about the remarkable accomplishments of this Arab nation? Here are the major milestones in the UAE’s extraordinary space journey: 2000 – ThurayaSATs:The UAE’s entry into space commenced with the launch of Thuraya-1 on October 21, 2000, marking the first geostationary satellite owned and operated by an Arab country. Serving as a communications satellite, it significantly enhanced telecommunication services across the Middle East, North Africa, Europe, and parts of Asia. Thuraya-2 (2003) and Thuraya-3 (2008) expanded coverage, with Thuraya-4 set to launch in 2024. 2009 – DubaiSATs:On July 29, 2009, DubaiSAT-1 was launched, marking the UAE’s venture into Earth observation satellites. Developed by the Emirates Institution for Advanced Science and Technology (MBRSC), it provided high-resolution satellite imagery for applications such as urban planning and disaster management. DubaiSAT-2 (2013) continued this mission. 2011 – Al Yah Satellites:In 2011, Al Yah Satellite Communications Company (Yahsat) launched its first satellite, Al Yah 1, designed for government applications and broadcasting high-quality free-to-air TV channels. Subsequent satellites, Al Yah 2 (2012) and Al Yah 3 (2018), further expanded Yahsat’s capabilities. 2014 – Establishment of UAE Space Agency:Under Federal Law by Decree No. 1 of 2014, the UAE Space Agency was established, signifying the nation’s commitment to advancing space exploration and technology. The agency plays a crucial role in promoting peaceful space research applications, enhancing national capabilities, and contributing to economic growth. The UAE’s space odyssey continues to unfold, with these milestones representing just a glimpse of the nation’s remarkable journey beyond the Earth’s atmosphere.

Tax News

UAE Ministry of Finance Revamps Corporate Tax Regulations for Free Zones

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Dubai: The UAE Ministry of Finance has introduced significant changes with the issuance of Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 265 of 2023. These decisions specifically impact qualifying income and activities within free zones. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, emphasized the vital role of free zones in the UAE’s economic growth and their significance in attracting foreign direct investment. The decisions underscore the UAE’s commitment to aligning with international taxation standards and enhancing the competitiveness of its Corporate Tax regime. Cabinet Decision No. 100 broadens the definition of Qualifying Income to encompass income derived from the ownership or exploitation of Qualifying Intellectual Property. This aligns with the OECD’s modified nexus approach, detailed in Ministerial Decision No. 265 of 2023. Ministerial Decision No. 265 designates the trading of Qualifying Commodities as a Qualifying Activity, qualifying for a 0% corporate tax rate for income generated from the physical trading of various commodities on recognized stock exchanges. It also includes derivative trading income utilized for risk hedging in such trading activities. Moreover, the Ministerial Decision provides clarity on the scope of Qualifying and Excluded Activities, offering transparency to businesses operating within free zones. The decisions aim to maintain a competitive Corporate Tax regime, reinforcing the UAE’s position as a global hub for business and investment, and align with its sustainable development agenda.

Tax News

Can Non-Residents Engaged in UAE Business Activities Be Subject to Corporate Tax?

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In March, we emphasized the need to distinguish between UAE’s tax residency regulations and being deemed a ‘resident person’ for corporate tax purposes. Contrary to the misconception that an individual is exempt from UAE corporate tax without a primary or permanent residence in the UAE or staying less than 90 days, the Federal Tax Authority clarified that physical residence, whether by citizenship or residency visa, is not the criterion for determining corporate tax residency or taxability. Individuals engaging in a ‘business’ or ‘business activity’ in the UAE are considered ‘resident persons’ and subject to taxation, provided their turnover exceeds Dh1 million annually. The accuracy of immigration status, visas, work permits, and business licenses does not affect tax implications. The scope extends beyond ‘business’ to include ‘business activity,’ potentially triggering corporate tax liability. ‘Business’ encompasses any regular, independent activity, such as industrial, commercial, or vocational activities, while ‘business activity’ considers short-term activities conducted in the UAE. Determining factors include the location of individuals contributing to services or assets supporting service rendering in the UAE. For instance, a person regularly providing architectural services in the UAE is considered a ‘resident person’ subject to the Dh1 million threshold. Overseas individuals, including performers, sportspersons, and celebrities, need to assess whether their activities constitute a ‘business activity’ in the UAE, potentially obligating them to corporate tax compliance. Tax treaties with other countries may influence tax obligations. Where overseas individuals are not engaged in a ‘business activity,’ their UAE-sourced income might be subject to withholding tax. The current withholding tax rate is 0%. The guide clarifies that certain activities, like raffle winnings or game show prizes, are not typically considered ‘business’ or ‘business activity.’ However, sports personalities earning income in other countries often encounter similar tax considerations on winnings. Resident individuals engaged in independent business activities, such as doctors, artists, or social media influencers, should assess tax implications. Golden Visa holders earning income other than wages or investment income need special attention. Individuals and professionals should be aware of their tax obligations, seeking timely consultations for a smooth transition into the tax era with confidence.

Retail

Yusuffali Attends First Event Since Chopper Crash, Inaugurates New Outlet

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Businessman Yusuffali M.A. marked his return to public events after a helicopter crash as LuLu Group inaugurated a hypermarket in Ajman. Fully recovered from spine surgery following the April accident, Yusuffali emphasized LuLu Group’s dedication to the UAE’s progress, stating that the opening of the 212th hypermarket, the third in Ajman, demonstrated their commitment despite pandemic challenges. Sheikh Mohammed bin Abdullah Al Nuaimi, Chairman of Ajman Ports and Customs, praised Yusuffali and LuLu Group’s resilience, foreseeing their contribution to the UAE’s recovery and growth. The 70,000-square feet facility in Nuaimia, a full-fledged supermarket and department store, reflects LuLu Group’s ongoing investment in the UAE’s future amid post-pandemic rebuilding efforts. Yusuffali affirmed the group’s commitment to supporting the UAE’s vision and being an integral part of its progress.

Retail

Consumer Confidence in the UAE on the Rise Amidst Sustained Economic Recovery

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In the second quarter of 2021, the UAE retail sector witnessed a 4% surge in consumer spending compared to the first quarter, according to Majid Al Futtaim’s State of the UAE Retail Economy Report. This growth surpasses the corresponding quarterly increase of 3% in 2019. The report indicates the continuation of retail recovery from the first quarter of 2021, with consumers displaying cautious optimism about the future. The prevailing sentiment in the UAE retail market during Q2 2021 is characterized by cautious optimism, bolstered by steady economic recovery. The success of the UAE’s response measures and vaccination program is expected to further enhance positive sentiment and resilience. The data underscores the permanence of e-commerce, with a 17% overall increase in e-commerce sales in H1 2021 compared to H1 2020. Despite a 3% dip in consumer spending in H1 2021 compared to H1 2019, sectors most affected by lockdowns, such as leisure, entertainment, fashion, and hyper/supermarkets, experienced the bulk of the decline. Leisure and entertainment spending, for instance, saw a 51% decrease in H1 2021. Alain Bejjani, CEO of Majid Al Futtaim – Holding, noted positive trends in the UAE retail economy over the past six months, with significant progress in some sectors returning to pre-pandemic levels. Cautious optimism is attributed to robust vaccination measures by the UAE Government. Excluding the worst-hit sectors, there was a modest 0.3% increase in retail general categories between H1 2019 and H1 2021, signaling a potential return to pre-COVID-19 levels by the end of the year. Tourism trends are evolving, with fewer tourists but longer stays and increased spending. The average length of stay in the UAE rose from 3.5 nights in 2019 to 5 nights in 2021. Remote working has influenced growth in sectors like home furnishings, with an 18% increase, and books and stationery, with a 46% rise in H1 2021 compared to H1 2019. While fashion sales declined by 4.0% during the same period, other retail general categories, including food and beverage, electronics, home furnishings, and hotels, recorded a modest yet significant 0.3% increase between H1 2019 and H1 2021. The UAE retail economy, as depicted by POS data and mall footfall across multiple sources, indicates that consumer spending is approaching 2019 levels, with growth observed in May 2021. Looking forward, accelerated consumer expectations for omni-channel experiences, increased integration of digital and technology solutions, and anticipated recovery in tourism-related sectors, especially with the opening of Expo 2020, contribute to the optimism. The report highlights green shoots of sustainable growth, and Majid Al Futtaim expresses confidence in the UAE retail economy’s trajectory toward a complete recovery. In sectors like residential property, pent-up demand, exemplified by a 215% increase in residential property transactions in Dubai between May 2020 and May 2021, demonstrates the rebound after the relaxation of restrictions. Shoppers are showing increased comfort in public spaces, with 64% feeling at ease visiting shopping malls. Majid Al Futtaim’s malls witnessed an 11% increase in total footfall in Q2 2021 compared to Q1 2021. Non-mall retail destinations experienced a 3.0% increase in consumer spending in the second quarter of 2021 compared to the equivalent period pre-pandemic (Q2 2019). Food and beverage sales surged by 41%, and home furnishings recorded a 28% increase.

Retail

Lamborghini Achieves Milestone with Over 10,000 Vehicle Sales in 2023, CEO Announces

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Italian luxury sports carmaker Lamborghini achieved a historic milestone by selling over 10,000 vehicles in the past year, marking the first time in its history, according to Chairman and CEO Stephan Winkelmann. The success is attributed to the popularity of the Urus SUV, priced at over 230,000 euros ($250,000). Lamborghini, a subsidiary of Germany’s Volkswagen, witnessed an increase in deliveries from over 9,200 vehicles in 2022 to 10,112 sports cars and SUVs in 2023. The Urus played a significant role in the brand’s expanded output, driven by robust demand from affluent car enthusiasts. The company plans to introduce hybrid models in its lineup, with the Urus and a new car replacing the Huracan expected to go all-hybrid in 2024. The highest increase in deliveries occurred in the Europe, Middle East, and Africa (EMEA) region, with a 14% rise to nearly 4,000 vehicles, followed by a 9% increase in the Americas to 3,465 and a 4% growth in the Asia Pacific region to 2,660. Rival Ferrari, set to release 2023 data later this year, delivered more than 13,200 cars in 2022.

Property

Dubai Investments announces its inaugural international venture with a project in Angola.

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Dubai Investments has officially confirmed its first international project, set to take place in Angola, Africa. The venture, covering 2,000 hectares, is designed to mirror the success of Dubai Investments Park in Dubai. Encompassing residential, commercial, and industrial real estate, the project will integrate seamlessly across a 3-kilometer coastline and a 2-kilometer beachfront. Dubai Investments, trading at Dh2.36 on the Dubai Financial Market, will develop the infrastructure and lease land for the project, which includes plans for an 18-hole golf course and diverse housing options. The strategic location in Dande Municipality positions it 50 kilometers from Luanda, the capital, and 33 kilometers west of Caxito, the provincial capital. The project underscores Dubai Investments’ commitment to leveraging its expertise in constructing successful mixed-use developments globally, marking a strategic expansion into the African market.

Markets

In Dubai, the sales of homes priced at $10 million and above experienced a significant increase, nearing 100% throughout the year 2023.

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In Dubai, the luxury real estate market experienced a surge in sales of homes priced at $10 million and above, witnessing an impressive increase of over 92% in 2023, totaling 431 transactions. The year marked several record-breaking achievements in this high-end property segment, and the trend is expected to continue into 2024. Faisal Durrani, Partner and Head of Research for MENA at Knight Frank, emphasized Dubai’s position as the world’s most active $10 million-plus homes market. During the final quarter of 2023, the value of homes sold in this category increased by 28% year-on-year, highlighting the robust demand for the city’s most luxurious residences. Interestingly, city-wide listings above $10 million decreased by 8.9% in the same period, underscoring the scarcity of such properties. In the first nine months of 2023, Dubai outperformed its closest competitor, New York, by selling more than twice as many homes priced over $10 million. Dubai recorded 323 deals compared to New York’s 159. Developers responded to this demand surge by launching projects, including high-rises and communities, to cater to discerning buyers willing to make substantial investments. The international ultra-high-net-worth demand not only impacted the $10 million-plus market but also supercharged the $25 million-plus property market. The number of homes trading at this ultra-luxury level doubled in 2023 to 56 deals, totaling $2.3 billion. Palm Jumeirah emerged as the preferred choice for buyers in the $10 million-plus segment, with Jumeira Bay Island securing the second spot. Despite Palm Jumeirah having 9.5% fewer homes for sale in 2023 compared to 2022, its central location in New Dubai and prestigious ‘Blue Flag’ status added to its appeal among elite buyers seeking immediate access to the vibrant lifestyle offered by Dubai.

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