Lebanese investment heads to Dubai, but not by choice

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Dubai's new tram moves out of a station at the Marina in Dubai on November 12, 2014. AFP/Marwan Naamani

Published Tuesday, November 18, 2014

Lebanese investment in Dubai is not new. Since "the rise of the emirate" years ago, the Lebanese private sector has had a marked presence in several economic sectors. What is new today is that investment in the United Arab Emirates (UAE), and Dubai in particular, is no longer an option. It has somewhat become "mandatory." Why?

Dubai – Due to the difficult economic and security situation in Lebanon, the lack of hope in achieving change in the foreseeable future, and the unstable business environment in the Arab world, Lebanese businesspeople and investors were left with no option but to find safe opportunities to offset some of the losses suffered by many economic sectors, namely the tourism sector in Lebanon. Therefore, the destination today is… Dubai.

In the UAE, many Lebanese businesspeople and investors talk about the high cost of investment for their projects, increased competition in the local market, and impeding legal and procedural challenges. However, they confirm that conditions are still much better than in Lebanon.

Recently, Iraq's Kurdistan region, the city of Erbil in particular, became the most desirable place for Lebanese investment in various sectors. However, the recent events in Iraq have had a negative effect in this regard, leading to a decline [in foreign investment] in favor of Dubai, which remains the most lenient in terms of the provision of facilities for foreign investment compared to the rest of the UAE.

Restaurants and cafés

The Mohammed bin Rashid Boulevard stretches along some 3 kilometers, and is located in the new Dubai city center adjacent to Burj Khalifa, the tallest building in the world. According to well-informed economic sources, this part of Dubai is today the most expensive investment hub in the world in terms of rental value and commercial terms and conditions. It is no coincidence that more than 11 Lebanese restaurants have opened in and around this street.

You can find Abdel Wahab restaurant, Café Najjar, Hallab and al-Baba sweet shops, and other well-known Lebanese chains like Em Sharif, Karam Beirut, Leila, Burj al-Hamam, Scoozi, al-Safadi, Napoletana, Zaatar w Zeit, and B2B. These Lebanese names can be seen across Dubai and have established a presence in the tourism sector.

The migration of the Lebanese private sector to the UAE, and especially Dubai, is a phenomenon that has grown in the last three years. The reasons are many, most notably that Dubai – compared to other countries like Saudi Arabia, Qatar, and Kuwait countries – still enjoys the most suitable and stable investment environment. Another reason is that the deteriorating economic and security situation in Lebanon, and the accumulation of problems which have only grown in the last three years have forced Lebanese businesspeople and investors towards "economic migration" in the direction of Dubai.

Lebanese investment first

According to informed economic sources, most Lebanese investments in Dubai are concentrated in the real estate sector, followed by the tourism and recreation sectors, then the commercial, services, and software sectors, in addition to a minor presence in the manufacturing sector.

According to a report recently released by the Dubai Land Department (DLD) for the first quarter of 2014, Lebanese investments in the real estate sector in Dubai ranked first among Arab countries. More than 180 Lebanese businesspeople invested more than $274 million in this sector, followed by Jordanian investment. Indian investment used to rank first among foreign investments in the emirate.

Among the citizens of the "Arab Spring” countries, Egyptians ranked first in the real estate market in Dubai with investments exceeding $223 million, followed by the Syrians with investments amounting to around $174 million, and Yemenis with investments close to $70 million.

The Syrians compete

According to unofficial figures, the number of Syrians [currently residing] in the United Arab Emirates are estimated to have reached about 700,000, constituting the second largest expatriate community in the country after the Indian community, whose members are mostly concentrated in low-wage industries.

If these estimates are correct, the UAE will be the first Arab country in which the number of expatriates of a single Arab nationality would have exceeded the number of locals.

In Dubai today, you frequently meet Syrian businesspeople or investors who were forced to leave their country because of the situation there, and are thus looking for new investment opportunities. Economic sources say that most Syrian investments during the last three years were mainly concentrated in tourism, real estate, and the industrial sector. This is evident through the large number of Syrian restaurants and cafés that have recently opened their doors across Dubai. These have become the main competitor to Lebanese outlets in this sector.

As for tourism, many Syrian industrialists (especially from Aleppo) have transferred their capital and expertise to the United Arab Emirates after their factories were destroyed or stopped production. Today, a considerable number of Syrian factories established partnerships with local industrialists in the glass, leather, and plastic manufacturing industries.

It seems that it is the economic [golden] age of Dubai. The country’s quick exit from the financial crisis that gripped the country in 2008, the positive indicators recorded on different levels, and taking advantage of the ramifications of the "Arab Spring" are factors that have made the emirate today the most suitable opportunity for investment, at least in the foreseeable future.

The Lebanese private sector has caught up with the trend. Will there be a new trend in the near future? Many are wondering, but it doesn’t look like there are many options.

(Al-Akhbar)

This article is an edited translation from the Arabic Edition.

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