Why international investors are drawn to the region recently?

Why international investors are drawn to the region recently?

Until recently, the region remained an untapped market despite the potential it offers. Lately, however, International investments have increased in the region, especially in the last few years. One key reason for increased investments is the expected economic growth in the region in the next few years and the governmental measures and efforts to support this growth! This growth varies from one country to another in terms of reasons and sources of growth. We will look at two of the main countries (UAE & KSA) to see how they are transforming their economy and attracting international investments.

One of the most important elements to understand the region’s transformation is to remember all its countries' efforts to depend on non-oil revenues. The UAE can give lessons in that, with a diversified economy that depends on trade, different industries, a rising tech industry that is benefiting from sites such as Dubai Internet City and Dubai Media City, and extends to vital sectors like AI, Robotics, space exploration, and the growth in tourism. The latter plays a significant role, due to the city of Dubai’s status as one of the world’s most popular touristic destinations.

But it doesn’t stop there, as Dubai is hosting Expo 2020, which will not only affect the tourism sector, but construction and real estate sectors as well, and has positive impacts on the short and long terms, with the projects’ contracts valued at 11 billion AED. As a result, the IMF forecasts that the UAE’s GDP will be on the rise, with about 4.5 trillion AED expected in non-oil trades and increasing government spending to reach 60 billion AED, and more than 27.3 million AED in direct foreign investments, as the economy is refreshing in general.

The Kingdom of Saudi Arabia is undergoing its own transformation as well, in many aspects. The Saudi economy, being one of the top 20 largest economies in the world, has largely depended on oil, enabling the country to finance social programs and its development.

 However, the country’s reliance on oil has slowed down its plans to diversify the economy and develop investment in the private sector. According to the numbers, non-oil GDP is below 50%, mainly due to KSA possessing 20% of the world’s oil reserves.

A key factor in changing that is Vision 2030, which has several ambitious targets to reach in the next decade. Moving the economy to reach the top 15 globally is on top of them, while there is also increasing the contribution of the private sector contribution to reach 65% of GDP, encouraging the foreign direct investment, raising the share of non-oil exports, and growing government revenue from non-oil sectors. Vision 2030 also aims to improve tourism’s role and raise the number of tourists and pilgrims to reach 30 million annually, and to raise assets in the Public Investment Fund.

These long-term plans in two of the leading countries in the region are working as supporting factors in turning investors toward the region. And while investors may turn to different sectors, the real estate market is always on the top of them, due to its unique nature and because of its guaranteed ROI and little risk, especially in UAE and Dubai, where the last few years have shown the sector’s ability to stabilize and adapt.

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