The UAE is booming despite turmoil in the surrounding area and a depressed oil price, and firms expect a further boost when sanctions against Iran are lifted. Senior Associate, Barry Greenberg discusses this in a panel.
What have been the highlights of 2015 so far for you and what sort of market trends do you think they reflect?
A big story is that, despite two factors that have been a drag on the UAE economy – the rapid decrease in the price of oil in 2014-15 and an oversupply of real estate units coming to market – the downside has been remarkably controlled. Unlike the boom and bust cycle we have seen in the past, commercial activity has continued and expanded, albeit at a much slower pace than in prior periods. This trend perhaps is a sign of a more diversified market that is not over-reliant on too few sectors. Given that the price of oil has been cut in half since mid 2014, the consequences could have been disastrous, but there has been no sign of any panic or any significant drawdown. In the long term, should oil remain at its current level, there may be structural changes in how regional governments budget and fund their activities, but given how oil prices fluctuate, this is speculative at this point.
The UAE’s economy has grown strongly in the last couple of years. Do you expect the ongoing turmoil in the wider Middle East region to have any impact on this, or on investor confidence in the UAE?
Short of a major regional war or the development of an active insurgency in the UAE, investor confidence is unlikely to be affected by recent turmoil in the wider region. The UAE has for the vast majority of its history as a Federal State avoided the internal strife and external conflict that has plagued other nations in the region. And despite many regional conflagrations over the last 35 years, including the Iran-Iraq War, the Gulf War of 1991, the US led invasion of Iraq in 2003 and its aftermath, and the Arab Spring events of 2011 and the continuing aftershocks, the UAE has continued to flourish. There is no reason to think that will not continue.
Looking at the legal market, a number of international firms have consolidated their presence in Dubai in preference to Abu Dhabi recently. What do you think is prompting this trend and do you expect it to continue?
This comes down to where business development prospects are stronger. Abu Dhabi, as the Federal capital of the UAE, has a very strong governmental presence. Any firm that looks to do significant business in that sector will want an Abu Dhabi office. Dubai remains the commercial hub of the UAE and the wider GCC region, with aspirations to become the commercial center of the greater MENA region and a gateway between east and west. With so many opportunities developing in Dubai in the commercial setting, law firms are simply looking to go where there are greater prospects for generating new business. There is no reason for this trend to reverse itself, unless Abu Dhabi seeks to become a stronger player in the commercial market, which could occur depending on the success of the new Abu Dhabi Global Market financial free zone.
What areas of growth are you predicting for the legal market in the next few months?
A big driver of growth in the short and medium term will be the lifting of sanctions against Iran. The UAE is a natural jumping off point to doing business in Iran, and with the anticipated lifting of international sanctions, it is expected that many international companies will seek to establish an Iranian presence. The UAE legal community is well situated to provide services to those companies looking to make inroads into the largely untapped Iranian markets. The new UAE Commercial Companies Law, and perhaps later this year, a new Insolvency Law, also will generate some activity as companies look to take advantage of each.
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|Title:||Special report: UAE is hot right now|