Investment Magnet Middle East to gather more Chinese and East Asian inflows

By Rahul Vaimal, Associate Editor
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Middle East
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The Middle East will receive more investments from China and other East Asian countries, opines industry experts as they discussed the evolving global industrial strategies at a webinar organized by Savills.

China has already invested nearly $71.1 billion in the Middle East as part of its Belt and Road Initiative (BRI) between 2014 and 2017 with Egypt being the largest recipient. The Belt and Road Initiative is a development strategy adopted by China in 2013 involving investment in nearly 70 countries and organizations and infrastructural developments.

The experts strongly believe that more investments in the Middle East can be expected from the BRI fund.

During the webinar titled Trade Wars and Risk, Murray Strang, Head of Savills Dubai said that “Trade wars could also impact how and where investments are made. Savills’ report shows how China now plays a significant role in the Gulf and North African regions.”

Murray Strang
Murray Strang
Head of Savills Dubai

“This investment trend from China and from far east Asian countries is expected to further increase in the region as they recognize the strong value of the market and its fundamentals. For instance, recent major deals completed in the UAE such as Amazon/Souq and Uber/Careem are a testament to the opportunities the market can offer.”

UAE was the largest recipient of FDI worth $14 billion in 2019 and the investments were majorly in the sector of oil and gas. The report suggests that this FDI shows a high growth margin compared to 2018.

Investments in Saudi Arabia also saw an increase of 7% in 2019 as the government took measures to make it investment-friendly and boosted economic diversification to fulfill its Saudi Vision 2030.

Saudi Vision 2030 is a holistic strategic framework to lessen the Kingdom’s dependence on oil, expand its economy, and develop public service sectors such as education, health, tourism, infrastructure and recreation.

Measures to develop a more favorable regulatory environment have been implemented by Oman, Bahrain and Egypt as well. Towards the same. Full foreign ownership of companies that are involved in oil and gas drilling has been permitted by Bahrain.

“The protectionist policies of the two biggest economies, the US and China, would disrupt global supply chains and lead to a less efficient allocation of global resources”. added Chief economist at Peninsula Real Estate Christopher Payne.

Mr. Payne added that “According to the IMF if threatened tariffs are fully implemented, we could see half a percentage point less global gross domestic product growth going forward.”

“But there are potential silver linings. Deglobalisation could fragment global supply chains in such a way as to increase cargo transportation, which could actually increase oil demand, offsetting the lower global growth’s impact. Also, trade wars could lead to dollar weakness, which could spur increased foreign investment into GCC real estate, particularly in the UAE”, Mr. Payne concluded.

UAE and China have enjoyed a steady relationship, with trade increasing over the years. Several concessions have been already granted to Chinese companies to develop Abu Dhabi’s oil fields.