A year to remember that some would rather forget

Looking back: Sectors in the UAE had a mixed year as the Arab Spring provided opportunities for some industries and challenges for others. The National's business reporters recall the highs and lows - with gallery.
James Cameron and James Murdoch at this year's Abu Dhabi Media Summit.
James Cameron and James Murdoch at this year's Abu Dhabi Media Summit.

Sectors in the UAE had a mixed year as the Arab Spring provided opportunities for some industries and challenges for others. Overall, though, 2011 has left most companies in the country in better shape than they were in last year. The National’s business reporters recall the highs and lows


The global economic landscape was dominated by two big worries this year: the European debt crisis and the fiscal deadlock in the US. Both concerns combined to put the brakes on growth in the developed world. A more pressing concern in the Middle East has been the spreading of unrest across Tunisia, Egypt, Bahrain, Yemen, Libya and Syria. An exodus of foreign investment, a slump in business activity, and a drain on government spending rocked the economies of affected countries. The UAE was spared the unrest, with its economy expected to expand by 3.3 per cent this year, according to the IMF. - Tom Arnold


This year was all about delivery for UAE developers who started projects at the peak of the market. In Abu Dhabi, the first towers were opened on Reem Island and more projects were completed on Raha Beach. To woo buyers, developers Sorouh and Aldar launched rent-to-own schemes, the first of their kind in the capital. In Dubai, more than 15,000 homes were completed, providing house-hunters with a variety of new choices. Rents and home prices continued to decline in both Abu Dhabi and Dubai as more supply came on line. But there were signs of stabilisation in some neighbourhoods, as buyers and renters sought out prime properties at newly affordable prices. - Kevin Brass


Two world events - the accident at Japan's Fukushima Daiichi nuclear plant and Libya's eight-month civil war - defined 2011. On the green front, the Emirates lined up the largest financing package for a regional renewables project for its Shams 1 solar plant. But alternative energy was not immune to the financial downturn, with Abu Dhabi's clean energy company Masdar cutting staff and changing its plans for a "carbon-neutral" city to "low carbon". - April Yee


One of the most recent and memorable headlines in the technology sector included the death of Apple's co-founder, Steve Jobs. Globally, his name was the ninth most popular search on Google this year. Earlier in the year, however, the Arab Spring became a significant catalyst for the industry by bolstering the popularity of social networking sites such as Facebook, Twitter and YouTube. New, strategic partnerships were formed, including one between Nokia and Microsoft in the smartphone space, while some of the most significant acquisitions included Google's purchase of Motorola Mobility and Skype's sale to Microsoft. - Neil Parmar


Moves to offer more financial support to small businesses in past years have been bolstered by efforts to give the sector additional structure this year. Banks continued to expand the range of products and services available for small and medium-sized enterprises (SMEs), while the government set new guidelines to help secure them more money. The nine principles of the corporate governance code are voluntary, but some new changes were forced on businesses. - Gillian Duncan


Many retailers across the Emirates have experienced their best year in 2011, as consumer confidence returned following the financial crisis and tourists flooded the country's malls. The overall retail market has grown for the first time since the global downturn, according to Euromonitor International, a research and information company. Corner shops in the capital, meanwhile, were told they must begin renovating their stores to the standard of large supermarket chains such as Lulu or Carrefour or face losing their licences to trade.- Rory Jones


Big orders and industry tie-ups were the highlights of Gulf commercial aviation during the year. Gulf carriers managed to navigate their way through headwinds posed by higher oil prices, the Arab Spring and - in the latter half of the year - a slowing global economy. Etihad Airways, Emirates Airline and Qatar Airways all booked multibillion-dollar orders for new aircraft to build their aircraft capacity in the mid to late part of the decade. Etihad also expanded its reach in Europe this month by paying US$95 million (Dh348.9m) to become the largest shareholder in Air Berlin, the continent's six-largest carrier. - Tom Arnold


One of the main factors affecting tourism in the region this year was the Arab Spring. While countries including Egypt and Syria experienced sharp declines in the number of tourists this year, the UAE benefited because it was considered a safe destination. In particular, there was a surge in the number of tourists from the GCC to Dubai and Abu Dhabi. Both emirates experienced growth in the number of hotel guests over last year. Abu Dhabi is forecast to have hosted about 2 million guests this year, up from 1.81 million last year. The UAE tourism sector is also attracting a far more diverse range of visitors, with Asian markets such as India and China growing strongly, helped by the fact that hotel rates have become much cheaper. - Rebecca Bundhun


A dramatic rescue of Dubai Bank, followed by a forced acquisition by Emirates NBD, underscored lingering doubts about the UAE's slow recovery this year from the financial crisis. Hidden debts swelled at Dubai Group and resolution of debt problems looked far off, while restructurings at Al Jaber Group caused a headache for lenders in the capital. Meanwhile, the Central Bank imposed new rules to rein in the freewheeling lending of the boom years and protect consumers from excessive fees. And investment banks battened down the hatch as the euro-zone's sovereign debt crisis raged, then withdrew staff from the Gulf as tens of thousands of job were cut. - Gregor Stuart Hunter


In short, a horrible year. Investors fled Middle Eastern stocks during the Arab Spring. About half of the UAE's brokerages went bust as volumes dwindled and investment banks scaled back equity research and sales teams. The UAE and Qatar failed to secure an upgrade to emerging-market status from the index provider MSCI not once, but twice. Draft rules on short-selling, securities lending and market-making may go some way towards reviving local trade. But a long-awaited merger of the UAE's bourses remained on the starting blocks. Tamweel's return to trading after a three-year absence was a lone bright spot. - Gregor Stuart Hunter


The Arab Spring prompted losses in advertising revenues in the key market of Egypt. Zubair Siddiqui, the managing director of the media agency UM Dubai, said Egypt's advertising market recovered, but there was still an overall decline over the year as a whole. "The real drops were close to 65 to 70 per cent in absolute numbers. It was devastating: Most agencies had to let go more than 50 per cent of their people. But then it came back, and the overall drop is anywhere between 25 and 30 per cent," he said. This prompted a wider malaise elsewhere in the region, with overall advertising revenues set to be flat or lower than last year. Despite this, there were new media launches, such as Read, the free newspaper distributed on the Dubai Metro. - Ben Flanagan


The telecommunications industry faced a tough year. Several regional companies focused on boosting revenues from data use, amid tighter competition on voice calls and the need for heavy investment in infrastructure. The majority of regional telecoms companies posted a negative performance during the year, according to Shuaa Capital. Etisalat faced a particularly tumultuous year. In March, it abandoned a US$12 billion (Dh44.08bn) bid for Zain Group. The company also pulled out of a bid for Syria's third mobile licence, and faced problems with its India operation. But as with other telecoms companies in the region, Etisalat is pinning its hopes on infrastructure investment: the company has invested Dh6bn in fibre-optic and 4G mobile networks. - Ben Flanagan

Sovereign wealth funds

SWFs and state-owned development vehicles in the Gulf had an active year despite stress in the global economy and the regional political tumult. Aabar Investments, owned by Abu Dhabi's International Petroleum Investment Company, made one of the biggest transactions of the year in May, when it put about US$1 billion (Dh3.67bn) into Glencore, the commodities giant. The Abu Dhabi Investment Authority, one of the world's biggest sovereign funds, also made a number of big deals, including buying a 9.9 per cent stake this month in Thames Water, the UK's biggest water utility. Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, spent the year building up its aerospace division and adding to its portfolio of assets. - Asa Fitch


The development of the UAE's industrial base continued apace this year, with major expansions announced by a pair of the sector's biggest players. Emirates Aluminium, a joint venture between Mubadala Development and Dubai's Dubal, said it would proceed with a US$3.8 billion (Dh13.95bn) second phase of construction set to increase the smelter's production capacity from about 750,000 tonnes of the metal year to 1.4 million tonnes. Emirates Steel, the country's biggest steel-maker, is also forging ahead with a $500 million expansion that it expects to complete next year. - Asa Fitch

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Published: December 27, 2011 04:00 AM


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