The Italian car maker is expecting a double-digit increase in its earnings worldwide this year. Pawan Singh / The National
The Italian car maker is expecting a double-digit increase in its earnings worldwide this year. Pawan Singh / The National

Ferrari revs up in capital



MARANELLO // Ferrari is increasing its presence in the capital with the launch of the first Ferrari World theme park and the opening of a new showroom on the Corniche.

The Middle East is one of Ferrari's main growth areas. The company, whose luxury sports cars carry the famous prancing horse badge, last year achieved a 30 per cent increase in sales in the region on the previous year, despite a 5 per cent decrease globally.

This year, Ferrari is expecting a double-digit increase in its earnings worldwide. The car maker has a strong affiliation with the UAE via Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, having a 5 per cent stake. Etihad Airways is also a major sponsor of the Ferrari Formula One team. "Our dealer there is investing," said Enrico Galliera, the commercial and marketing director of Ferrari. "We have good expectations."

Al Tayer Motors is the official Ferrari dealer in the UAE. The existing Ferrari showroom near Maqta Bridge will be replaced by a new development that is expected to open by the end of the year. Mr Galliera said Ferrari limited its production runs to make sure demand exceeded supply and keep the brand exclusive. The cars are only made to order. It typically takes about a year from buying the car from a dealer to receiving the finished vehicle.

In newer markets, he said there was still much to be done to increase the understanding that each car was individually manufactured to specifications and could not simply be bought and driven away from the showroom on the same day. Last year Ferrari produced 6,250 cars. The world's first Ferrari World theme park is scheduled to open in Abu Dhabi on October 27. Ferrari said it had worked with the Abu Dhabi-based Aldar Properties, which is developing the theme park, to make sure its strict brand standards were adhered to.

"It's something that we believe will give a strong boost to the knowledge and awareness of the Ferrari brand, not only in the Middle East," said Mr Galliera. "If things go well, [Ferrari World] might be the first of others," said Stefano Lai, the Ferrari communications director. Ferrari has a presence in 57 countries and plans to start selling its cars in India early next year. At the Paris Motor Show last week the company unveiled its limited edition SA Aperta, which will cost more than €400,000 (Dh2 million) each. Only 80 will be produced and all had been sold before the show.

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Install an air filter in your home.

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Shower or bath after being outside.

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Stay indoors when conditions are particularly poor.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”