Travel and Tourism

Dubai makes the world's top 10

Dubai is expected to leapfrog New York, Rome and Barcelona in numbers of arrivals this year, according to a new study from MasterCard.

Gregor Stuart Hunter

June 07, 2011

Dubai is expected to be among the world's top 10 cities for business and tourism arrivals this year, beating traditional destinations such as Rome and New York, according to MasterCard Worldwide.

In the credit card company's inaugural Index of Global Destination Cities, Dubai ranked as the leading destination in the Middle East with 7.9 million visitors. Abu Dhabi came in sixth place for the Middle East and Africa.

Dubai is also expected to attract the greatest expenditure from travellers in the region at US$7.8 billion (Dh28.64bn), a rise of 24 per cent on last year.

"Dubai really doesn't have a close competitor today [in the Middle East]," said Dr Yuwa Hedrick-Wong, global economic adviser for MasterCard Worldwide. "And Dubai is very important as an origin city itself for many of the other regional cities."

MasterCard compiled its index by analysing arrivals and subtracting returning residents and transit passengers. London topped the list, followed by Paris and Bangkok.

Among US cities, only New York featured in the top 20 for visitors, although it ranked second worldwide for traveller spending.

Dubai is expected to attract many more new arrivals, with a 17.3 per cent increase in travellers between last year and this year.

Visitor numbers to Abu Dhabi are expected to grow by 15.5 per cent this year, with travellers from Manchester expected to surge by 46.2 per cent.

The English city is expected to become the ninth-ranking departure spot for visitors to Abu Dhabi, some of which can be attributed to its links with the football club Manchester City. Creating such links are key factors for cities looking to put themselves on the world map, Dr Hedrick-Wong added.

"The soft connection is crucial," he said.

For travellers from Beijing, who account for Dubai's third-largest source of visitors, the emirate is not only the easiest place in the UAE to visit, but also provides a taste of the region without having to visit the entire Middle East, Dr Hedrick-Wong added.

Europe’s rearming plan
  • Suspend strict budget rules to allow member countries to step up defence spending
  • Create new "instrument" providing €150 billion of loans to member countries for defence investment
  • Use the existing EU budget to direct more funds towards defence-related investment
  • Engage the bloc's European Investment Bank to drop limits on lending to defence firms
  • Create a savings and investments union to help companies access capital

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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.”

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