Dubai Cruise Terminal welcomes first ocean liners

Cruise ships from Germany were the first to arrive at the new Dubai Cruise Terminal this week to help lead the industry's fightback against the Covid-19 pandemic.

Twin cruise liners from German company Aida arrived at the huge 120,000 square-metre construction in the heart of Dubai, built to moor some of the largest passenger vessels in the world.

Nestled between the Bluewater island development and The Palm Jumeirah, one of the emirate’s most eagerly awaited mega-projects is almost ready for action.

The 300-metre Aidaprima ocean liner – capable of carrying 3,300 passengers in luxurious comfort – and the smaller Aidavita vessel were the first two cruise ships to take part in a recent test run at the new terminal.

Before the pandemic, the cruise industry was the fastest growing in the travel sector.

Demand soared by 20.5 per cent in the last five years, taking the industry’s value close to $207 billion (Dh760.2bn) in annual global revenue, according to KPMG, with 270 vessels across more than 50 operators.

By mid-March, as international borders slammed shut to contain the coronavirus, hundreds of passengers around the world were forced to quarantine on stranded cruise ships before they could be repatriated.

As signs of life begin to return to global travel amid hopes of widespread international vaccination programmes, the cruise industry is preparing for lift-off.

Dubai Cruise Terminal’s location – close to the marina, the 250-metre Ain Dubai observation wheel and Jumeirah Beach Residences – promises a spectacular arrival for those on board.

Aida Cruises is now taking bookings for operations from Dubai between late November and mid-April 2022 and will offer seven-day trips to the Far East.

Although not yet fully open, the terminal promises to be one of the world’s busiest.

It aims to bolster Dubai’s reputation as a major tourism hub, three years on from the joint venture between developers Carnival Corporation and Shamal Holding.

A public unveiling of the project has twice been delayed owing to Covid-19.

The planned Dubai International Boat Show was first set to take place at the terminal last year, and again this year before both events were postponed. It is now scheduled for March, 2022.

Once open, the port will become the primary hub for Carnival Corporation’s transit operations in the region.

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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.”