Explained: UK traffic light system for travel
The UAE is likely to secure new quarantine-free travel corridors with the EU and the US before it comes off Britain's red list, the head of Dubai Airports has said.
Paul Griffiths said he did not expect the UAE to be removed from the UK's red list when London reviews it on June 3.
The UK has recently recorded a spike in cases of 3,000 a day, linked to the Indian variant.
"The problem of course is that in the UK the situation is not looking great," Mr Griffiths told CNN.
"They were looking so well in containing the spread of Covid-19, but of course recently that situation seems to be rather more challenging.
"So I am not sure that the UK's going to change the status of the UAE.
"We're obviously anticipating something happening at some stage in the future, but I think for the time being that the corridor we've agreed with Italy is a very positive step."
As of Tuesday, June 1, passengers can travel between UAE and Italy as long as they are fully vaccinated or if they present a negative PCR test before boarding and take a rapid antigen swab test on landing.
Mr Griffiths predicted similar deals with other nations would follow.
"And as further steps emerge, perhaps with the EU as a whole and with the USA over the next few weeks, perhaps that'll give the UK government the courage and conviction to allow flights to restart between the UAE and the UK," he said.
"The UK is an incredibly important market with London the biggest air travel route between the UAE and the UK. So we're all very, very keen to get those discussions under way."
Vaccine passport could replace testing
The airport boss said the UAE was moving forward with a vaccine passport system that he said was probably the "long term solution to travel corridors opening up again".
"And if that's the case then those that have got inoculated with the approved vaccines for Europe will be allowed to enter EU countries," he said.
"And I know there's similar system under way in the US. And those digital systems should enable people to travel without having any problems at the airport.
"Of course testing works, but it does require quite a lot of capacity for testing at the arrival airport.
We are seeing markets such as Ethiopia, Croatia, Greece all surge to the front
"The vaccine passport system doesn't require a physical check so it's a more efficient way of travel."
Dubai International Airport recorded a 69 per cent slump in traffic in 2020 as global aviation was grounded.
Despite that, with 26 million passengers, it remained the busiest airport in the world.
With flights from India, Pakistan, Sri Lanka, Nepal and Bangladesh and other countries on hold, new destinations are now top of the charts.
"We are seeing markets such as Ethiopia, Croatia, Greece all surge to the front," he said.
"So it's unusual times and unusual traffic patterns, but we're hopeful that as soon as some of these major markets open up again, rather than being a trickle of recovery there will be a flood of demand.
"Because four billion people having been under lockdown over the last year are desperate to travel."
UAE vaccine campaign - in pictures
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.”
