A positive new beginning awaits the United Arab Emirates (UAE) and Qatar as the latter’s three-year blockade comes to an end in 2021, indicating positive implications in the countries’ business relations.

Being the region’s distribution hub, the UAE’s reopening of borders for Qatar after its diplomatic crisis is expected to generate far-reaching and positive implications in terms of cross-border trade, investments, boost in travel and tourism, and further development of real estate which are key pillars of the UAE’s Gross Domestic Product (GDP).

The reopening of the air space between the two countries, home to half a dozen international airlines, is seen to generate more income for the aviation and tourism sectors of both nations. While accounted for only one percent of UAE visitors, Qataris represented high spending among consumers especially for luxury goods and hospitality services. The restoration of the countries’ relations is expected to greatly support the UAE’s retail and hotel sectors.

In real estate, the UAE has attracted capital from countries in the gulf region in the past for having the most developed market in the Gulf Cooperation Council (GCC). And in 2016, the Dubai Land Department (DLD) reported that the sum of real estate investment transactions for the said year exceeded AED 91 billion from 55,928 investors.

Investors particularly from Qatar and Kuwait cumulatively accounted for AED 2 billion worth of property transactions among a thousand Qatari investors, accounting them to the top 10 most active investors in Dubai’s residential market according to Dubai Land Department (DLD). Shops and offices in the UAE that provide stable source of income and good returns within the established areas of Dubai such as Downtown, the Palm Jumeirah, and Dubai Marina were also points of focus for these investors.

This data shows that with proper re-establishment of trust in business relations and without the impediment of diplomatic turmoil unlike before, these numbers could well be reached and breached considering the future events that will significantly boost UAE’s income generation.

In 2017, following the tumultuous diplomatic conflicts involving different countries that resulted in economic blockades including the UAE, a significant number of Qatari investors liquidated their entire portfolio at a discount of 10-15% below the market price before the initial two-week deadline to leave the UAE. The rest having unable to dispose of their assets during the blockade explored asset swap opportunities instead.

It is expected that former and upcoming Qatari investors will likely take time to gauge new UAE market opportunities this time, considering the investors’ limited time window to divest back in 2017. Business connections and diplomatic relations needs to be revamped and trust needs re-establishing in order to further strengthen Qatar’s root in the UAE market.  It is highly likely, however, that Qatari investment volumes will gradually increase over the coming year.

The perceived lower geopolitical risk and the expected boost in consumer and investor sentiment implies positive contributions in the economy especially this year ahead of significant events such as the Expo 2020 starting in October in Dubai and the 2022 FIFA World Cup in Doha.

Also, with the development and application of vaccines against the global pandemic in full roll this year, normalcy would slowly but surely enable the return of more business establishments and create more opportunities.

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