The year 2021 will be considered as a year of recovery in Dubai & UAE. The world economy has suffered a major setback due to the COVID-19 pandemic and still, at the time of writing this article, many countries across the world are under lockdown. However, due to bold decisions and timely measures to curb the spread of panic caused by the pandemic by UAE Government, all businesses were back to operational by almost the beginning of May 2020, resulting in saving thousands of jobs and survival of the SME sectors and avoiding lasting damage on the economy and making sure continuity of businesses. The UAE Government had also opened international travel quickly, with appropriate precautions in place, making it easier for people to return to their homes and to unite with their families.
Dubai Government had moved swiftly to shift majority of Government services to be delivered digitally so that businesses can function seamlessly and during this time, Government had taken major decisions to implement Smart systems across all departments.
Pandemic has taught and almost forced people and businesses to conduct almost every function of life and business digitally. Technology has become the lifeline of businesses and Governments all across the world. Countries and companies more advanced with technology bounced back with more power and resilience.
Meanwhile, Expo 2020 in Dubai was also postponed due to COVID-19 and is now scheduled to take place in 2021. With such a big event around the corner, a huge influx of tourists is expected during the year. Massive preparations are ongoing at site of Expo 2020, to make the highly anticipated event a success, something Dubai is known for.
Dubai and UAE Government has made historical decisions on an international relationship front and opened trade relationship with Israel and Qatar. These moves will surely bring massive business opportunities and investments for businesses located in UAE.
Very recently, the UAE Government has announced to grant UAE Citizenship to expatriates, an unprecedented decision paving way for many individuals to make UAE a permanent home, for themselves, their families and future generations. This move will surely result in billions of dollars to be pumped into the economy and to be retained in UAE. This move will also result in increasing permanent population in UAE and decreasing floating population. This will result in increase in demand for all commodities and services necessary to support the livelihood of human beings.
Dubai was recently announced as third globally and second in Major Cities category as part of report ‘FDI Global Cities of the Future 2021/2022’ by Financial Times, further solidifying its position as a top city for investment and business growth, and marking its resiliency even during the turbulent global economy.
UAE Government has also approved vaccinations to curb the spread of COVID-19 and people staying in UAE have already started taking it. Government has made massive arrangements to make this process as fast and simple as possible.
Dubai economy is expected to grow 4% in 2021, bouncing back from last year’s contraction (as per the projections from Dubai Statistics Center).
Flying Colour Business Setup Services is assisting organizations and individuals in setting up businesses in UAE since 2004. Currently, with a team of 60 experienced professionals, we are delivering errorless and seamless services for business setup and corporate structuring across all UAE jurisdictions, be it Mainland, Freezones or Offshores. We also provide corporate UAE national service shareholder/agent for Mainland companies. We advise in structuring, using funds, foundations, SPV’s etc in financial Freezones like ADGM and DIFC. We assist in bank account opening, trademark registration; accounting and VAT related services all over UAE.
We know the difficulties and pain an entrepreneur goes through in order to setup right type of company without falling in to the trap of wrong advisory resulting to waste of time, money and other business opportunities. Based on our current observations dealing with the local market in UAE, we have come up with an analysis based on facts and figures on which business sectors could possibly thrive during 2021 and beyond in Dubai-UAE. The information furnished here is purely our observations and anyone should utilize this information after discussing with us the specific business plan.
Unprecedented time and once in a lifetime experience due to COVID-19 pandemic has fundamentally changed how we live and work. However, the entrepreneurs for tomorrow will definitely reap benefits of opportunities these unprecedented circumstances have unfolded which otherwise were not in existence.
With that being said, the below are the 12 business sectors that could possibly thrive during the year 2021 and beyond:
1. E-commerce industry – Product/Service Sales online
During 2020, people were locked down in their houses for weeks, months in some places; a situation many thought is not possible. Businesses, schools, parks, recreational places, everyday utilities shops were closed.
During this time, online businesses were a major convenience and in many cases, almost a necessity for people to buy products or services that were necessary for everyday life. This pushed existing E Commerce companies towards new challenges, and with it, new levels of success and growth. People have now moved on from the traditional mindset of touching, testing, feeing or smelling the products or services before buying them, a tradition that could possibly be now considered old and unhygienic partly due to COVID-19 precautions. The E commerce model also proves profitable for businesses as well as it allows entrepreneurs to keep the startup costs lower.
Consumers also find it convenient to use E Commerce platforms, saving time and cost of travelling to brick and mortar stores. E commerce has also made it easy to scale up the business with lesser cost unlike brick and mortar stores. Many new ideas for E Commerce are circulating in people’s minds and investors are ready to support them, as it is quite clear that E Commerce is the future.
2. Tourism and hospitality industry – Yacht rental, hotels of all categories, hotel apartments, cloud kitchens, restaurants, online booking platforms, rent a car etc. businesses will be in high demand
Dubai being an international tourism hub has started witnessing influx of tourists from December 2020 onwards. Dubai has also hosted successfully trade shows like Gitex recently which allowed people to visit the stands physically. All such successful experiments have driven the tourism and hotel bookings upwards again.
Expo 2020 is around the corner and possibilities for a stable population on rise due to UAE citizenship being announced, all businesses related to hospitality sectors are expected to perform during 2021. As per CNBC’s 17th December 2020 report, Expo 2020 organizers expect 25 million visitors over the 6 month event, despite concerns about the pandemic’s impact on global travel and tourism. This is a huge number, and can lead to an increased demand I the hospitality industry.
The international trade relations opening with Israel and Qatar will also lead to more hospitality demands in the UAE. Further into 2022, the Football World Cup is to be hosted by Qatar, which is expected to bring a lot of visitors not only in Qatar, but also in UAE.
All these factors point as positive indicators for the tourism and hospitality industry.
3. Real estate and construction – Real estate development, real estate brokerage, civil and other engineering construction, infrastructure like roads and bridges development, construction and building material trading businesses
Real estate market has already started witnessing high demand in the first month of 2021. RERA (Real Estate Regulatory Agency) in Dubai has already implemented many strict rules safe guarding the business interests of developers and buyers. Since 2007, all real estate brokers and brokerage companies are licensed by RERA. All real estate development companies are licensed by RERA and any off-plan project selling can only be done once escrow account is opened. Law number (13) of 2008 regulates the off-plan sales of real estate protecting the interest of buyer and developer. Lot of construction activities are going on full swing due to Expo 2020 event as well.
The real estate transactions in January and mid February of 2021 are already higher than in the same period in 2020, according the Dubai Land Department website.
The above factors, as well as the governmental policies related to citizenship and investment benefits in real estate could lead to increased demand in real estate transactions, and in turn related industries of development, consultancies, engineering consultancies, contracting and trading.
4. E-cigarette, vaping devices and E-Liquid trading
Dubai Government has allowed E cigarette, Vaping devices and E liquids to be sold in local market. The new legislation came in to effect in April 2019 known as UAE S 5030. Earlier it was banned. This has opened doors for manufacturers and traders from all over the world to enter in to untapped, yet highly potential, market and to capture the maximum share of the business in the early stages. All such products have to be approved from ESMA (Emirates Authority for Standardization and Metrology) Dubai. This business is expected to boom in 2021 and beyond this, as the market for these products grow globally and within the UAE.
5. Healthcare industry – Specialty clinics, pharmacies and hospitals
The medical infrastructure existing in Dubai and UAE has played a significant role in fighting against COVID-19 successfully. Doctors, healthcare employees along with DHA (Dubai Health Authority) and MOH (Ministry of Health) have played an extra-ordinary role in protecting the lives of people in UAE and this has established Dubai and UAE on the world map as a safe place to live.
Revenue receipt from UAE healthcare industry is forecast to grow at the rate of 7.5% CAGR (Compound Annual Growth Rate) for next 5 years. A sale in Dubai is expected to reach 10.7 Billion USD in 2021 due to high demand in preventive medicines, said by Dubai chamber of commerce and industry and reported by Arabian business.
Medical tourism is expected to reach AED 8.4 Billion in 2021 and grow by CAGR 17.1% for next 5 years. As per IHRC (International Healthcare Research Center), Dubai has been ranked 6th out of 46 global destinations as per Global Medial Tourism Index 2020-2021.
Government has also adopted an approach to develop healthcare infrastructure to such a level that the country should be able to bounce back from any possible similar shocks like COVID-19.
All these parameters will drive high demand for clinics, hospitals and pharmacies in Dubai and all over UAE.
6. IT industry – Software development, cyber security, artificial intelligence, internet of things, blockchain and digital transformation
Technology has become the integral part of any business. Businesses, without implementing technology, will not be able to thrive and grow any more. In a hyper connected world, no sector of the economy will be untouched by technology and only those who adapt quickly to technological change will survive.
Dubai and federal Government has also adopted to move swiftly to engage all available technological advancement and accordingly changing its policies. Dubai Government has launched Smart Dubai 2021, preparing Dubai to embrace the future. Guided by His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of the United Arab Emirates, and ruler of the Emirate of Dubai, .the Smart Dubai office has transformed the city by revolutionizing how the Government services are delivered by connecting several Government departments and adding 1000 plus smart services. The intention is to make Dubai, the happiest and smartest city on the earth. Such a technological approach by Government to bring happiness to people utilizing best of the technology will surely boost implementation of technology in a smallest to biggest businesses across all of its business operations in city.
Regardless of any short term benefits from Expo 2020 event, any business offering IT services, be it software development utilizing all modern AI, Blockchain, IOT and data analytics will keep thriving subject to it also being able to keep pace with advancement and attract human assets equipped with such modern technological knowledge. In an internet economy surely cyber security companies will have to play major role in safe guarding people from any threats of cyber crimes.
7. Retail stores like hyper markets, super markets, grocery stores, exclusive stores, specialty stores, department stores, general merchandize stores, trading businesses like specific product trading or general trading and logistics related businesses
Dubai is expected to become the biggest trade hub in 2021.
Retail and trading drives the overall economy of Dubai. Dubai is ranked number 1 in an international retailer presence as 62% of global brands have footprint here. Retail segment is expected to thrive even in the digital transformation amid COVID-19 and the advancement and growth of E Commerce platforms.
There seems to be a growing co-existence of E Commerce platforms and retail industry. While the retail industry has taken a hit globally, especially during the pandemic, it is expected to continue and co-exist with E Commerce platforms. Retail sectors will now have to be more innovative and technologically advanced.
Retail shops are still showcasing wide variety of goods from diversified global brands which still may not be available in online platforms.
International retailers are also launching Dubai-only edition of products which creates a special demand from tourists. Retail business owners should also keep in mind that people living in Dubai and tourists are brand conscious.
Dubai enjoys its strategic location between Asia, Africa and Europe making it convenient for air and maritime trade and logistics boosting trading activities. This strategic advantage along with tourism influx will make Dubai retail and brick and mortar shops shine.
Also trade brokers and indenters from all over the world prefer to buy and sell their large quantity of products through traders based in Dubai to gain the advantage of reaching out to the grass root level of world trader’s community.
Also the business owners have to innovate the experience they going to offer to the customer through their physical shops and they will have to provide an experience that will keep the customer coming back.
In general any business related to trading will continue to reap fruits during 2021 and any retail shop will do decent business if the shop location has been finalized carefully considering the consumer mindset and products to be offered.
8. Delivery services, courier, transportation and logistics businesses
Complimentary to the growth of tourism, and E Commerce industries, the growth of delivery and transportation industries is naturally expected.
The ever-growing industry of food delivery, products delivery and courier services has only been bolstered by the impacts of COVID-19 and could well have found more permanent markets due to the same.
UAE’s courier market is expected to grow by 7.5% annually, according to an article published by CBN ME.
The transportation and logistics business has been in the pulse of the UAE market since decades. The location of UAE on the word map, coupled with world class ports, maritime, aviation and road facilities ensures that this industry is a growing sector.
9. Educational businesses like E learning, training institutes and nurseries
COVID-19 has changed the fundamentals of physical classroom education systems. Most schools and universities have implemented online classes.
Any educational businesses which can create an extraordinary consumer experience of delivering quality study contents through computer / mobile phones / tablet screens will potentially become profitable. This will require technology to be well integrated with intelligent study content development which can provide overall personality development of students along with subject knowledge while still remaining confined in homes away from physical interaction. Such challenges will unfold massive business opportunities for the early entrants in the digital educational business.
10. Cleaning and sanitization services business
Corona virus has caused sudden upswing in cleaning services business in 2020 and it is expected to continue in 2021. Sanitization and cleaning becomes more and more important as people flock to malls, cafes and work places, but with Government imposed precautionary measures, which include continuous sanitization.
Globally hotels, restaurants, cafes and public transportation have to comply with new cleaning guidelines. All hospitality businesses have to guarantee highest level of cleanliness to rebuild the consumer trust. Businesses related to cleaning services will have high demand for many years to come.
11. Professional services like management consultancies, HR consultancies, event management, audit and accounting services
Dubai and UAE will remain an attractive place to do business. The postponement of Expo 2020 will provide a huge enthusiasm wave to ride on for new businesses to flourish in 2021.
Signing of Abraham Accords in September 2020 and subsequent normal relation between UAE and Israel will add a complete new dimension in UAE economy. All types of consulting services will remain in high demand. However the consulting firms have to implement sophisticated digital capabilities and high quality customer services. Consulting firms will need to cater niche advisory services to price conscious clients.
Dubai and UAE holds extremely high potential for all types of consulting services considering thousands of Expo 2020 visitors will be looking for such services as they look to consider UAE their next business destination.
12. Manufacturing and Agricultural facilities
Industrial activities are on the rise in UAE to achieve sustainable diversification under UAE economic 2030 vision. The government has put the target of contribution of manufacturing sector to overall GDP from its current 10% to 25% by 2025.
Manufacturing sector will grow at a rapid speed under the diversification and self sustainable plan of the Government. Dubai Industrial Park spread across 55 square kilometers speaks a lot about Government’s aggressive policy and support on developing manufacturing sector.
The Agricultural industry in the UAE is expected to grow, with the support of the Government and its incentives to grow the industry and overall make a sustainable agricultural industry.
The above are the 12 sectors that are expected to thrive in 2021 and beyond. If one is looking to invest in or start a new business in any of the mentioned sectors, please consult us for customized advisory.
This article is written by Meet Joshi – CEO from Flying Colour Business Setup Services.
For any enquiry related to setting up business in Dubai and all over UAE, please enquire here
*Please Note: This article was published on 17th February, 2021. The information provided in the article is based on the policies and rules applicable at the time of writing it. This article has been published as an information only and should not be treated as an advisory.