Brexit: Win-win game for UAE-GCC and UK

Trade between the UK and GCC will increase in post-Brexit era as the European nation will be able to negotiate deals with the Gulf countries that are more liberal.
In addition, pound will strengthen in post-Brexit period which will greatly benefit Dubai's tourism and real estate sectors due to increased inflow of tourists from the UK as well as more British citizens investing in Dubai's property market, say analysts.
Data showed that trade between the UAE and the UK jumped 7.4 per cent to Dh24.45 billion during the first half of 2019, up from Dh22.76 billion in the same period last year. The UAE's exports to the UK fell 16 per cent to Dh6.1 billion in H1 2019, down from Dh7.26 billion in the same period last year. While the UAE's imports from the UK grew by around 18.4 per cent to Dh18.35 billion, up from Dh15.5 billion.
On June 23, 2016, the British citizens had voted in favour of leaving the European Union in a referendum. British prime minister Boris Johnson had announced that Britain will leave EU on January 31, 2020.
"UK's exit from European Union after more than 3 years since the initial Brexit referendum is a welcome relief even for the GCC region. The ties between UK and EU seem stable at this point of time and this should support a rally in pound. On the other hand, GCC trade with UK is bound to increase as the country will be able to negotiate a new trade deal with the Middle Eastern nations that is more liberal," said Vijay Valecha, chief investment officer, Century Financial.
David Abood, partner at Core, expects the UK buyers to continue investing in Dubai as they have historically been one of the major investors in the UAE. "With the introduction of five-year tourism visa, we expect higher interest for secondary and holiday homes by this demographic. Furthermore, a stronger pound compared to the dollar and continued price softening in Dubai is expected to keep interest levels steady for UK based buyers," he said.
Capital preservation and UK's inherent appeal is perceived deeply by UAE based buyers who have historically shown a keen interest in properties within the UK, particularly in prime central London districts.
Alex Casaki, head of London Desk at Core, said with the sterling expected to continue gaining upward momentum against the dollar coupled with the potential introduction of an additional stamp duty surcharge for non-resident buyers in the upcoming budget, greater interest for prime central London properties is expected in first quarter 2020 - with UAE buyers potentially capitalising on this window of opportunity.
Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), said the UK will look to strengthen relations with trade partners outside the eurozone as a result of Brexit.
"However, trade deals take time to finalise, and in the near-term, much will depend on underlying growth momentum. We do not expect to see an immediate impact on UK nationals in the UAE following the UK's exit, uncertainties will remain as a new relationship is defined," she added.
The UK has already said that it would explore possibility of free trade agreements with each GCC country after leaving European Union.
"The question of whether bilateral trade agreements [with individual countries are possible] is something we want to explore after we have left the EU," Liam Fox, former UK Trade Minister, had said.
The UAE and UK also enjoy relations in tourism and travel sectors. There are around 1.5 million British nationals visit the UAE every year.
Saj Ahmad, chief analyst at London-based StrategicAero Research, said air traffic between the UK and UAE will continue to expand and should not be affected negatively due to Brexit.
"Overall, there is a potential for airlines flying to the UK, such as Emirates and Etihad, to seek additional landing slots at key UK hubs like London, Manchester and Birmingham since the UK will have a free hand at how it distributes extra slots and capacity. There will be less incentive to hand these to EU airlines without question. Rather, the UK can derive greater economic benefit if it finds that capacity and slots can be shared to non-EU airlines," Ahmad said.
Valecha noted that around 20-30 per cent of tourist in some Gulf countries like the UAE come from the UK and strengthening of pound will be key factor in driving this sector's growth.
"For Dubai itself, Britons account for more than 30 per cent of inward tourist flock. For real estate, money flow from the UK is likely to get better with pound appreciation. As per recent statistics, British entities habitually rank amongst top 3 nationalities buying Dubai real estate. Likewise, Gulf region based wealthy families and business houses may look for more investments /real estate purchases in UK as the situation is more stable. If sterling rises sharply, the flow of students to UK from GCC might be impacted as the cost will rise," Valecha added.
- waheedabbas@khaleejtimes.com