Regional recruiting agency, Gulf Talent.com, has recently published their survey findings “Employment & Salary Trends in the Gulf,” covering the labour sector outlook from 2010 - 2011. Although the UAE had the smallest growth in the Gulf last year, the report found that Dubai remained the most attractive destination for professionals and its employee retention remained the highest among Gulf States. Furthermore, due to average salary increases and low inflation throughout 2010, quality of life actually rose for some in the UAE, depending on the field of employment.

Regarding the local real estate economy, Dubai is witnessing some positive activity; projects which were once on hold have resumed construction as cheaper build costs allow developers to finish construction, a more favourable alternative than the costly return of investors’ capital. Other positive activity includes the resurgence of available finance for property investments, with the likes of Lloyds TSB, Tamweel and Gulf Finance offering competitive terms to a wider range of credit worthy clients.

Other projects are expected to complete over the coming quarter, placing further pressure on sales and rental levels in some areas. Although project completion includes the possibility of increasing mortgage defaults down the line for investors whose payments are tied to construction milestones, Gulf Finance has stated that clients facing financial hardship will be afforded the opportunity to rework their payment schemes without facing criminal prosecution under Dubai’s strict debt laws, which have in the past encouraged defaulters to flee the Emirate. Although these are reasons for caution, it appears that the market is learning from past mistakes.

Regarding the wider economy, there are a few risks worth addressing. Regarding political instability emerging in parts of the region, the UAE remains politically stable, strengthening the country’s long-term growth prospects. Should the current political turmoil in the region remain disruptive, the UAE could even witness a beneficial inflow of talent from less stable states. However, this gain could be offset by the outflow of Western expatriates as well as foreign investment in regional businesses.

Finally, the increasing costs of commodities have become a topic of concern; though higher oil prices benefit the UAE in the short-term, sustained long-term prices could put upward pressure on inflation. Due to the nature of the region, markets in the Middle East have long functioned under the threat of instability. Although we face a heightened period of uncertainty in the short term, there are good reasons to be optimistic regarding the economy of the UAE.

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