The UAE is the third most attractive market in the world for investment in infrastructure, according to EC Harris, the global asset consultancy company. The UAE ranked third globally and second regionally for its strong business environment, healthy pipeline of development work and growing economic, making it an attractive country for investors including pension funds and banks.
The findings come from the second ARCADIS Global Infrastructure Investment Index, which ranks 41 countries by their attractiveness to investors in infrastructure. The study looked at various issues including the ease of doing business in each market, tax rates, GDP per capita, government policy, the quality of the existing infrastructure and the availability of debt finance. Combining all of these factors provided a strong overview of the risk profile for each market and how attractive each one is likely to be to potential investors.
"Good infrastructure is critical for the long term economic development of a country, and the U.A.E. is becoming more promising for investors in this regard," said Tim Risbridger, Partner and Head of Infrastructure - Middle East, at EC Harris. "Almost half of the investment planned in the region is related to transportation, with every major city in the region planning to follow Dubai in building a metro system with lines being constructed simultaneously in a relatively short period of time." Singapore’s integrated strategic plan linking infrastructure planning with business and social requirements helped it retain top position in the index as the most attractive global market for infrastructure investment. However, with a government which self-finances most major projects, investment opportunities are limited, so other countries with major investment plans such as the U.A.E. and Qatar were tipped as being more promising for investors.
Risbridger continued, "A key differential that we have seen in Asian and Middle East markets is that those countries that have a clear integrated strategy that ties the infrastructure development plans to business and economic objectives tend to nearer the top of our ranking. This gives long term clarity to investors and is something that European markets, in particular, would do well to emulate if they are to succeed in attracting more private finance into infrastructure." The report also underlined that the key risk in these markets is inflation in construction resources from manpower and specialist skills to construction commodities. Despite the potential for rising inflation, the gulf countries’ strong credit ratings and enviable taxation regimes will continue to appeal to investors.