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Dubai Conference

“Israel will soon become a central axis for trade, just like it was during the Ottoman Empire”

Israeli and Emirati business people took part in a series of roundtable discussions on various ways to cooperate

Naomi Zoreff, Irit Avisar, and Ron Friedman 17:2529.11.20
Hospitality and Retail Roundtable


“Soon Israel will be a major axis for the transportation of goods, like in the days of the Ottoman Empire”

 

Israel’s Fattal Hotel Group is considering opening hotels in Dubai after the coronavirus (Covid-19) pandemic is over; the possibility was discussed in a roundtable panel during the Israel-UAE conference held by Bank Leumi, Calcalist, and Reshet 13, although a strategic plan has yet to be made. David Fattal took part in the first discussions concerning hospitality and retail, which was moderated by Shmulik Arbel, head of the corporate and commercial division at Israel's Bank Leumi. Fattal noted that during the forum he was looking for opportunities to invest in Dubai.

 

Israeli businesspeople and their Emirati counterparts discuss ways to conduct business. Photo: Orel Cohen Israeli businesspeople and their Emirati counterparts discuss ways to conduct business. Photo: Orel Cohen

 

Gabriel Rotter, co-CEO of clothing brand Castro said that “I think the State of Israel needs to now invest more than ever in the quick development of infrastructure, like the train to Eilat, because I think that soon we will become a central axis of trade, like in the days of the Ottoman Empire. In 2000, we spoke about a vision of the ‘New Middle East,’ and I think that’s what is unfolding now. I’m very excited, and I think this is the start of something great. I don't understand why it hasn’t happened sooner, since we have so many joint interests,” he said.

 

Rotter said that plans to enact full business corporations haven’t been worked out yet, mainly because of how the pandemic has influenced the sector. “This is a learning journey for me, I don’t have anything concrete planned yet. I still need to do research and understand which of my brands would fit in here. Regardless, the Emirates are experiencing the pandemic in a serious way, and this is a problematic period now because we can’t formulate plans. The entire retail world is in question, but it is clear to me that stores and malls won’t disappear, and digital purchasing will comprise 20% of consumerism.”

 

During the panel, a representative of Al Habtoor Group LLC, one of the most influential Emirati hotel and real estate chains, was interested in whether under Israeli law, an Israeli company could be fully owned by foreign investors. They also noted that even though Bank Leumi plans to conduct business relations with the UAE from afar - mainly through digital services - the conservative families in the UAE would prefer if there would be physical branches in the country. In that way, they’d feel more comfortable working face to face to broker credit arrangements and investments. “The faster that happens, the better it will be,” the representative said, “we are looking for investment opportunities and want the bank to be available to us. It’s a bit worrisome for our executives to conduct business from afar,” he said.

 

Finance and Tech Roundtable

 

“The Emirates are a gateway to a trillion-person population”

 

There was high demand for the finance and high tech talks, and the discussion split off into one-on-one meetings between Israelis and their Emirati counterparts.

 

One of the largest banks in the Emirates, Emirates NBD Bank PJSC, had representatives who signed a deal to cooperate with Bank Leumi with joint banking and investment banking ventures, in a goal to moderate between the Israeli companies and the local ones. Participants from the biggest investment companies in Dubai that are interested in investments and in cooperating with Israeli companies also joined the talks. On the Israeli side, members of Bank Leumi and managers of Israeli investment funds took part.

 

Sheikha Abdulla Al Nuaimi, who is the Commercial Operations Executive Director of the Ajman Free Trade Zone said that in order to encourage trade between companies, incentives must be offered. In that way, startups with technologies relevant to the region can start with a pilot product, and in return will be monetarily rewarded.

 

One of the main categories that interested participants was the health sector, with an emphasis on digital health. The UAE considers it a strategic goal to further develop the sector, in which Israel has an advantage. The meeting saw initial discussions emerge between the Emiratis and Israeli companies from the healthcare field.

 

Israelis and Emiratis discuss future business ventures at the conference. Photo: Orel Cohen Israelis and Emiratis discuss future business ventures at the conference. Photo: Orel Cohen

 

Industrial Manufacturing Roundtable

 

“It is clear that Israelis are serious business people who came here to work”

 

Business cards traded hands quickly at the roundtable dedicated to industrial manufacturing, led by Leumi Partners CEO Avi Ortal. “Israel may not have the cheapest products, but they are of high quality and it is clear that Israelis are serious business people who came here to work,” said Henrik Christiansen, CEO of Exceed Industries.

 

Panelists also discussed the food industry. Ezra Cohen, the owner of Gad Dairy, was able to identify potential opportunities with a few Emirati company representatives and develop plans to export products to Africa and Asia.

 

While Israelis were disappointed with the fact that the government doesn’t sufficiently encourage manufacturing and prefers to concentrate on the tech sector, the UAE counterparts said it remains a backbone of their economy and are looking to increase its significance by establishing an aviation production center. Airbus and Boeing already have factories in the country.

 

Real estate Roundtable

 

“Maybe its imaginary wealth”

 

Despite the curiosity between Emirati real estate representatives and their Israeli counterparts, it seemed as if the only possible path for cooperation lay a long way ahead.

 

Walid El-Hindi, CEO of Bloom Properties said that the Emirati market is still young, but competition has recently increased. He suggested that it was important for construction companies to cooperate with one another, whether commercial or residential. El-Hindi was asked to estimate the cost of office buildings in the Emirates, which he said came out to eight times the amount in Israel, some NIS 800 ($240) per square meter (11 square feet), being a riskier business.

 

The gross profit in residential projects stands around 25%-30%, which otherwise would not be worth it for local entrepreneurs. El-Hindi and his colleague Saad Erekat said that banks in the Emirates have become more conservative in financing real estate projects due to high competition. The pandemic has led to a drop in real estate prices in the Emirates and has created additional buying opportunities at a time when the market can recover after the crisis, but is characterized by advanced infrastructure that is constantly developing. The Israeli counterparts were impressed by this and noted that the Israeli government could learn a lesson from the Emirates.

 

Real estate prices in the UAE dropped before the crisis, and from 2018-2019, the oil prices dropped as well, and this year recorded a slump. As for potential buyers, they noted that 85% of homeowners in Abu Dhabi are Emirati citizens, while in Dubai the percentage of foreigners who conduct real estate business deals - either for investments or living - is much higher. The average leases in commercial areas are for nine years, with the average being anywhere from three to five years with an option to extend a lease.

 

As for cooperation, the sides talked about the field of entrepreneurship, and the Emirati party noted that at this stage, what they would seek from their Israeli partners is funding. It was an interesting point, or as one Israeli put it: “Perhaps all their wealth is imaginary, while we Israeli construction companies which have more access to finance.” One idea that came up was to build a shared community complex for Israelis who travel to Dubai for business, based on the assumption that a project that was less specifically tailored would have less of a chance to succeed.