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Dubai construction attracts increased foreign investment as United Arab Emirates predict 20% growth in 2014

The United Arab Emirates (UAE) is expecting a 20% increase in foreign direct investment (FDI) in 2014, much of it in the construction sector, the Financial Times reports.01 Apr 2014

The UAE is forecasting $14.4 billion FDI this year, compared to $12 billion in 2013. If the figure is achieved it would be equivalent to more than three times the amount of FDI the federation experiences in 2009, when the UAE economic crisis was at its peak, and return FDI to its pre-crisis peak, achieved in 2007.

Economists believe that the construction sector is leading the boom in Dubai, where up to 70% of FDI can be attributed to real estate investment, according to the Financial Times. The increased interest in this sector is also reviving projects which stalled amid the UAE economic crisis. The construction sector is expected to enjoy a further boost as Dubai seeks to double its hotel capacity ahead of hosting the World Expo exhibition in 2020.

However analysts believe that the broader economy is "thriving", in Dubai, with emerging markets also investing in the emirate. Dubai, along with other Gulf nations, is enjoying increasing investment from Asian markets. Chinese businesses in particular are choosing the emirate to establish regional basis in the Middle East. Consultant Nasser Saidi, former chief economist at the Dubai International Financial Centre, told the newspaper: "That is the most significant change: east is moving west. Developed market investment into developing markets is being replaced by emerging markets going into other emerging markets.”

Iran's improving diplomatic relations with the international community following progress on its nuclear programme are also expected to benefit Dubai. Some analysts are predicting that should long-standing trade sanctions against Iran be eased, Dubai will become an attractive base for businesses hoping to start trading with Iran, said the Financial Times.