Good Morning and Happy New Year Smashi Business Readers!

Welcome to the first edition of your go-to daily business roundup for 2025.

In the UAE, the economy grew by a solid 3.6% in the first half of 2024, driven by the non-oil sector — proof that the country’s diversification game is strong and still going strong. Meanwhile, the Gulf’s IPO scene is sizzling, with robust growth expected to continue as the region’s markets remain attractive to global investors. And when it comes to food, we’ve got a twist: restaurant operators are being urged to focus on local, authentic concepts rather than chasing imported trends.

Keep reading for more details.

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Why the Gulf Will Remain a Powerhouse for IPOs

📰 What is it about?

• The Gulf region continues to dominate the global IPO market, driven by economic diversification, government-backed privatization, and strong investor confidence. Key markets like the UAE, Saudi Arabia, and Oman have witnessed record-breaking IPOs in diverse sectors including technology, logistics, healthcare, and financial services.

  Recent milestones include:

  • Talabat Holding’s $2.04 billion IPO, marking the region’s largest public float of 2023.

  • UAE stock markets surpassing $1 trillion in market capitalization, driven by 27 IPOs since 2021.

  • Saudi Arabia’s IPO market shifting towards non-oil industries, with over 40 major listings since 2021.

💡 Why it matters?

• Economic Diversification: Gulf nations are reducing their reliance on oil revenues by focusing on sectors such as tourism, technology, and financial services.

• Resilience Amid Global Volatility: While global IPO volumes dropped by 35% in Q3 2023, Gulf markets have bucked the trend, outperforming in post-listing gains and investor returns.

• Privatization and Market Expansion: Government-backed IPOs, like Oman’s OQ Exploration and Production, are driving market liquidity and depth, boosting economic growth.

• Global Investor Interest: High valuations, regulatory reforms, and strong performance are attracting regional and international investors, shifting focus to Gulf markets over more volatile regions

🔜 What’s next?

• Emerging Sectors: Expect more IPOs in sectors like FinTech, electric vehicles, e-commerce, logistics, and healthcare as Gulf economies align with global innovation trends.

• Privatization Drive: Governments are poised to list more state-owned enterprises, expanding investment opportunities and market depth.

• Regulatory Enhancements: Continued reforms to meet international standards will make Gulf markets more accessible and appealing to foreign investors.

• Smaller Markets Rising: Countries like Oman are enhancing their stock markets with significant IPOs, contributing to regional capital market growth.

• Sustained Investor Confidence: High post-IPO performance and strong subscription rates suggest enduring demand for Gulf equity offerings, cementing the region as a global IPO leader.

Markets

UAE Economy Grows 3.6% in H1 2024, Driven by Non-Oil Expansion

📰 What is it about?

• The UAE's economy expanded by 3.6% in the first half of 2024, with non-oil sectors contributing significantly to the growth. Real GDP reached AED 879.6 billion ($239.5 billion), while non-oil GDP grew 4.4% to AED 660 billion, accounting for 75% of the total GDP.

• Key drivers included entrepreneurship, trade, investment, tourism, and development projects.

💡 Why it matters?

• Economic Diversification: The UAE’s shift from oil dependency is yielding tangible results, as evidenced by robust growth in trade, manufacturing, tourism, and technology.

• Trade Milestones: A record AED 1.4 trillion in non-oil foreign trade during H1 2024 reflects the success of Comprehensive Economic Partnership Agreements (Cepas) with major global economies.

• Sectoral Growth: Fast-growing sectors include transportation and storage (8.4%), financial activities (7.6%), and construction (7.3%), showcasing diversified economic strength.

• Tourism Boom: Hotel revenues rose to AED 24.6 billion, with 15.3 million guests, highlighting the UAE’s global appeal as a tourism hub.

• Global Positioning: The UAE’s proactive reforms, including long-term visas and strategic partnerships, position it as a key global trade and investment destination.

🔜 What’s next?

• Ambitious Targets: The UAE aims to achieve a GDP of AED 3 trillion by 2031 through its Vision 2031 plan.

• Continued Reforms: New economic policies and visa categories will attract more talent, investments, and partnerships.

• Trade Expansion: Cepas are expected to boost exports by 33% and contribute AED 153 billion to the economy by 2031.

• Higher Growth Forecasts: The UAE’s economy is projected to grow by 6% in 2025, driven by global trade agreements and infrastructure investments.

• Sustained Non-Oil Momentum: Sectors such as technology, tourism, and financial services will continue to anchor the UAE’s growth trajectory, enhancing its resilience against global economic fluctuations.

Gulf Restaurants Urged to Embrace Local Concepts for Growth

📰 What is it about?

• Experts are advising Gulf restaurant operators and investors to focus on local, authentic dining concepts instead of importing high-end foreign brands. Key insights are coming from experts in the industry, such as Duncan Fraser-Smith, CEO of Craft Hospitality Group, who highlights the market opportunity for homegrown restaurants featuring local chefs, especially in Saudi Arabia and Riyadh.

• The need for location-specific venues and overcoming challenges like staffing issues and market saturation in Dubai are also key points of discussion. The use of AI-powered market intelligence tools like Spotquest is helping operators make data-driven decisions for restaurant success.

💡 Why it matters?

• Market Demand for Authenticity: The growing demand for local dining experiences, led by Saudi Arabia’s economic initiatives and the growing local restaurant scene, presents a stronger market fit than foreign brands, especially for Riyadh’s evolving restaurant culture.

• Growth in Homegrown Brands: Homegrown restaurant concepts are proving to be successful across the region, with Dubai-based brandsexpanding into international markets like London and Ibiza. This trend is expected to take off in Saudi Arabia with developments like Neom and the Red Sea.

• Economic Opportunity in Saudi Arabia: Despite challenges in recruitment and staffing, Saudi Arabia offers a high-spending population and low restaurant density, positioning it as the largest opportunity in MENA for restaurant businesses.

• Riyadh and Dubai Market Dynamics: Riyadh is shifting from an imported brand model to a homegrown focus, whereas Dubai faces saturation risks, with too many high-end venues. Strategic market analysis and planning will ensure that restaurants succeed by catering to the local dining preferences.

• Staffing and Supply Chain Issues: Saudi Arabia faces staffing challenges, particularly in fine dining, but experts believe this issue can be addressed with investment in training and improvements in supply chains.

🔜 What’s next?

• Rise of Local Concepts: Investors and operators should prioritize local restaurant concepts that are authentic and relevant to the region, especially in Saudi Arabia where demand is growing. This shift will likely lead to more successful homegrown brands opening and scaling.

• Leveraging Technology for Success: Using AI-powered tools like Spotquest to conduct detailed market intelligence will become more widespread, enabling operators to make data-backed decisions on what to open, where, and at what price point.

• Strategic Market Entry: Saudi Arabia will continue to be a primary growth market. However, restaurants need to adapt to local cultural preferences and geographic locations, avoiding the one-size-fits-all approach of importing international brands.

• Rebalancing the Dubai Market: In Dubai, restaurant operators may need to take a more strategic approach, avoiding market saturation and opting for a mix of dining options including mid-range and casual outlets to maintain a healthy market ecosystem.

🔍In other news…

1. Create. Group, a leading digital communications agency based in Dubai, is acquired by Stagwell, a global marketing powerhouse.

2. “Growth is the new normal for Dubai property,” says Betterhomes CEO.

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