RAPAPORT...Although I have visited Dubai numerous times, most recently for a trade show that occurred in December, I find assessing the country’s business potential in terms of the diamond trade not as easy as appearances would dictate. Much hype and speculation surround this rapidly growing country and luxury retailers are flocking to set up shop in the rich emirate. With high oil prices creating unprecedented wealth in the Arab community, diamonds and jewelry would seem to be a natural fit.
Dubai’s strategic location has enabled it to assume the role of a robust trading center in the past, and many in our industry would welcome the opportunity to penetrate the surrounding Gulf markets. But I remain skeptical of the extent of the role Dubai will play. In actuality, the country’s diamond wholesale community is currently small, producing minimal trade in comparison to the other markets that make up today’s global diamond industry. And while there is potential for a sustainable diamond trade to emerge, the need for additional trading centers in countries lacking diamond production, such as Israel and Belgium, is questionable to me.
This is not to imply that the DMCC (Dubai Multi Commodities Center) is not making an effort to attract foreign business to the region and create a viable diamond center. It is adamant about providing its members with the benefits and services that will enable them to conduct business in a secure and efficient manner. A large array of recent initiatives include the launch of the International Diamond Laboratories (IDL), offering certification services to the trade and the first-ever laboratory report in Arabic.
At present, diamond trading in Dubai is conducted in the Gold Souk. There seems to be a consensus that a central location for locals and foreigners to convene would facilitate trade and turn Dubai into the hub it desires to become. Many in Dubai have their hopes pinned on the opening of the Almas tower, the proposed home of the Dubai Diamond Exchange (DDE), to create a sole industry destination, equipped with the required services. With the imminent completion of Almas, the willingness of Dubai’s existing local trade to adapt to the changeover will most definitely influence the DDE’s overall success.
Dubai is indisputedly a country in transition. While many assume the growth to be oil-related, it is real estate that is playing an ever more important role in Dubai’s rapid development. Boasting a third of the world’s cranes, Dubai’s endless construction is seemingly justified by steady, and even climbing, real estate prices. Although the sustainability of this phenomenon is questionable in the long run, the current accelerated pace of construction has made investors content, at least for the moment.
As our industry becomes ever more competitive, alternative avenues by which to move product and increase revenue must be identified. If we are to gain a lesson from Dubai, it should be that opportunities exist in markets we are not necessarily familiar with. While possessing far less potential than China and lacking the current diamond and jewelry demand of the United States, the Arab markets are not to be minimized. Dubai’s retail luxury market is thriving, with increased demand coming from the surrounding Gulf markets. While it may take time for a vibrant wholesale environment to materialize, Dubai is no longer as foreign a market as some may conceive.
Article from the Rapaport Magazine - January 2008. To subscribe click here.