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Abu Dhabi, UAEWednesday 20 June 2018

UAE ties with UK strengthen rapidly as Brexit looms

Developments have been remarkable since 2011 when the UAE-UK Business Council was launched to promote bilateral trade, investment and economic opportunities.

Abu Dhabi-based Masdar has a 35 per cent stake in the world's largest windfarm, a 402MW scheme offshore Norfolk in the UK. The UAE's ties with Britain are becoming stronger. Jan Arne Wold - Woldcam / Statoil ASA
Abu Dhabi-based Masdar has a 35 per cent stake in the world's largest windfarm, a 402MW scheme offshore Norfolk in the UK. The UAE's ties with Britain are becoming stronger. Jan Arne Wold - Woldcam / Statoil ASA

Selling coals to Newcastle is a venerable British way of describing the enterprising trade of shipping a good to a place that is synonymous with the production of the self-same commodity.

The UAE renewables investment platform Masdar has in recent years staked out a leading position in harnessing the wind energy potential of the North Atlantic through three large investments around the British coastline.

It’s a position that could only have been imagined in 2011 when the UAE-UK Business Council was launched to promote bilateral trade, investment and economic opportunities.

For Rachel Elks, who serves as a director of the council and its working group coordinator, the Masdar development is typical of the world of opportunity that exists between the two countries.

“Yes the UAE is bringing windpower to the UK,” she tells The National. “It’s a big selling opportunity and the UAE has taken it.”

Samir Brikho, who has been the co-chairman of the council since the start, describes how it has established its work against a backdrop of ambitious targets and outperformance in the real world figures achieved.

“When we started the mutual figure was £7.5 billion [Dh37.63bn] and we were laid down the challenge by [then UK] Prime Minister David Cameron to reach £12bn by 2015. Actually it went up to £15bn in five years and we now have a new target of £25bn by 2020.

The work of the committee is capped by half-yearly meetings shared between venues in the UK and UAE. It met last month at the headquarters of Barclay’s Bank in London.

Mr Brikho tells The National that the committee members are keen on incubating growth and he points to how links have been fostered with Pitch at the Palace and the Khalifa Fund for Enterprise Development. The emphasis on entrepreneurs and growing young businesses has become a big focus for the council. “The FTSE 100 companies are well known to each other and can do business by themselves but we can bring them together with the small and medium sized enterprises [SMEs]. How do they get to know each other otherwise,” he says. “We also work with Pitch at the Palace with the Duke of York to bring the format to Abu Dhabi and the region.”

Following the most recent meeting, the UAE Ambassador to Britain Suleiman Al Mazroui said the two countries could use their markets as platforms for global expansion. “Research shows that two thirds of British businesses looking to expand overseas would consider the UAE,” the ambassador. “And it’s not just the corporate giants looking to the Gulf. Small businesses are also seeking out new opportunities, such as the Exeter-based vanilla producer LittlePod, which has developed a new non-alcoholic vanilla paste that it intends to start selling in the UAE, and Newport-based Proton Partners International, which just last month acquired its first facility in Abu Dhabi, from where it will soon start providing its proton beam therapy to cancer patients in the UAE.”

Working alongside Mr Brikho is Nasser Alsowaidi, also a co-chairman. The focus of the committee is on seven working groups that encourage individual sector development as well as opportunities for networking between large and small businesses, as well as officials.

The current working groups are:

Infrastructure

Health and Life Sciences

Financial and Professional Services

4th Industrial Revolution

Energy

Education and Skills

Security and Aerospace

UK-GCC Free Trade Agreement

Nick Cochrane-Dyet, the chairman of the Abu Dhabi-British Business Group, said the working groups offer a platform for business to get involved in new opportunities. “These working groups give different sectors a chance to focus on their own areas and beyond. For example artificial intelligence (AI) is something the emirates and businesses can learn how AI will create opportunities to grow.

“Expo 2020 is another good example of how to cross-reference experience, to use the council profile and give different sectors ideas on how to participate on something like that.”

Even within well established sectors there is an emphasis on developing new strands. Mr Brikho points to the energy working group and how it looks beyond the traditional oil and gas activities to prioritise renewables. “The energy sector is not only oil and gas but also renewables and that focus points to how our working groups have evolved their role over time into some really big projects,” he says.

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And the backdrop to this is one the largest strategic UAE investments in Britain. Not only does Masdar operate £1bn assets in the UK with investments in the London Array, Dudgeon and Hywind Scotland wind power projects, it earlier this year announced it was bringing innovative battery technology to the portfolio. Working alongside Norwegian partners, Batwind will bring battery storage solutions to the floating wind farm to ensure that battery storage can be used to raise the efficiency and operational capacity of the facility.

To Ms Elks, the business-to-business aspect of the council takes shape in dozens of the working group meetings that are held each year. “While we are a CEO-level organisation, we expect each member to come with knowledge that benefits not just their company but the whole sector,” she tells The National. “This means that we can identify not just opportunities but also barriers to business. By raising these with officials on both sides and hopefully getting them eliminate [these barriers] we see they are not just increasing those opportunities for their own companies but also opportunities for their competitors.”

Membership is by invitation only and as well as the two ambassadors, includes leading names in world business.

With Britain poised to leave the European Union and its free trading zone, the single market, the council has become a test bed for ambitions to seal a free trade agreement with the UAE and more broadly the GCC. “Brexit is a great opportunity for us as British business to raise our profile because people are so interested in what is going to happen,” said Mr Cochrane-Dyet. “Let’s not get too concerned about the outcome but use the opportunity to have fuller engagement with our business partners, including a Free Trade Agreement with the GCC.”

Members were able to give their views on how an agreement would work last year and the Brexit-orientated study, conducted by PWC, was judged so successful it is now being carried out with business communities elsewhere in the region.

Other examples include feedback on healthcare regulations, shared resources on cyber security and a project on supply chain management. Since the UAE global ports operator DP World oversees some the UK’s biggest ports including the London Gateway, that information sharing is invaluable for small exporters seeking to unlock the potential of the GCC market.

Often caricatured as a stampede to invest in central London property, the UAE interest in British property sector stretches far wider. The investments also include the redevelopment of inner city Manchester, a major city in north-west England among others outside the capital.

However, property remains a vital component of the relationship. Creating a better investment climate for those buyers will also be key to the future UK trading ties with the Uae. Aneisha Beveridge, an analyst at Hamptons International, says buyers from the region underpin the market.

“The exclusivity of the best addresses in London and its place as one of the world’s most prestigious cities still acts as a big draw for international buyers,” she says. “Uncertainty about the UK leaving the EU is adding to nerves, but the depreciation of sterling seems to have countered this. The proportion of homes sold to Middle East buyers in prime central London has risen over the last few years, reaching 15% in H2 2017, up 5 percentage points since H1 2017. Buyers from the Middle East have now overtaken those from the EU as the biggest group of international buyers in prime London.”

David Adams, director of real estate agency Humberts Mayfair, agrees that investors from the UAE and the wider region were holding back the forces of downturn. “You had the drop in the pound, and investors in places like the UAE said, ‘That’s fantastic, I’ll wait for sterling to go even lower and buy then.’ They were surprised by the rebound in the pound, and many of them are panicking now because they think they’ve missed the bottom. So that is driving an increase in investment,” he tells The National.

“We are seeing more interest from younger buyers from the Middle East, who have certain fixed ideas of where they want to buy – traditional high-end areas such as Mayfair and Knightsbridge, because they’ve seen their families invest in those areas as well.

“Another major driving force is that in the middle of the year, it simply gets too hot to live in Arab countries, so families look to London for their second homes. That hasn’t changed – London remains a key centre of business, and is still attractive for overseas buyers.”

Brexit has opened a big agenda for Britain and the UAE with not only a potential free trade agreement but also an investment accord and possibly visa-free access for UAE passport holders. In addition the movements in the pound create more opportunities for keen traders. “There’s a feeling among international investors that London will do very well after Brexit, and the pound will continue to firm. So it’s ultimately a currency hedge. If you think the pound is going to keep strengthening, you’re buying into something that’s shifting in the right direction,” adds Mr Adams.

Leaving the EU is bound to have an effect on UK trade, points out Mr Brikho, who adds there will be advantages to be uncovered. “We can see how much traction there is to gain with different partners in every part of the world.

“The UAE is certainly one place to see if we can both apply the goodwill in the relationship to get better access for both.”