2012 Middle East attractiveness survey
An awareness challenge
Investor expectations: education, stability and innovation
Yet again, investors who have not yet done business in the Middle East have a very different perception of the region compared with those already there. Political instability clouds their view: 40.4% of investors not involved in the region highlighted the current political environment as the key area for improvement.
This could also explain why new investors are skeptical about entering the Middle East in the near future.
However, business leaders already present in the region have very different views. They highlight education and skills development (27.3%) as the highest priority for improving attractiveness. Although increasing political stability (25%) also remains high on their list of priorities, they view the following as equally important: investing in major infrastructure and urban projects (23.8%), and supporting high-tech industries and innovation (21.5%).
The perception gap: an awareness challenge
The Middle East is facing a serious image issue that is impairing its attractiveness among companies currently not operating in the region. For instance, only 54% of investors not yet present consider that the region's attractiveness will improve in the next three years, compared with 83% of those present in the region.
This perception gap is particularly pronounced in terms of opinions on attractive features, sector-specific opportunities and areas for improvement. Companies outside the region have an incomplete view; for instance, seeing only natural resources as an attractive regional feature, where established companies are able to highlight other promising areas — such as investments made by governments.
Companies already operating in the Middle East look forward to various sources of economic growth, in real estate, or business services for example, while those firms not active in the region see only energy as an economic driving force.
This gap is probably mostly due to a lack of up-to-date knowledge and awareness among investors. This highlights the need for Middle Eastern governments to improve communication channels with potential investors in the rest of the world and tackle these inaccurate views.
Viewpoint: The importance of inclusivity
If you've never been to the Gulf, your external perception is characterized by ignorance, filtered through your impressions of what the Gulf was in the past. Once you have been there once and seen what is going on, you realize it's a much more attractive place to do business than you thought.
Within the Gulf city-states, there are huge development opportunities, and that makes things appealing for property investors. But if you are a foreign corporation doing business in the Gulf, you see property as housing.
Of course you make an investment decision based on all the due diligence and everything else, but you are also aware that you will be moving executives and their families to new places. You care how they will be treated. How each family member is accepted as a person turns out strongly to influence how the executives see a place to do business in.
When your society offers a more inclusive and more tolerant place for an expatriate to enjoy a normal expatriate lifestyle, including acquaintances and friendships with locals, I think that has a backwash effect and influences corporate CEOs' decision to invest in a country. Social life, education systems, and the ability of children to mingle all become strong considerations. On these criteria, I think the Gulf states look appealing, and I can see why many westerners like moving there.
CEO, Affordable Housing Institute
Where should the Middle East concentrate its efforts to increase its attractiveness?