A Green Response

In addition to conventional Islamic banking, Islamic bonds are a growing consideration in the Emirate, with Dubai’s recent issuance of $750 million worth of sukuk. This recent listing pushes the total value of sukuk listed on Dubai capital markets to over $20 billion. A World Bank survey of North African countries in 2013 found that only 2% of respondents used sharia-compliant banking, demonstrating how un-tapped the market still is. Meanwhile in London, David Cameron, the British prime minister called for London to become a hub for Islamic finance. With all these developments, Dubai’s plan to become the capital of the Islamic economy brings with it a range of exciting opportunities, as well as some challenges.

Real estate developers are rushing to meet rising demand for everything from sharia-compliant apartments to saunas. One such venture by Damac Real Estate Development Ltd. will feature segregated swimming pools and gyms, separate floors for women, and prohibitions on pork and alcohol. Islamic hotelier R Hotels plans to spend AED1.5 billion ($408 million) on expansion projects, which include building a hotel on Dubai’s man-made Palm Island. Family tourism is another growing part of the Islamic economy. Research by Thompson Reuters conducted in 2012, found that Islamic tourism accounted for over $133 billion annually. Dubai is ranked first-place on the 2013 Travel and Tourism Competitiveness Index, in the Organization of Islamic Cooperation (OIC) category. Halal food products are also in high demand; the industry is expected to grow from $2.77 trillion to $6.4 trillion by 2020, as more Muslim customers align their values with their pocket books.

The massive growth of the Islamic economy has triggered a demand for skilled workers that institutions in Dubai are scurrying to address. The Dubai Islamic Economy Development Centre (DIEDC) was established in December 2013 to spearhead this transformation. The DIEDC is tasked with implementing a seven-pillared strategy in the areas of finance, the halal industry, tourism, digital infrastructure, art, knowledge, and Islamic standards. Meanwhile the educational sector is responding with new programs. According to the Islamic Corporation for the Development of the Private Sector, more than 530 institutions worldwide now offer courses or degrees in Islamic finance. Nine fully accredited degree providers are established in the UAE, such as the Master’s degree in Islamic Banking and Finance at the Hamdan Bin Mohammed Smart University. With the value of global Islamic finance instruments growing at 19% annually, graduates of these programs can expect a bright and lucrative future.