Why one man is investing $175m in the Dubai dream
Back in October 2020, as coronavirus continued to bite down deep on global economies, and as nights drew in and temperatures plummeted in parts of Europe, Dubai sent out an invitation to the global workforce.
The emirate asked, “Why not, if you have to work remotely, do so in glorious sunshine?” Its virtual working programme offered the chance of a new life, one where restaurants were open, as were the beaches, and where coronavirus cases remained incredibly low compared to many other locations around the world.
It was launched with a series of light-hearted videos, with employees video-calling their bosses from the beach, or the pool, or the golf course, only to be discovered by their jealous employers.
But one man took those videos seriously, very seriously, so much so sensing a massive business opportunity. And so Lal Bhatia, a businessman with offices in Italy, Russia and Thailand, decided to move the global operations of his Hilshaw Group to the emirate and bet $175 million on the promise that working from home in Dubai will be an investment force in the world.
“I’d been travelling in and out of Dubai, prior to Covid and post-Covid. When I came to Dubai, I saw the government’s no-nonsense approach towards handling the pandemic, the infrastructure, the way of doing business,” says the Chairman of the Hilshaw Group, detailing his reasons for moving.
The Middle East is the world's first post-Covid economy.
“Despite the pandemic, Dubai is still open for business, that’s number one for me. Number two, the ease of setting up a business. Here you can set up a business in seven days or less, you can get your visa stamped in three days or less. Compare that to different parts of the world or different countries in which I do business. It takes months, if not years, to set up a corporation, and forget about your visa status. Here, things are very conducive for business.
“It also remains one of the very few hubs that are open for business, most of the other hubs are under lockdown. And while these governments in other different hubs are handing out subsidies, somebody at the end will have to pay for it. The only way to pay for it is by increasing taxes. And in Dubai, there is no personal income tax.”
The positive outlook is driven by the UAE’s coronavirus response and business-friendly reforms.
He’s not the only one in business who thinks that the UAE is ahead of the curve. At the recent Arabian Business Forum 2021, in which Bhatia spoke on stage, economists and business leaders predicted that the region is already the first post-coronavirus economy.
Indeed, recent predictions by PwC’s chief economist Richard Boxshall estimated the Gulf’s growth in 2021 would be 3 percent, also pointing to Dubai’s recent changes to visa regimes and the foreign ownership structures as positive factors.
But working from home in Dubai? Is that really worth investing $175 million?
While here in the UAE, with the advantages of a high-speed vaccination programme, some workforces have returned to offices full time, Bhatia has his eye on the global picture. Tech giants such as Twitter and Facebook – both with massive office campuses globally – have already said their employees need never return to the office, while Google has also said its employees won’t return until at least September this year at the earliest.
Indeed, a McKinsey report ‘What’s next for remote work?’ published in December 2020 opened with a powerful statement: “More than 20 percent of the workforce could work remotely three to five days a week as effectively as they could if working from an office. If remote work took hold at that level, that would mean three to four times as many people working from home than before the pandemic and would have a profound impact on urban economies, transportation and consumer spending, among other things.”
Bhatia believes this to be true, so much so his business strategy is built on creating work-from-home communities in Dubai where the world can Zoom/Teams/Skype their bosses in comfort. But doesn’t freedom from office life comes at a cost, with many employees forced to work from cramped apartments?
Bhatia decided to move the global operations of Hilshaw Group to Dubai
“We are bullish on the fact that Dubai is a place to work from, especially now people are now encouraged to work from home,” says the Chairman. “But your home is not designed for husband, a wife and a child to work in one environment – it’s not conducive to either living or working and that leads to demoralisation. Zoom calls are great, or at least they were for the first couple of weeks, but it’s getting very boring now.
“So homes now need to be designed, where you can work remotely in a more conducive environment, at the same time keeping the home life in its proper place. I think if a company or organisation can retrofit, its apartments, its houses, its villas, designed for working from home then it would become a pleasure working from Dubai. That’s a big part of our strategy, to take these buildings and design them, retrofit them, for work from home, with separate sectors within that unit where people can work independently of living. There’ll be segregation within that house.
“I believe working from Dubai should be the next way of living in the sense that it’s going to be less expensive to work from here than working from a campus in the Silicon Valley, where you’re prone to catch Covid. To be fair, how much is that happening now? All those monstrous campuses are empty. And so work from Dubai, I think is the more cost-effective way of working now. These large corporations are kind of confused and asking ‘What do we do next? How do we handle our worker? How do we get more productivity out of the remote workplace?’
“Look at it this way, as an employee, what am I looking for? I’m looking for healthcare. I’m looking for education. I’m looking for tourism. I’m looking for a lifestyle. My question is: why not Dubai? And from a company perspective, to employ a person, the normal cost is in upwards of 25 percent to provide them with a workplace and all the logistics that accompany that. Hence, if they’re working from home there is a cost saving. But there is another non-economic cost factor and that is the factor of demoralisation. So if you can create a conducive environment at half the price, why not?”
Bhatia believes property in Dubai is still undervalued.
While many have their opinions, Bhatia believes property in Dubai is still undervalued and has been in talks with a number of developers with inventory on their books, with a view to retrofit and create his work-from-home communities. He’s already in talks with a number of global companies who also see the logic of his business strategy.
“The initial strategy that we have is to invest $175 million and in my opinion, even that is small,” he says. “We’re talking to real estate development companies. All the large ones as well as the smaller ones that have inventory. And we’re trying to take that inventory, retrofit it and help cater to the client base that we are aiming to get.”
Another boon for Bhatia’s business model is a major event on the horizon that could bring 25 million people to Dubai.
“I think Expo 2020 is a big, big opportunity. If you look at it from this standpoint, even if the anticipated amount of people who were supposed to come don’t come, even if, let’s say, half of that number come and, of that half, even if a million people stay back – that’s going to make a tectonic shift in the way Dubai does business and the opportunities that come with that.
“Think of it just from the standpoint of the rental market, or the food and beverage sector, the restaurants, the hotels, etc. So I think it’s going to be an uptick in the economy even if half of those people who plan to stay come to live in Dubai. It will make a big, big difference.”
Logistics: A huge opportunity
Bhatia is also eyeing the logistics sector, looking to the huge growth in free zones and the need for warehousing, with success stories like that of Dubai South, which leased nearly 1 million square feet to hundreds of businesses during 2020. Add to this the rise of e-commerce with players such as Amazon and Noon, and the Chairman believes that the growth story is not yet fully told.
“Look, a four-hour flight gets you access to a population of more than 2 billion people. Right now. In Dubai – having its infrastructure, being open for business, having its e-commerce structure in place – warehousing is going to be very important from the standpoint of logistics, of the hub-and-spoke concept. And so we believe that there is more demand than supply to provide a full-scale warehousing facility in Dubai.
“There’s been a tectonic shift in the way people do business, and that shift is towards e-commerce. However, to dovetail on e-commerce you have to have places where you can store your goods, you’ve got to have warehouses.
Dubai South leased nearly a million square feet to businesses during 2020.
“And while the demand is increasing for warehousing, the supply is just not matching the demand. So I think that gap is where we plan to come in.”
The final promotional video by Visit Dubai on its remote working visa sees the employee’s boss grab a towel and say ‘See you soon’. Bhatia firmly believes that many more will follow suit.
“The old adage about working on a beach sipping a cold drink is a reality out here. Our message is that because of the infrastructure, because of the way of life here from a business and lifestyle standpoint, Dubai is here to stay. Choose Dubai and we will welcome you to your new global office.”