Open for business: How UAE-Israel peace is driving deals at breakneck speed
Businesses in the UAE and Israel have been taking full advantage of a historic deal between the two countries signed last week, as previously untapped markets become open for business.
The news, announced August 13, has led to a slew of deals in recent weeks, with the establishment of a business council and signing of finance, tourism, and other agreements.
In what some are calling a “new era of trade relations,” annual trade between Israel and the UAE is expected to reach $4 billion in just three to five years, Israeli Intelligence Minister Eli Cohen has previously said.
Here’s how businesses in the two countries have been reaching out and collaborating:
UAE-Israel Business Council
Prior to the announcement of the deal, relationships between businesses in the UAE and Israel could be difficult and inefficient. Right after the deal was announced, however, the UAE-Israel Business Council was established to foster economic cooperation and collaboration between the two nations.
Co-founder and deputy mayor of Jerusalem Fleur Hassan-Nahoum told Al Arabiya English that thousands of people have signed up to participate in the independent business council, with about half being Emiratis.
“The council is both a platform for business connections and an active creator of joint ventures between the two countries,” Hassan-Nahoum said in an interview with Al Arabiya English on Thursday.
Emirati businessman and entrepreneur Thani AlShirawi, part of the council and an adviser to Israelis exploring business opportunities in the UAE, said that economic relations between the two countries is crucial for lasting peace.
“The council will ease normalization. With economic ties you tend to make friends faster,” said AlShirawi, who is himself the deputy-managing director of the giant Dubai-based conglomerate Al Shirawi, in an interview with Al Arabiya English.
“We will convince the people who are skeptical of the relationship, in this part of the world, to be pro-peace also,” he said.
So far 250 Israeli companies are trading with UAE companies, according to the council, with interest only increasing, Hassan-Nahoum explained.
The UAE property market, in particular Dubai, is well known as a destination for real estate investment. The UAE-Israel deal, has provided a new, geographically close, source for investors looking to profit from the emirate’s bustling market for property.
Although the coronavirus pandemic has caused the global economy to enter an unprecedented recession, interest from buyers and renters in Dubai’s property market skyrocketed, as savvy investors look to secure a deal while prices dampen, previous research has shown.
Driven Properties, a large Dubai-based real estate brokerage which focuses on helping international investors enter the Dubai market, told Al Arabiya English that it has seen a surprising amount of demand from Israeli clients.
“Immediately after we opened a few of our channels to the Israel market through some of our networks, we saw a huge demand and on the basis of that we decided to do a webinar … and that webinar has led to a surge,” said Abdulla al-Ajaji, founder of Driven Properties.
“I think we have had thousands of emails and questions, not just to us as a dealership and management, but also how they can access the Dubai real estate market, the regulatory and legal framework,” he added.
On September 24, Driven plans to hold another webinar for Israelis looking to invest in UAE real estate, following the interest in its first.
Al-Ajaji noted that Dubai is an attractive destination for property investors from Israel with its globally high yield rates and competitive pricing – especially when compared to Israel capital Tel Aviv.
“If you compare apples to apples, or prime Dubai [real estate] to prime Tel Aviv [real estate], Dubai stands at one fifth of the prices of Tel Aviv … You can buy four or five units in Dubai compared to what you can get in Tel Aviv,” al-Ajaji explained.
Although a treaty has yet to be signed that will allow Israeli investors to participate in Dubai property, al-Ajaji expects “that to happen very soon,” and should interest be high enough, Driven would open an office in Israel, joining other UAE-based businesses that have announced similar plans.
Banking & finance
The banking and finance industry, often considered the engine of economic growth, stands to see significant benefit from the peace deal.
The two countries signed a Memorandum of Understanding (MoU) on banking and finance on September 1, opening the door to agreements between institutions in both countries.
One week later, the first official Israeli trade delegation arrived in the UAE, with the CEO of Bank Hapoalim, the biggest bank in Israel, present. Bank Hapoalim went on to sign an MoU with Dubai’s largest bank, Emirates NBD during the trip.
Israel’s second largest bank, Bank Leumi, then signed an MoU on September 16 with Abu Dhabi Islamic Bank to explore areas for future cooperation in the UAE, Israel and other international markets.
The same day the Abu Dhabi Investment Office, the central government hub supporting private sector investment, announced that Israel's Tel Aviv would be the location for its first ever office outside of the UAE.
In insurance, Israel’s Harel Insurance Group signed a deal with the UAE’s Dubai Insurance on September 23 to provide services in both Israel and the UAE.
A global race is currently underway between pharmaceutical and drug companies to develop treatment for the coronavirus pandemic.
The UAE has recently led efforts, with an announcement last week that it had issued emergency approval for the use of a COVID-19 vaccine that is currently undergoing testing in the Gulf country.
Even prior to the news of the peace deal between the two countries, private companies in Israel and the UAE had already announced in June that they would collaborate to develop research and technology in the fight against COVID-19.
More recently, however, higher level discussions have taken place, with UAE and Israeli health ministers discussing how to better cooperate on tackling the pandemic and “ways to strengthen cooperation in the medical field,” focusing on pharmaceutical industry and medical research, state news agency WAM reported at the time.
Earlier this year, the UAE and Israel ranked as the safest countries in the Middle East during the coronavirus pandemic, comprehensive data analysis by Hong Kong-based Deep Knowledge Group showed.
Both countries were classified within the “Tier 1” category - 20 countries that ranked highest “in terms of regional safety and stability” in the era of COVID-19.
The UAE and Israel are both popular global tourism destinations, and are committed to facilitating direct tourism between the two countries, something that the Director-General of Israel’s Ministry of Tourism Amir Halevi said, “will undoubtedly benefit the economy of both countries.”
“We are working with all the relevant bodies to both facilitate the opening of direct scheduled routes and the visa issue, to ensure fast and easy travel between our two countries,” Halevi said in an interview with Al Arabiya English.
He added that one possible tourist package that could be offered to American tourists would be a travel experience that combines trips to both countries.
Direct flights from the UAE to Israel are likely to be set up by the end of 2020, Israel’s Ministry of Foreign Affairs spokesperson Lior Haiat told Al Arabiya English.
Israeli carrier Israir said earlier this month that it has reserved slots for commercial flights from Tel Aviv to the UAE and Israel’s Aviation Links said days after the agreement was announced that it would start selling vacation packages to Rixos hotels in the UAE.
Meanwhile, Dubai conglomerate Al Habtoor Group - whose portfolio covers the hospitality, construction, education and automotive sectors - announced this week it will open a representative office in Israel.
Both the UAE and Israel are home to vacation hotspots, such as Dubai and Jerusalem - cities whose hospitality industries have suffered due to travel restrictions put in place to slow the spread of the coronavirus pandemic.
The agreement will look to revive their tourism industries, though the timing is uncertain as Israel has not yet opened to foreign visitors due to a severe second coronavirus wave, while Dubai began to welcome tourists back in July.
While the diamond industry has likewise been hit by the coronavirus pandemic, respective exchanges in Dubai and Israel are hoping that an agreement will help rebound their industry.
Described as “an opportunity that can’t be missed” by Dubai Multi Commodities Center (DMCC) Chairman and Dubai Diamond Exchange Chairman Ahmed Bin Sulayem, diamond exchanges in Dubai and Israel signed an agreement of collaboration last week that will see the establishment of reciprocal offices in each other’s country.
The Israel Diamond Exchange will open an office in Dubai and the Dubai Diamond Exchange will open an office near the city of Tel Aviv.
Both Israel and Dubai are leaders in the global diamond industry. The diamond industry in Dubai has grown rapidly, from an export trade of $3.6 billion in 2003 to $23 billion in 2019.
In anticipation of tourists from Israel, the UAE’s restaurants and hotels are exploring a new food market: kosher, a term referring to food that conforms to Jewish dietary law.
The UAE capital city Abu Dhabi’s Department of Culture and Tourism has sent a memo to general managers at all hotels in the capital city advising them to offer kosher food to visitors.
UAE-based businesses are also looking to get in on the action.
A recently opened homegrown kosher eatery – Elli’s Kosher Kitchen – has paired with the Habtoor Hospitality group to become the first hotel chain in the country to offer kosher food and services.
Elli’s Kosher Kitchen has seen a huge increase in demand over the last few months, according to founder Elli Kriel.
The world’s largest kosher certification agency, Orthodox Union, has also been brought in to ensure kosher food delivery, and will be involved in the planning of Dubai’s Expo 2020 – although the expo has now been delayed to 2021 due to the coronavirus pandemic.
Technological collaboration could surge as innovators in the two countries bring mutual experience together. One field that could see particular benefit is that of transportation.
Self-driving “robotaxis,” which could be on the streets by the end of 2022, are arguably the most innovative fruit born from the deal thus far.
Al Habtoor Group and Israel’s Mobileye launched a partnership on Wednesday to create a fleet of self-driving “robotaxis” for Dubai.
Testing of the autonomous vehicles will begin in 2021 and a pilot program is expected by the end of 2022.
Another major transportation possibility is the potential opening of a direct shipping line between the two countries.
Dubai’s DP World said on Wednesday it is partnering with an Israeli group to bid for the privatization of Haifa Port, one of Israel’s two main ports, meanwhile Danish shipping giant Maersk announced on the same day that it would begin transporting cargo between the UAE and Israel.