Uber will not get back on the road in Abu Dhabi until the 'prohibitive" cost of operating in the UAE capital is overhauled, the ride hailing company has revealed.
Uber suspended its services in the capital in August 2016, saying the move was only temporary at the time.
But it has still not resumed its operations nearly two years on - and says a return isn't on the agenda unless it is able to reduce fare charges for customers.
Local rival Careem, which halted operations at the same time, has since returned to the market, and launched a new, cheaper “economy car” service last month in the capital. Careem’s economy service is available for hire for a minimum charge of Dh19 – compared to the base charge of Dh12 for a standard taxi.
In the press conference to announce the launch of Careem’s cheaper cars, Mohammed Al Qamzi, general manager of Integrated Transport Centre, confirmed that it was also in talks with Uber over a return to the emirate.
Uber’s Middle East chief says the company is "very keen" to get back on the road in Abu Dhabi, but insists it is difficult to run an affordable service in the city.
“We have been in conversations ever since we paused our operations over there. The reality is that we are very keen in launching Abu Dhabi again. It is a very interesting market,” said Anthony El Khoury, Uber’s general manager for the Middle East region.
“We were there and we know for a fact that there is a lot of potential. The reality is that we still feel that the current regulation, specifically on pricing, makes it a bit difficult for us to have an affordable and convenient service in Abu Dhabi.”
He said current regulations dictate that ride sharing or limo-style companies like Uber must charge 30 per cent more than standard taxis. And this makes it difficult for the company to run an affordable and convenient service, he added.
Mr El Khoury said Uber will continue to talk to the government about its return but it is difficult to say if and when it will ever resume operations in Abu Dhabi.
“What I can tell you is we have a philosophy of affordable transportation for everyone. Today’s regulation is prohibitive,” he said.
“This is why we are going to continue the discussions. Now depending on how the discussions go we might enter the market, but we really want to stand hard on this philosophy,” added Mr El Khoury.
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Read more:
Careem launches cheaper service in Abu Dhabi
Uber and Careem to increase prices in the UAE
Careem gets regulatory approval for cheaper services in Abu Dhabi
Careem blazes a trail for Middle East tech start-ups
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Business is doing well in Dubai, which is one of the company’s largest markets in the region, he said.
“You have a lot of tourists coming in, a lot of people who know Uber and who use Uber,” said Mr El Khoury.
The company has expanded its services in Dubai, launching UberX, which is 30 per cent cheaper than its standard cars.
“UberX is a product that a lot of discussion with the RTA of Dubai. We have seen an amazing success there. This is what we want to push towards,” added Mr El Khoury.
The Department of Transport has been contacted for a comment.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
