Sharjah fashions itself as a magnet for start-ups

From Amman to Cairo, several cities have been tipped as the Silicon Valley of the Arab world. But there is a new contender for the crown as the region’s star start-up centre: Sharjah.

Many of the UAE’s most dynamic entrepreneurial ventures have sprung up in Dubai, making it a magnet for the regional offices of established global players like Facebook, Twitter and LinkedIn.

But two new initiatives designed to boost Sharjah’s start-up status could result in the Middle East’s elusive Silicon Valley edging northwards.

The university-based Sharjah Entrepreneurship Centre, known as Sheraa, plans the first intake of its entrepreneur accelerator programme next month, while the separate shjSeen initiative is to start its incubator scheme, with 50 start-ups, in early 2017.

Both offer incentives such as free business licences and office space. But are they enough to make Sharjah shine bright as a start-up hub?

Najla Al Midfa, general manager of Sheraa – which means “sail” in Arabic – acknowledges that this is something that will take time.

“Entrepreneurship cannot be implemented overnight,” she says. “Sharjah is an emerging entrepreneurship hub.”

Sheraa, located on the American University of Sharjah campus to encourage students to become entrepreneurs after graduating, launched in January under the patronage of Sheikha Bodour bint Sultan Al Qasimi, chair of the Sharjah Investment and Development Authority.

It recently opened a co-working space and is accepting applications for its first accelerator programme until Thursday. It has already received more than 100, many of which are for tech-enabled ventures. Eight of the 10 accelerator places available will be for those with some link to one of the universities in Sharjah. But two are open to people without any university connection.

The three-month scheme’s first accelerator programme, which starts on October 15, will offer the teams a free trade licence for at least a year, a Dh35,000 grant, access to potential customers and the crucial mentorship sessions.

Ms Al Midfa, a UAE national who was born in Sharjah, says the emirate’s 20,000-plus student population is a key advantage for anyone looking to build a start-up business there.

“It’s a talent hub. If you speak to many entrepreneurs and start-ups in the region, one of the key challenges they face is access to talent. And we’ve got that right here,” she says. “The other draw, of course, is that it has a lower cost base than Dubai.”

Sheraa is just one initiative in Sharjah’s wider drive to become an entrepreneurial hub, says Ms Al Midfa.

The Sharjah Tatweer Forum, established in 2005 and which runs leadership programmes, is also part of the wider “ecosystem” contributing to this vision.

Jassem Mohammed Al Beloushi, chairman of the Sharjah Tatweer Forum, said earlier this year that the forum is gearing some of its activities towards the increasing number of Emiratis who want to set up their own business.

“Every young Emirati today likes to have his own company, likes to be an entrepreneur,” he told The National in May. “There are more companies now led by UAE nationals compared to five or 10 years ago.”

Another programme that aims to boost Sharjah’s start-up activity is called shjSeen, an initiative from the Sharjah Chamber of Commerce and Industry (SCCI).

Sara Al Madani, a board member of the SCCI and shjSeen board of trustees, was clear about Sharjah’s bold ambitions in the field.

“We want to make Sharjah the start-up hub in the Middle East,” she says.

Ms Al Madani, an Emirati national who started her own fashion label at 15, says Sharjah’s affordability, facilities, and good geographical positioning make it a prime contender.

ShjSeen’s first two-year incubator programme will begin in January, with applications accepted from both UAE nationals and expats up until December 15, Ms Al Madani says. The 50 successful applicants will have the use of office space, a free trade licence and access to facilities.

Ms Al Madani says while the UAE already provides people with many opportunities when setting up their own business, shjSeen would help to steer them in the right direction.

“In the UAE we have the opportunity, but not the right ecosystem,” she adds. “It’s easy to open a business in the UAE. But it’s like saying you have a fast car, you have a Ferrari, but you don’t know how to drive it.

“So this is the gap we are trying to fill. We are preparing these drivers for these fast cars. So we are just preparing people, teaching them how to use these opportunities in the right way.”

But it’s a long road ahead when it comes to Sharjah’s aim to be an entrepreneurial hub, cautioned Ms Al Midfa.

“You can’t expect to see a billion-dollar company by the end of your first year,” she says. “It has to take its time, it will evolve.”

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$5,000 a post: The power of UAE's social media influencers

Would you pay someone US$5,000 to do a quick Instagram post?

Probably not. But that’s exactly what a growing number of brands are doing in the UAE as they chase endorsement deals with social-media influencers.

Snapchat stars, YouTubers and bloggers in the UAE are commanding huge fees to talk about products, with many even issuing rate cards specifying what it costs for individual mentions on Facebook or Twitter.

While none have yet attained the social-media power of Kim Kardashian – one of a few celebrities who could make or break a brand with a single tweet – UAE consumers are increasingly listening to what local influencers say.

Evidence of this comes with a recent survey by the Dubai PR agency BPG Cohn & Wolfe, which found that 71 per cent of UAE residents ages 18 to 40 are happy to take advice from influencers before making a purchase.

One UAE influencer who has bagged several deals with brands is 28-year-old Max Stanton, who boasts about 529,000 followers on Instagram.

Mr Stanton was born to an American father and British mother but spent much of his youth in Yemen, and has picked up a fluent grasp of Khaleeji Arabic dialects.

His love of Arabic culture earned him the nickname Max of Arabia, lots of Emirati friends, and endorsement deals with brands ranging from car companies to restaurants and real estate developers.

Brands love Max of Arabia because he’s seen as personifying the crossover the between expatriate and Emirati cultures – but also, says Mr Stanton, because he has not sold out.

For example, Mr Stanton is a Middle East digital brand ambassador for Nissan, a role in which he posts about the cars to social media and attend events. But he owned a Nissan vehicle before he accepted the job – so he was already a fan. Likewise, Max of Arabia says he would never promote a restaurant serving food he cannot stomach.

“People have to believe you, they have to trust you, they have to think it is a product that you actually use,” he says.

Some of the biggest advertisers in the world are partnering with influencers such as Max of Arabia. Unilever, for example, says it was one of the first to partner with Uturn, an entertainment network founded in Saudi Arabia that helps connect brands with influencers.

Asad Rehman, the media director for Unilever in the Middle East and North Africa, says using influencers has distinct advantages over regular advertising and marketing.

“The followership is huge,” he said. Influencers “bring a great deal of authenticity to the communication. People relate to them more. They trust their advice,” he adds.

One Unilever brand to have used such endorsements is Sunsilk shampoo, which roped in several influencers for its Style Studio campaign, including the Dubai fashion designer Tamara Al Gabbani.

Using influencers is especially useful in reaching the all-important 18-to-40 age demographic, says Taghreed Oraibi, the PR director for BPG Cohn & Wolfe’s consumer practice.

Ms Oraibi led the company’s research, conducted with YouGov, into influencers in the UAE. The survey of 1,000 residents found that 63 per cent are more likely to buy fashion and beauty products based on what influencers say.

Influencers offer what Ms Oraibi calls “one of the most powerful tools in marketing” – word of mouth.

“We work with bloggers or influencers on a daily basis,” she says. “Brands are investing heavily in them … The average rate for a post would be from $1,000 up to $5,000.”

There are about 500 recognised influencers in the UAE, Ms Oraibi says, with partnerships with brands “growing tremendously”.

“When we first started working with influencers all we used to do was either send them products or invite them to a review. But nowadays, with the increase in [influencers having] rate cards, they charge for everything and anything. You have to pay them to review, and you have to pay them to wear a certain fashion brand or attend an event.”

But brands should look for long-term partnerships with influencers, Ms Oraibi says, and not necessarily just chase those that have millions of followers. “Followers can be bought,” she said. “[You need to] look at the quality of the posts.”

Another issue is the need for more regulation about disclosing when social-media posts are paid for – something most UAE influencers do not do, Ms Oraibi says.

Alex Malouf, the vice chairman of the Middle East Public Relations Association, agrees that influencers should disclose it when a seemingly off-the-cuff Facebook post is actually paid for by a brand.

“For the benefit of consumers, we need to be clear, we need to be honest with them,” he says.

What’s very clear, however, is that the influencers are getting more influential.

“A couple of years back, UAE influencers didn’t exist – they weren’t being seen as a credible option in terms of advertising,” Mr Malouf adds. “[Now] they’re moving from the niche to the mainstream.”

Era of fintech arrives on UAE investment scene

Would you trust a robot with your life savings, lend money to a complete stranger, or buy a stake in a start-up in a country you’ll never visit?

Many of us would, quite prudently, say no. But thanks to the boom in fintech – or financial technology – investors are doing all these things and more, and increasingly so in the tech-savvy UAE.

Fintech has emerged as one of the latest buzzwords among global entrepreneurs. And the online services that this technology makes possible are creating waves of interest – or hype, according to some – in the investment world.

Opportunities include peer-to-peer lending and “crowd investing” in properties and equities, as well as so-called “robo advisers”, which offer automated access to investments at a far lower cost than their human equivalents do.

But as with all investments there are some risks attached. Here’s the lowdown on the hot new fintech investment ser­vices active in, or on their way to, the UAE – and, crucially, how to avoid getting your fingers burnt.

1. Peer-to-peer lending to businesses

Given the collapse in global interest rates, investors are craving yield like never before. And one fintech model promising investors a better return is peer-to-peer lending, which allows individuals to lend to small and medium-sized businesses as part of a crowd.

Dubai’s Beehive Group specialises in just this, and has so far arranged Dh44 million in funding across about 100 loans.

Craig Moore, its chief executive, said more than 2,000 investors had signed up to the platform, and that the average return is about 12 per cent, of which Beehive takes 1 percentage point. The typical Beehive investor puts in between Dh10,000 and Dh20,000 across 20 different loans; Mr Moore emphasised that this should be done as part of a diverse portfolio.

“We never expect for people to have more than probably 3 to 5 per cent of their net wealth on a platform like this. But if they’re able to make double-digit returns, or even high single [digit] returns, then it makes a meaningful contribution to a good, well-balanced portfolio,” he told The National.

Such financing does come with risks – with Mr Moore saying that Beehive’s loan default rate stands at just more than 2 per cent. “You’ve got to make sure that you’re only investing a small amount of money that you can take a risk on,” he said.

(In comparison, the UAE’s overall rate of non-performing loans stood at 5.2 per cent in 2015, according to the IMF and World Bank. Those numbers do not indicate what the rate is specifically for SMEs, but it was reported in November that a rising number of company owners are abandoning the UAE without repaying debt. People in the SME sector may have left behind Dh5 billion of loans in 2015, Abdul Aziz Al Ghurair, chief executive of Mashreq and chairman of the UAE Banks Federation, told Bloomberg at the time.)

Another peer-to-peer lending platform courting investors in the UAE is the London-based ArchOver, which secures loans against the borrower’s accounts receivable as a way of providing additional security to the lender. At the time of writing it has arranged more than £20 million (Dh96m) in loans, promising investors interest of between 6.25 per cent and 8 per cent, with zero defaults.

“The hunger for yield is definitely still out there. People are putting money in, and they believe in our secured and insured model,” said Angus Dent, chief executive of ArchOver. Although the platform is open to UAE investors, it does not currently offer loans to SMEs outside the UK.

2. Peer-to-peer lending to individuals

The world’s largest peer-to-peer platform for individual loans – the UK-based Zopa – was launched in 2005, before fintech was a common term. To date, more than £1.62bn in consumer loans has been arranged through the platform, with 63,000 active lenders. Zopa’s domestic service is for UK residents only.

The peer-to-peer lending model is yet to take off in the UAE but that could be about to change, according to one expert on financial technology. David Martínez de Lecea, a Dubai management consultant who has worked with fintech com­panies, said that he was aware of at least one entrepreneur looking to bring the Zopa-style model to the UAE. One barrier has been the lack of clear regulation in this area, he said. “It’s not allowed, but at the same time it’s not forbidden,” Mr de Lecea said.

3. Crowd funding for equities

One model that has taken off in the UAE is crowd funding for equities, which helps investors buy stakes in start-up and small businesses. One of the most prominent platforms is Eureeca, which has offices in Dubai, London and Kuala Lumpur.

Christopher Thomas, Eur­eeca’s co-chief executive and co-founder, said 16 businesses have been successfully funded through the platform, raising $3.5m with an average individual investment of $5,800.

Eureeca investors have so far benefited from one formal exit, involving a company called Search in Mena, which delivered a return of 150 per cent over 13 months. That meant that, if an investor had put in Dh10,000, they received Dh25,000 back. “This … was unusual because normally it will take a number of years before exits are realised,” said Mr Thomas.

Given that most start-ups fail, and that there is no guarantee of a return, investing through Eureeca also comes with its risks.

“This is why it is very important to build up a portfolio of deals,” said Mr Thomas. “The key is div­ersification. Who knows – you may invest in the next Facebook, Uber or Airbnb, which is the dream of every investor.”

Joe Hepworth, chief executive of the Dubai-based British Centres for Business, which helps UK firms establish and expand in the UAE, has invested in three companies through Eureeca. He said he is hopeful of a decent return but is wary of the old adage – “only invest what you can afford to lose”.

Mr Hepworth said: “I have invested small amounts – a few thousand dollars in each deal. Returns-wise, I would hope for the businesses to at least double in value before exiting in three to five years’ time.”

4. Crowdfunding for property

Fintech has also been used to bring crowdfunding to work in property investments. In the US, one of the most prominent platforms for investing in real estate is called Fundrise, which promises returns of 12 to 14 per cent on individual stakes starting from $1,000, although it is not available to foreign investors.

Mr de Lecea said that the ­model has been slow to take off in the UAE, although it has been attempted. “It’s really hard to reach volume,” he said.

One such attempt is Humming Crowd Realty in Abu Dhabi, which lists on its website three funded deals with claimed annual returns of between 8 per cent and 11 per cent. The company did not, however, respond to requests for comment and phone calls went unanswered. Another company, Dubai’s Durise, in 2014 announced the launch of its crowdfunding concept for property, allowing investors access to the market from just $5,000.

5. Robo-advisers

Many UAE residents complain of unsolicited calls from so-called financial “advisers”, loudly selling the virtues of long-term investment plans, while remaining a little quieter about their own commission rates. So why not turn to someone – or something – you can trust better … like a robot?

So-called robo advisers offer automated investment services, assessing individuals’ appetite for risk through questionnaires, and managing a portfolio of exchange-traded funds for a low cost. Popular US robo-advisers include Wealthfront and Betterment – although neither are available overseas.

Comparable services are springing up in the Middle East with the arrival of Finerd, and a planned new robo-service by the fee-based financial advisory AES International, which has an office in Dubai.

Sam Instone, chief executive of AES International, said he was wary of other new and sector-specific investment opportunities being made possible by the rise of fintech.

“If you are investing into fintech, or into crowdfunding for equities, or real estate … or peer-to-peer areas, we would look at that [as being] very sector-specific. We believe that the only way to invest properly is to diversify very well at a low cost, and keep your money in the market,” he said.

“Good investment is like watching paint dry, or grass grow. It’s boring. Anything else is speculation.”

The robo-adviser model is more sensible, Mr Instone says, and says his own company plans to launch such a service, called the AES Direct Investment Platform and serving investors across the Arabian Gulf, next year.

It is currently difficult for a company like AES International to provide financial planning for those with less than £500,000 to invest, because the cost of the advice would eat up the potential returns, Mr Instone said. And so there is potential for robo-advisers to help give those falling in this “advice gap” access to exchange-traded funds (ETFs) with investments of as little as $1,000, he added.

But Mr Instone warned against other services that he said amounted to “online gamb­ling sites”, such as speculative spread-betting sites.

This, he said, is the negative side of the fintech boom for investors.

“It’s a double-edged sword. You can use technology as a force for good, which is what low-cost robo-advisers are doing. Or you could use it to perpetuate the [negative] industry culture.”

Case study: Khaled Al Nuami

Investing in property is an obvious choice for many UAE investors – but the hefty deposits required can be prohibitive for some.

This was the case for UAE national Khaled Al Nuaimi, who ended up turning to new financial technology as a way to make an investment for his future.

The 28-year-old government employee, who lives in Abu Dhabi, bought shares in the start-up, which successfully raised $100,000 via the Dubai crowd investing site VentureFin.

“If you want to make money, real estate is the place to do it. But because the income is not that high for me, investing a very small amount in a start-up company [was a good option],” said Mr Al Nuaimi. “It’s more of a long-term shareholding value. I just want to keep it there, see how it goes.”

He said investing via VentureFin, which launched in February, is an “easy process”, with the service doing due diligence on the company and sending share certificates to investors.

So far is the only start-up that the platform has listed. It plans to post more after summer, as well as launching a crowdfunded loans service early next year, said Ibrahim Jaber, VentureFin’s founder and chief executive.

Investing in young businesses is risky – with Mr Jaber pointing out that more than 80 per cent of start-ups fail.

“With every investment comes risk. But the rewards in comparison to that risk are much higher,” he said.

“You can invest in government bonds, for example, and get a yield of 1 per cent, 2 per cent, 3 per cent in five years. Well the difference is that, if you invest in a start-up, the rewards could be 10 to 100 times higher – take Twitter or Uber, for example.”

Dubai lost property start-up puts purpose before money-making

We all know that money talks – but for one Dubai-based entrepreneur, the conversation is about much more than that.

Kavit Handa is the chief executive of ReturnHound, an online service that aims to transform ‘lost and found’ globally. It allows staff at hotels and other public places to log lost property, while visitors can register items they have mislaid. If there is a match, ReturnHound quickly arranges a courier, if required, and handles payment for delivery.

But it’s no guaranteed moneymaking machine. ReturnHound allows users, if they wish, to pick up lost items from where they were left and not pay a cent. And while getting something couriered back comes at a price, the only charge ReturnHound itself levies is an optional $5 fee, of which it takes $2, with $2 going back to the employee who found the lost item, and $1 to charity.

That may sound like a somewhat shaky revenue stream. But for Mr Handa – a former Merrill Lynch executive who has launched several ventures – it’s a vital business model for the 21st Century.

“Looking at it from a purely financial perspective is very much an old way of doing business,” says the 44-year-old British citizen.

“The world is just becoming too conscious, and information is just too available for you to just sit there and say ‘I want to grab all the money and pour it into my corner of the room’.”

Mr Handa says businesses that wish to survive these days need to adopt the “triple bottom line” approach – a framework that evaluates organisations according to their financial, social and environmental performance. ReturnHound’s plan, he says, involves giving money to underprivileged children through its charitable platform – called the RH Foundation – as well helping prevent unclaimed items going to landfill.

Investors seem to agree with the approach. Courier firm Aramex holds a 20 per cent stake in ReturnHound, an Asian venture capital firm holds 30 per cent, and the company is confident about a potential series A investment round in the next year or so.

Venture capital firms that have not backed ReturnHound say the “triple bottom line” concept has merit.

“We love to invest in businesses that are able to have [something] beyond just the profit objective,” says Dany Farha, chief executive and managing partner of Beco Capital in Dubai. “As long as there is a means to an end from a commercial perspective.”

Mr Farha says Beco Capital had been approached by some start-up businesses that had not yet established how they will make money. That’s OK, he says, as long as the entrepreneur is serious about solving a particular problem.

“If somebody is solving a massive problem they are extremely passionate about, they will find a way to make it a sustainable and profitable business,” says Mr Farha.

ReturnHound was certainly born out of an emotional personal experience. Mr Handa was on holiday in the Maldives with his family, and upon returning to Dubai realised his young daughter Sienna, then six, had left her Minnie Mouse soft toy behind. It was only after several phone calls, and an agonising 18-day wait, that the toy was finally returned.

The entrepreneur started working on ReturnHound last November, and has been in talks with “numerous” hotel groups about adopting the system. Mr Handa says it is free for hotels to use and – while Aramex is a partner – it is “agnostic” as to which courier firm is used to return items.

His vision for the business, which is registered in Dubai and had 14 employees as at the end of May, is to be “the standard for lost and found globally”. He sees it as particularly scalable worldwide because the issue of lost property is “the ignored, troubled child” of hotels and other organisations.

“It’s not sexy enough to attract lots of people,” says Mr Handa. “I can unequivocally tell you that we’re neither the next Facebook nor the next Uber.”

That said, Mr Handa does draw one comparison between his own young venture and web behemoths like Facebook and Amazon.

“These companies didn’t go out on day one saying ‘you know what, I’m going to start a company because I want to make a tonne of money’. They said ‘I want to start a company because I have a purpose’,” he explains.

“If you made $2 a day on the 250,000-odd items that are lost globally every day, that’s $500,000 a day. That’s a lot of money you could make. But if I decide to say ‘I want to make $20 every time someone loses something’, that’s a problem. I don’t want to capitalise on someone else’s misery,” the entrepreneur adds.

“We took a step back and said, ‘what’s our main purpose here’. And our main purpose with this was not really to go out and make money. It was to go out and change a problem.”

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Future of flight: From the return of supersonic travel to pods that clip onto planes

Fasten your seatbelt: you’re about to embark on the flight of the future. This high-tech journey – departing in the 2060s – starts at Abu Dhabi’s central rail station, where you board a train that whisks you to the airport at 200 miles per hour.

Above you, at 60,000 feet, a supersonic jet lets out its trademark “boom” as it accelerates towards its top speed of 2,335 kilometres per hour on a three-hour $100 flight to London. On the airfield a “hypersonic” plane is about to embark on a longer journey to San Francisco, in which it will soar 80km above Earth for a journey that will take just 90 minutes.

Your train grinds to a halt at the airport. But instead of disembarking, your capsule-like carriage is automatically “clipped” – along with two separate pods, one holding passengers from Dubai, the other cargo – onto an awaiting fixed-wing aircraft. Your “train” is now a plane and you’re ready for take-off – all without leaving your seat or, indeed, queuing at passport control.

It sounds like a flight of fancy. But in 2016 all these aviation technologies are being explored or even developed – pointing to radically different travel experiences in the decades to come.

Just ask Blake Scholl, a United States aviation entrepreneur and pilot. He says: “I want to live in a world where we can get anywhere on the planet in five hours – for $100.”

It’s an ambitious aim, but Scholl is founder of Boom Technology, in Denver, which plans to reintroduce supersonic passenger travel within a decade. A former Amazon executive who created mobile technology start-up Kima Labs, later acquired by Groupon, this year unveiled the design of a 40-seat plane that would fly up to 2,335kph, travelling from New York to London in three-and-a-half hours. A trip from Abu Dhabi to the UK capital would be even shorter.

“It’s going to change the way we experience the world,” he says.

Aside from the business market, the aviation entrepreneur sees supersonic flights opening up leisure travel – cutting in half the 14-hour flight between Abu Dhabi and Sydney, for example. “You come into work on a Monday morning and people [ask], ‘What did you do over the weekend?’,” says Scholl. “Imagine if you could say ‘I went to the opera in Sydney’.”

Richard Branson’s Virgin empire has already taken options to buy 10 Boom jets, with a European carrier having reserved another 15. And Scholl says the Arabian Gulf is likely to be “one of the very first markets” where Boom’s supersonic jets will fly.

Two of the Gulf’s biggest airlines have expressed interest in supersonic jets. Akbar Al Baker, chief executive of Qatar Airways, said in April that supersonic travel was “hugely viable” due to technology having moved on after the “fuel guzzling” engines used by Concorde.

“In 10 years’ time, there will be a very high probability of Boeing and Airbus launching something similar,” he told the Dubai Eye radio station. Dubai’s Emirates airline once dismissed supersonic travel as too expensive and damaging to the environment. But Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates Airline and Group, told the radio station the same month that he hoped supersonic travel would one day once more be possible.

And the UAE also has an interest in faster air travel through Abu Dhabi’s Aabar Investments, which has a 37.8 per cent stake in Virgin Galactic. While Branson’s pioneering company is initially looking at space tourism, it has said it could also make passenger jets for long-haul travel above the Earth’s atmosphere. Such technology would reportedly allow passengers to travel from London to Sydney in just two-and-a-half hours.

“The Middle Eastern interest is tremendous,” says Scholl. “If you look at the leading airlines in the world, they are the ones based in the Middle East – the Qatar [Airways], the Emirates, the Etihads… Those guys are the leaders in passenger experience today. And it only stands to reason that at least one of those is going to offer the new leading travel product.”

A prototype Boom jet is set to fly at the end of next year, after which rigorous safety, certification and regulatory approvals processes would be required before a passenger model could take off. But given the proposed design only currently uses existing aviation technology, Scholl expects “no major roadblocks” and says the first Boom supersonic jets could launch in less than 10 years’ time.

It would not, of course, be the world’s first supersonic passenger jet. That honour was taken by the Concorde, which first flew with paying passengers back in 1976.

Scholl describes Concorde as the “elephant in the room” when talking about the rebirth of supersonic travel. But he says the extremely high price of tickets – up to $20,000 – on the joint UK and France-developed plane made it economically unfeasible.

Boom plans to sell its first round-trip tickets for about $5,000 – putting them roughly in the same bracket as top-priced business class tickets. But Scholl says this could come down as supersonic travel becomes more mainstream, using even bigger planes.

Scholl says that while the first 50 years of aviation saw fundamental advances in technology, developments over the past 50 years have been along the same trajectory.

“If you look at an [Airbus] A380 and you look at a Boeing 707 from the late 1950s, and you squint, they’re kind of the same airplane,” he says.

There are many other high-tech visions as to how aviation might look in the future. Some propose even faster travel, with scientists at the German Aerospace Center saying last year that “hypersonic” passenger planes – which could carry passengers between Europe and Australia in 90 minutes – could be a reality by 2030. The proposed “SpaceLiner” would be propelled to 50 miles above Earth on the back of an unmanned, reusable rocket-booster craft; it would then detach and the passenger cabin zoom to its destination at 24,140kph.

But the future of flying might not necessarily be about speed: airships are also making a comeback, with one Dubai-based company working on plans to use them for cargo. Airships Arabia is exploring “hybrid airships” technologies and anticipates both freight and passenger operations will start in 2018. The freight services would initially be able to transport 10 tonnes per load at distances of more than 3,500km. It is also exploring passenger services with a potential seating capacity of 48 “in yacht-style comfort”.

The environment is another factor that is shaping how things are developing: Nasa is reportedly developing an electric-powered plane, while the sun-powered Solar Impulse 2 completed the end of its round-the-world journey on Tuesday after landing back in Abu Dhabi. And Airbus – manufacturer of the A380 superjumbo – has proposed the idea of aircraft flying in formation to save fuel.

The future of aviation is not all about what happens in the air. Airport authorities in the UAE have massive expansion plans underway to boost passenger capacity. Abu Dhabi’s main airport is expected to handle 48 million passengers a year by 2025, with numbers boosted by the new Midfield Terminal, expected to open in December 2017.

Dubai International Airport, which opened its US$1.2 billion (Dh4.407 billion) Concourse D in February, expects passenger numbers to hit 85m this year, and up to 103.5m by 2020. And the long-term plan for Dubai’s Al Maktoum International Airport, currently capable of handling 5m people annually, is for a whopping 220m passengers a year.

One seemingly outlandish proposal for how we will fly in the future is Clip-Air, a concept of the Transportation Center at Switzerland’s Federal Polytechnic Institute of Lausanne (EPFL).

It is a modular system in which pod-like air capsules are transported by a fixed-wing aircraft. Multiple pods could be carried by a single aircraft in different configurations – with more economy class cabins, or all cargo, for example – depending on demand. The pods could even detach and continue their onward journey by rail, without passengers needing to disembark.

Clip-Air sounds far-fetched but its inspiration, says project manager Claudio Leonardi, is actually the humble shipping container.

“The possibilities of modular aviation are very big, and very interesting. When you [consider shipping] containers, it was a big revolution,” he tells me.

Alexandre Milot, industrial liaison officer at EPFL, says the integration of air and rail systems is something being explored. “We’re trying to offer door-to-door travelling systems,” he says.

But Clip-Air is, Milot acknowledges, a long-term project. The first phase of development would involve building a tiny “modular drone”, followed by small aircraft within about 10 years. But the idea of a commercial airliner, with three detachable pods, is probably not realisable until 2060, he says.

Not everyone, of course, agrees that such fantastical flying machines will ever get off the ground.

Aviation expert Saj Ahmad, chief analyst at UK-based StrategicAero Research, says Clip-Air is a “novel idea” but will inevitably be constrained by the huge development costs of linking the air and rail networks.

“The costs involved are huge and you cannot expect airports or cities to stump up money for this,” he says. “In a nutshell, it ain’t happening.”

Ahmad disputed the suggestion by Scholl that progressions in aviation technology have slowed over the past few decades, pointing to the huge steps in aircraft design which makes them lighter, more fuel-efficient and environmentally friendly.

And it is these concerns that really matter to airlines, says Ahmad. “[They] aren’t bothered by gimmicky new designs – they want efficiency, lower costs, better environmental performance and assets that hold their value,” he says.

“Real innovation will be low key… The media buzz about Boom, Clip-Air and other fanciful ideas will, in all reality, quickly disappear like the dodo.”

Ahmad points to other proposed revolutionary concepts in aviation, such as on-board swimming pools, which have not materialised. “Why? Airlines want bums-on-seats, not people swimming at 38,000 feet,” he says. “Flights in 2050 will likely be conducted the way they are today – and if anything – with greater airport security, screening and delays.”

Back in the US, Scholl has a more optimistic, and some might say more romantic, view of how we will fly in 2050.

“Going around the world is going to be like going down the street,” he says.

For him, a new era of supersonic travel will mean more than just getting places quickly. It could transform the way humans interact – and even make long-distance relationships less of a problem.

“You can be close to people that you just can’t be close to today.”

Ben Flanagan is a freelance journalist based in London.

McLaren shows clean pair of wheels to rivals in Arabian Gulf sales

Supercars may be quick but sales overall are moving at a somewhat slower pace in the Arabian Gulf. McLaren, though, is bucking the trend, outpacing peers such as Lamborghini, Ferrari and Porsche.

Drivers from the region have earned a reputation for having an appetite for fast cars, partly thanks to the summer “supercar season” in London, in which wealthy tourists from the Gulf parade their motors around the UK capital.

But the reality is that, while supercar sales are increasing globally, estimates show that they have plummeted by one third in the Gulf since 2013.

IHS Automotive, which tracks motor sales, forecasts that just 707 of the world’s most expensive sports cars will be sold in the six GCC countries, plus Iran, this year. That compares with a high of 1,058 in 2013.

Conversely, global sales of the world’s most expensive sports cars rose from 13,446 in 2013 to a forecast 13,590 this year.

The numbers relate to sports cars valued at £150,000 (Dh723,000) and more, and so represent the pinnacle of the market. The category includes the likes of the Aston Martin DB9, Lamborghini Huracán and McLaren 675LT Super Series, as well as super-expensive models such as the Ferrari LaFerrari at £1.1 million (Dh5.31m) and Porsche 918 Spyder at £712,000.

But it does not include some of the cheaper McLaren cars such as the 540C, at £125,000, 4x4s, or high-end saloons such as the Rolls-Royce.

For McLaren, the regional trend is considerably different. In the Middle East and Africa, it reported a 69 per cent increase in unit sales in the first half of 2016.

The Bahrain-backed McLaren Automotive last week reported 2015 operating profits of £23.5m, a 13.5 per cent increase from 2014, from revenues of £450.6m, which were 5.2 per cent lower. It projects revenues will increase by 50 per cent over the next two years and double by the end of 2022.

The company spent £123.9m on research and development in 2015, when it added five new cars to its range and established its three product tiers, namely the Sports, Super and Ultimate Series. Under its Track22 Business Plan, leading through to 2022, the company plans to invest £1 billion as part of its aim to launch 15 new cars or derivatives.

In markets such as the UAE, there are some distinctions McLaren sees from those in Europe and North America. These include a higher number of requests for customisations – options such as carbon-fibre additions, special stitching or bespoke colours – says Andreas Bareis, the managing director of McLaren Automotive in the Middle East, Africa and Latin America.

Ian Fletcher, a principal analyst at IHS Automotive in London, attributes the overall drop in supercar sales in the Gulf primarily to the crash in oil prices.

But he says the regional market remains “huge” for supercar manufacturers, and expects an upswing in sales in the wider Middle East and Africa region in the years to come. “From a low in 2016 it will start to climb again towards the end of the decade,” he says.

Global supercar sales are cyclical, depending on both economic conditions and the manufacturing patterns of the handful of car makers in the category, Mr Fletcher says.

“When Ferrari launches the new 448, for example, they’ll be an uptick in interest.”

But supercar manufacturers are “trying to smooth out these curves in demand” by bringing out staggered model variants such as fixed-roof coupés, “spyders” – or open top roadsters – and track-orientated ultra performance models, Mr Fletcher says.

Winning brands include McLaren Automotive, based in the United Kingdom, which is looking to build about 3,000 cars this year – almost double the 1,654 it sold last year.

Others include Lamborghini, which this month said it had set a new global sales record, having delivered 2,013 cars in the first six months of 2016.

Mr Fletcher says that was due to the huge success of the Lamborghini Huracán and broader factors such as supercars becoming more reliable and practical and – surprisingly, perhaps – the availability of credit facilities to finance their purchase.

“If you could get [a Lamborghini] to start back in the 1970s and 1980s, you were having a good day. Nowadays you can … even do the shopping in it if you really want to,” says Mr Fletcher.

“There’s a lot more [buyers] – especially with the ability to get credit for these vehicles.”

Global supercar sales are expected to continue rising over the next few years, although that will depend on model cycles as well as economic factors such as the situation in China and fallout from the UK ‘Brexit’ vote, Mr Fletcher adds.

“If there’s a little bit of a depression or recession somewhere they’ll tend to take a little bit of a dip, as people look at their expenditure and decide perhaps that buying a supercar – which is quite a frivolous purchase – is not a necessity,” he says.

“They are almost like the canaries in the mine with regards to the global economy.”

McLaren's regional sales accelerate for first half of year

London // The British supercar brand McLaren Automotive is racing ahead of the competition, with a surge in sales of its Dh723,000-plus motors in the Middle East and Africa.

That comes despite a slowdown in the overall luxury sports car market, which in the Arabian Gulf and Iran has plummeted by one third since 2013.

In contrast, McLaren Automotive saw Middle East and Africa unit sales rise by 69 per cent in the first six months of 2016, compared with the same period last year, according to figures published exclusively today by The National.

Andreas Bareis, the managing director of McLaren Automotive in the Middle East, Africa and Latin America, said that was partly due to the introduction of the marque’s entry level Sports Series.

But unit sales of the Super Series range – which starts at Dh900,000 and includes the 650S Coupé and Spider, along with the limited production 675LT models – also improved by 19.3 per cent, he said.

“The key driver for us is obviously the Sports Series,” Mr Bareis said. “Also we had some synergies from a brand-awareness point-of-view – here in the Middle East more and more people are now aware about the McLaren offerings.”

IHS Automotive, which tracks motor sales, forecasts that just 707 of the world’s most expensive sports cars – those costing Dh700,000 or above – will be sold in the six GCC countries, plus Iran, this year. That compares with a high of 1,058 in 2013, although these numbers do not account for some of McLaren’s cheaper models.

Mr Bareis, speaking from McLaren Automotive’s regional base in Bahrain, agreed that the top-end car market in the region has suffered.

“Therefore with our results we are very pleased, because it’s going [in the different direction],” he said. “It’s quite a tough competition here in the market.”

McLaren sold a record 1,654 cars globally during in 2015, a number it expects to double this year, Mr Bareis said.

He did not specify how many unit sales were made in the Middle East and Africa, but added that the region accounts for approximately 10 percent of the global volume.

Sales of the more expensive models – including the now-discontinued P1, which sold for £866,000 (Dh4.1 million) in the United Kingdom – are, however, disproportionately high in the Middle East market, Mr Bareis said. The P1 was part of the marque’s top-end Ultimate Series, in which it is does not currently make any new cars.

And the road ahead appears even more enticing for the British supercar maker.

Despite the tough market conditions, Mr Bareis said he sees future “continuous growth” in the Middle East.

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McLaren supercars – behind the scenes at the birthplace of dreams

London // The McLaren Technology Centre, set in the leafy “stockbroker belt” outside London, is a place where British supercars are born – and, as with many a birth, grown men have cried.

As I found during a visit there for The National, on Sunday, there is plenty to stir the emotions of ardent petrol-heads at the home to the both the Bahrain-backed McLaren Automotive, and its namesake F1 team.

But it is not the line of historic Formula 1 racing cars along the building’s indoor “Boulevard”, nor the gracefully sweeping curves of the Norman Foster-designed headquarters, that drives people to tears.

Nor is it the frosted glass which, frustratingly for nosier visitors, shields workshops where new road cars and high-speed F1 racers are being developed, and gives the place the feel of a top-secret gadget lab from a James Bond movie.

It is not even the eye-watering prices of some of McLaren’s road models, which in the United Kingdom have ranged from about £126,000 (Dh615,000) to £866,000 for the recently discontinued – 350kph – P1.

It is, rather, the sight of a McLaren supercar descending from the on-site assembly line – something that has caused some of the marque’s wealthy customers, literally, to weep.

Arriving at McLaren’s glass-walled UK headquarters by taxi does not seem suitably glamorous. But given the dearth of supercars-for-hire outside the train station at nearby Woking – a busy but bleak commuter town about 40km from central London – it is an unfortunate necessity.

Invited visitors are issued electronic passes that open some doors, but certainly not all. Security is paramount, mainly due to the need to protect the industrial secrets of McLaren Racing – home of the McLaren-Honda Formula 1 team – as well as McLaren Automotive, which builds luxury sports cars for general sale, and its associated technology business.

From above, the McLaren Technology Centre resembles a giant Chinese yin-yang symbol, one side being the kidney-shaped main building, the other a lake. The taxi sweeps around the crescent-shaped lakeside road, reserved for visitors and VIPs, to the main entrance.

Here awaits Amanda McLaren, the only child of McLaren Racing’s New Zealand-born founder Bruce, who was killed in a testing accident at the UK’s Goodwood race track in 1970, when Amanda was just four years old.

As a young adult Ms McLaren worked in health care in New Zealand, with McLaren Racing moving under different ownership after her father’s death. But, decades later, after a meeting with the McLaren Automotive chief executive Mike Flewitt in 2013, Ms McLaren and her husband Stephen were offered jobs.

As a brand ambassador for McLaren Automotive, part of her role is to show customers around the centre. If they time it right – and the centre is not on “lockdown” due to new car prototypes being developed – they will get to see their own car leave the assembly line at the McLaren Production Centre next door.

“We’ve had customers cry when they first see their car. They’re so attached emotionally,” Ms McLaren tells The National.

“One guy said, ‘It was like watching my first child being born.’ The car touched the ground and he dissolved into tears.”

More tears are likely to be shed this year compared with previous years. McLaren Automotive increased its production capabilities earlier this year, adding 250 staff to its ranks, which now number about 1,750. A second shift at its Production Centre started in February, with the aim of doubling the number of cars made here daily from 10 to 20. Every single part of a McLaren road car is designed at the centre, before being manufactured off site, and shipped back for assembly.

The brand is looking to double the 1,654 cars it built last year, primarily to meet demand following the introduction of its Sports Series. That includes cheaper models such as the 570S, which has a UK list price of £143,250, making it accessible to a broader – well, slightly broader – customer base.

Many of these cars will be destined for showrooms in the Middle East – including those in Abu Dhabi, Dubai, Saudi Arabia and Bahrain – thanks to the company’s expanded global footprint into territories traditionally dominated by longer-established rivals such as Lamborghini, Ferrari and Aston Martin.

“Six years ago we had one retailer, in Hyde Park, London. And now we’ve got over 80 retailers in 30 countries,” says Ms McLaren. She adds that the company’s order books are full, and “demand outstrips our ability to supply.”

But limited supply is of course part of any niche brand’s appeal. Due to the bumper price tags, supercar sale numbers are naturally quite low globally. About 13,590 sports cars priced at £150,000 or more are forecast to be sold this year, of which just 707 will be in the Arabian Gulf and Iran, according to IHS Automotive data.

And while McLaren’s production will increase to above 3,000 this year and “up to 4,500 to 5,000” later, that is about as high as it can go, Ms McLaren says.

“We were profitable last year at a smidgeon over 1,500 cars. So we don’t need to sell volumes,” she says. “The exclusivity of a McLaren is also appealing to our customers. And so keeping that number capped or fairly low is important.”

Analysts confirm that McLaren’s sales are on the rise – but point out that this will probably slow when the marque starts to renew its more expensive models.

“McLaren is still very much in a growth phase,” says Ian Fletcher, a principal analyst at IHS Automotive in London. “We’ll probably start to see them level out in about 2018, 2019, once they’ve finally released all the variants of the sports series and they can then go to start renewing their Super Series models like the 650S.”

For now, McLaren is launching at least one new road car model a year _ although it has ruled out producing a 4×4, a route pursued by some other luxury car makers. “We’re profitable without doing it,” says Ms McLaren. “Our expertise is in supercars. That’s what we’re good at. And our customers aren’t asking for a SUV.”

Ms McLaren, dressed in a grey suit and wearing a silver McLaren badge, sits in the company’s sleek meeting room, her eyes frequently flicking to the £154,000 (Dh750,000) McLaren 570GT, its doors raised vertically, silently rotating on a nearby platform.

The company she works for has its origins in McLaren Racing, which was established by her late father in 1963. Although Bruce McLaren intended to manufacture road cars, this dream was cut short by his death. Road cars were subsequently built under his name – notably the 64 limited edition McLaren F1 road models made between 1993 and 1998 – but McLaren Automotive was not formally launched as a stand-alone manufacturer until 2010. Part-owned by Mumtalakat, the Bahraini state holding company, McLaren Automotive is separate from its Formula 1 namesake but shares facilities at the McLaren Technology Centre, which opened in 2003.

“There is crossover between the businesses with regard to technologies and, of course, our road cars have drawn an awful lot of innovation and technology from the Formula 1 cars,” says Ms McLaren.

Like the cars produced here, the McLaren Technology Centre may look pretty but many of its design features are more functional than aesthetic. Water from the lake actually forms part of a cooling system for the wind tunnel, in which prototype F1 vehicles are tested. Other neat design details include the reduced air pressure in the staff restaurant, which means that air rushes in when the door is opened, helping to contain food smells and moisture.

Behind glass in a sunken room off the main Boulevard, the intensely focused staff work painstakingly to make parts for McLaren F1 cars by hand. There’s a “heritage” section, where old cars are fixed up, as well as a pit-stop practice area. “I say to people: ‘Don’t blink, or you will miss it,’” says Ms McLaren.

The current McLaren F1 drivers and former world champions Jenson Button and Fernando Alonso visit the centre for various reasons, such as to use the car simulator, physiological testing at the High Performance Centre, or to attend events. The F1 car area is spotless – about as far from the oily rags of a traditional car garage as you can imagine – and there are no fuel smells or engine sounds to be heard.

“It is clean for a reason,” says Ms McLaren. “You’ve got millions of pounds of car down there, so you don’t want oil dripping around.”

Opposite is a long glass cabinet with 500 or more trophies, including several won by the brand’s late founder. The positioning by the F1 car workshop is no accident: “It’s strategically placed in front of these guys to remind them what it’s all about,” says Ms McLaren.

Technology has, of course, moved on considerably since Ms McLaren’s father used to build and race cars. But Ms McLaren says “the DNA of McLaren” and its core values, such as a particular attention to detail, have not changed in the supercars it produces today.

“I wouldn’t link his name to something that I didn’t think he would believe in,” she says of her father. “I think he would take one look at this and say, ‘Good job.’”

And many of the teary-eyed supercar buyers visiting today’s high-tech McLaren HQ would seem to agree.

Former Qatar Investment Authority chief: Brexit uncertainty keeps investors at bay

LONDON // Investors will remain hesitant until there is more clarity on Britain’s withdrawal from the European Union, the former head of one of the Arabian Gulf’s biggest sovereign wealth funds has said.

Ahmed Al Sayed, the former chief executive of the Qatar Investment Authority and Qatar Holding – which has invested billions in the UK in assets ranging from Barclays Bank to the iconic Harrods department store – said there would be a “wait and see” approach given the uncertainty over when the ‘Brexit’ will take place.

“Investors in general need clarity, are seeking clarity,” he told The National.

His comments came amid grim news that Britain’s economy had been battered by the Brexit vote and faced a “dramatic deterioration” in activity. Private sector business activity, as measured by the research group Markit’s Purchasing Managers Index, sank in July to 47.7 points, compared to 52.4 last month.

It was the lowest level since April 2009 following the global financial crisis and sparked predictions from some quarters of a painful recession, last month’s PMI figure is below the boom-or-bust 50 points barrier that signals contraction, Markit said.

Mr Al Sayed, now the founder and chief executive of Sharq Capital Investment, on Thursday spoke at a debate about the Brexit vote at the GCC-British Economic Forum in London, organised by the Arab-British Chamber of Commerce.

“The investor appetite will be more ‘wait and see’,” he told delegates.

“Fundamental issues need to be settled for the investor to make their decision to move … We would still like to know how the tax treatment will be in the future for specific sectors and in general. You will have a currency situation also.”

It is still not clear when Britain will formally leave the European Union – something adding to the uncertainty in the investment climate.

“Personally I don’t think that will happen soon … Maybe we will not see the Brexit until 2019 or 2020,” said Mr Al Sayed.

“This uncertain situation will remain until things become clearer. Then you will see the investment appetite.”

Despite the current climate, Mr Al Sayed said Brexit could bring opportunities, such as “more flexibility” on bilateral trade deals with the GCC.

“With Brexit, that could create opportunity – I’m not saying this is bad. But until we know what is the outcome, then it will be more clear to judge the situation,” he told delegates. “The trade between the UK and the GCC potentially should be increased.”

Abdulrahman Rashed Al Rashed, the managing partner at the Saudi Arabia-based conglomerate Rashed Abdul Rahman Al Rashed & Sons Group, agreed that it was a possibility that Brexit could boost trade with the GCC.

“In the past I think there were limits [that] the UK could have in bilateral relationships because of the fact that the UK is part of the EU, and they are governed by the EU trade policies. But I think now, because of this new situation with the Brexit, that might change,” he told the GCC-British Economic Forum.

“Personally, I think it is not a gloom-and-doom situation,” he added. “I think there’s an opportunity to enhance the relationship between the GCC and the UK.”

Other speakers were less optimistic about the effect of the UK’s historic vote to leave the European Union.

Jan Toporowski, a professor of economics and finance at the School of Oriental and African Studies at the University of London, said the outlook for UK universities was negative because of expected lower admissions and the effect on research.

“I think [Brexit] will affect, in the long run, students coming from the GCC and other parts of the world,” he said. “The outlook from universities is, I would say, universally grim.”

* Additional reporting by Reuters

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Brexit sparks fresh free trade talks between the Gulf and UK

LONDON // Arabian Gulf officials have embarked on free-trade talks with the UK following the Brexit vote, Saudi Arabia’s commerce minister has revealed.

The GCC and Britain already share strong business ties, with trade between the United Kingdom and UAE alone targeted to more than double to £25 billion (Dh120.93bn) by 2020.

Yet attempts at a free-trade agreement between the GCC and the European Union bloc have stumbled despite talks dating back to the 1980s.

Majid bin Abdullah Al Qasabi, Saudi Arabia’s minister of commerce and investment, yesterday said there are now “all the ingredients for success” after the vote to leave the European Union.

Talks over an individual agreement with the UK have already started, the Saudi minister told The National.

“It’s already been initiated – that’s why we are here,” Mr Al Qasabi said on the sidelines of a conference in London. “After Brexit, we need to just engage and to identify what are the opportunities and challenges.

“The United Kingdom has been a great partner, ally and friend to Saudi Arabia, and to the GCC countries. And I think there is an opportunity [for a] win-win situation.”

The Saudi minister met privately with Liam Fox, the UK’s new secretary of state for international trade, and other officials from the UK and GCC.

Mr Al Qasabi spoke earlier at the GCC-British Economic -Forum in London, organised by the Arab-British Chamber of Commerce.

Prince Andrew, the Duke of York – and the second son of Queen Elizabeth II – told delegates that he expects trade ties between the GCC and UK to strengthen following the UK vote to leave the EU.

“The GCC is a very, very important trading partner for the United Kingdom, be that inside or outside the European Union – and probably more so with the UK once we are out of the European Union,” he said.

“Yes, there is going to be a period of difficulty and uncertainty while a huge range of knotty subjects have to be negotiated … But at the end of that I believe there are opportunities not only for the United Kingdom but also the GCC.”

Prince Andrew – who is the founder of an organisation called Pitch@Palace, which supports entrepreneurs – said he plans to travel to the GCC to discuss opening up a similar programme in the region.

Mr Fox, who’s one of the most vocal campaigners to leave the EU, also said that he sees closer business ties between the GCC and UK after the Brexit vote.

“We are deepening, and broadening our already strong relationship,” he said.

“We have set up a new Gulf fund, committing £100 million over five years to support collaboration on practical issues in our mutual interests, such as cyber and national infrastructure security,” the minister added, without giving further details.

Baroness Symons of Vernham Dean, the chairman of the -Arab-British Chamber of Commerce, said bilateral trade talks with the UK are now a possibility, whereas those with the wider EU may have stalled.

“We will start talking to groups of countries such as the GCC,” she said. “We have some terrific opportunities now as a result of the decision of the British people.”

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