Bahrain loses edge as financial hub, firms eye Dubai*****

DUBAI, April 29 (Arabian Business.com): Bahrain is unlikely to regain its status as a financial hub losing out to Dubai in the wake of the political turmoil in the Gulf state, analysts said Wednesday. Dubai, on the brink of a debt default in 2009, has emerged as a magnet for investors fleeing widespread political unrest across the Middle East. Analysts are warning that Bahrain, home to one of the oldest financial centres in the region, could already have lost its edge as a financial hub as political instability deters foreign firms. "Bahrain probably has lost out in the competition, or has lost its status as a financial centre to Dubai," Brad Bourland, chief economist at Jadwa Investment, said. "I think Bahrain has some longer term losses from the turmoil that Dubai.is a clear beneficiary. Many have already left and moved down here [to Dubai] and I doubt that it will be reversed and that they would move back "The Dubai story is now much more compelling than the Bahrain story," he added. Bahrain imposed martial law and called in Gulf troops in March following weeks of pro-reform demonstrations in the kingdom. The Gulf state has continued its crackdown on mainly Shi'ite protesters who took to the streets to demand more say in the Sunni-ruled country's affairs. Bahrain-based businesses and expatriates have relocated to Dubai which, since the economic downturn, has emerged as a more attractive destination with reduced real estate costs. Confidence in the emirate is returning, spurred by the political unrest in the rest of the region and an improved global outlook, said Farouk Soussa, chief economist for the Middle East at Citi. "Dubai has pulled ahead from the pack looking like a haven of stability, and this further reinforced confidence in two ways. First of all because it looks like a haven of stability and second of all because investors who are looking to invest in the region and take advantage of this five per cent growth rate...have nowhere to go other than Dubai," he said. "Some people need to put a certain amount of money into the Middle East; where are they going to go? They come to Dubai because this is where the investment opportunity still looks fairly stable," he added. Measures of renewed confidence in Dubai are already visible. Hotel occupancy levels in the emirate increased 7.9 per cent in January, according to STR Global while deposits held at UAE banks rose 2.8 per cent in the first two months of the year, said Bloomberg. The International Monetary Fund in April raised its economic outlook of the UAE in the wake of the social unrest across the region. The UAE is expected to see GDP growth of between two and four per cent during the 2011 and 2012 period, said the IMF.