April 13th, 2012
10:32 AM GMT
Dubai (CNN) - Driven by demand from the growing Indian and Chinese middle classes, Dubai is fast emerging as a significant diamond hub.
With worldwide demand for diamonds set to grow by 6% a year to 2020, Dubai is vying for a piece of the world's diamond pie, competing against other global diamond hubs, such as Antwerp and Mumbai.
Dubai's location means it can serve as the gateway into parts of Africa and the Middle East, and the emirate is taking concrete steps to gain a foothold in the market. In 2004 it set up the Dubai Diamond Exchange - a subsidiary of its central commodities authority, the DMCC. Since then it has seen a meteoric growth in trade.
Ahmed bin Sulayem, executive chairman of the DMCC, told CNN’s Leone Lakhani: “Prior to the setup of DMCC the trade was around $3 million. Dubai was known as the Gold Souk - there was not much diamonds.”
He added: “In 2009, the diamond trade was around $18 billion - that's a big jump. In 2010 it was over $35 billion.”
That growth is also evident on the retail side. Half of the jewelry trade in Dubai now consists of diamonds, with many of Dubai's diamond jewelry sellers located in one central location - the Gold and Diamond Park. There, some 90 retailers operate tax free in a secure location.
“Security is a key selling point here,” said Syed Mahmoud, manager of Ria Jewels.
“The U.A.E has a relatively low crime rate and burglaries are rare,” he added, saying he feels comfortable leaving $250,000-worth of goods in his shop.
Anil Pethani, director of Cara Jewellers, has been in the business for 16 years. He serves clients from all over the world and says they have included celebrities such as Jermaine Jackson and Sharon Stone.
He adds that what draws in international buyers is competitive pricing - and zero taxation.
“If you look at it jewelry wise it's really a lot cheaper compared to the other parts of the world because there's no tax,” he said. “And the margin is also very low because of the competition. And the variety of the choices is very large.”
Pricing, security and location - all helping to position Dubai as a new international diamond hub. But it may be a while before it outshines the world's traditional markets.
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