Amid the frantic schedule of Dubai Diamond Week in November, executives of KGK Group casually welcomed visitors to their new diamond and jewelry office.
Nestled on the 51st floor of Almas Tower, home of the Dubai Diamond Exchange (DDE), the 1,200-square-meter space has a spectacular view of the Jumeirah Lakes Towers district and the ever-rising Dubai skyline. KGK, a Mumbai-based manufacturer, expanded its presence in Almas to accommodate the distribution of polished diamonds from its non-Indian manufacturing facilities. Its factories in Angola, Botswana, Namibia, and South Africa account for 50% to 60% of the company’s production, says vice chairman Sanjay Kothari.
The connectivity to Africa, proximity to India, and ease of doing business all made Dubai the obvious location to facilitate that portion of KGK’s polished supply, he explains. The rough gets manufactured in the origin countries’ beneficiation centers, and the polished comes to Dubai “because you need a centralized location to then distribute,” says Kothari. It doesn’t make sense to ship the goods to India, as there is a 5% import duty on polished diamonds.
KGK is not the only manufacturing or trading company with that Dubai-centric mentality. Stargems Group, which is active throughout the pipeline, also unveiled its new, larger office space in mid-November during Dubai Diamond Week. The 1,400-square-meter location on the 32nd floor of Almas serves as the company’s global headquarters and as the base for its rough tenders, mainly of goods from southern Africa.
A boost from the pandemic
Dubai has emerged as the premiere rough-trading hub, with regular tenders taking place either via the DDE viewing platform or in private facilities.
The city’s rough trade has grown significantly in the past five years. The total value of rough imports and exports amounted to $21.34 billion in 2023, compared to $16.77 billion and $14.28 billion in 2018 and 2019 respectively, according to data from Dubai Customs. The value of its polished trade, meanwhile, came to $16.91 billion last year, about double what it was in the two years before the pandemic.
“Dubai scored big-time during Covid,” says Adam Schulman, CEO of Koin International, which hosts rough tenders at the DDE viewing facility.
Koin was still operating out of Belgium when the pandemic began. While the company managed to conduct some rough sales virtually, Dubai became its only option for facilitating in-person sales when it opened for business again in October 2020. Koin wasn’t alone in its thinking; major producers De Beers and Alrosa ran sales in Almas while other centers were locked down.
“There were still restrictions in Dubai, but buyers could fly in and out and view goods,” Schulman recalls. “We decided to try some sales there, and we never looked back.”
The Indian connection
Since then, many companies have moved to Dubai, primarily from Belgium, which was traditionally the main rough-trading hub, Schulman notes.
The Abraham Accords that Israel signed with the United Arab Emirates (UAE) in 2022 further opened Dubai to the diamond industry, according to Mike Aggett, CEO of tender house Trans Atlantic Gem Sales (TAGS). But the more significant catalyst was the city’s proximity to India, the dominant manufacturing center.
“It’s a three-hour flight, so buyers from India can fly in and out for the day with no visa requirements,” Schulman explains. “They don’t have the expense and inconvenience of applying for visas, getting to Europe and paying for hotels.”
Setting up operations in Dubai also gave companies access to India’s vast pool of personnel. It’s very easy to bring in staff, Kothari stresses: Obtaining the necessary visas and residential permits is simpler than in Europe, housing is more readily available, and Dubai has become a multicultural city that offers an appealing lifestyle.
Having direct flights to Mumbai and Surat makes a huge difference, agrees Anshul Gandhi, CEO of manufacturing and trading company Choron Group. The comparative ease of travel extends to other destinations, particularly Africa and the Far East, he adds.
‘A calculated gamble’
While there has been a significant increase in diamond trade activity in Dubai over the past five years, the city’s prominence hasn’t been sudden. Rather, it’s been a strategic project of the Dubai Multi Commodities Centre (DMCC), which the city established in 2002 to develop commodities trading there. Early on, Dubai identified diamonds as a potential growth segment, and it set up the DDE in 2004.
However, it wasn’t until 2017 that the first rough tender — by TAGS — took place there. Even then, it was a struggle to get the industry behind the idea of selling rough in Dubai, according to TAGS founder Anthony Peter.
“We opened our office, and in the first two years, not one supplier supported us,” Peter recalls. “Eventually we managed to get a small production of marine goods from South Africa, and it was a huge success.”
Word spread among suppliers, and subsequent tenders got bigger. As the first mover, TAGS signed an exclusive partnership deal with the DMCC, although that agreement got canceled as more tender houses started to come in. That was fine from TAGS’s perspective; the more traffic, the better for its tenders, believes Peter, who also takes solace in the “significant” role the company played in establishing Dubai’s rough-tender circuits.
“It was a calculated gamble,” he explains. “For 10 years, people said the trade was going to move to Dubai, but nothing had happened.”
The signs were there, though; the major Indian companies had established a presence in Almas, even if they weren’t very active, says Aggett. “I remember coming here and knocking on doors of the companies I was working with at the time. They were empty, but the thing is, they had offices.”
Influxes and infrastructure
Many cite the 2013 relocation of De Beers’ sights from London to Gaborone as a turning point for the Emirati city, as it changed the route that rough would travel to India for manufacturing.
When the sights were in London, sightholders would often bring their newly acquired De Beers goods to Antwerp for trading before sending them on to manufacturers in Surat. However, the emergence of Gaborone as De Beers’ main distribution hub brought Dubai into play as a trading center, Aggett suggests. Company executives slowly started to relocate to the UAE, and that has now escalated tremendously, he adds.
Gandhi says people came because the DMCC built an infrastructure that was conducive to trading: “Whether it was basic bank accounts, customs offices, grading labs, tender facilities, Kimberley Process (KP) certification, shipping, or the big one — financing — all these things together created a very strong ecosystem that became very difficult to ignore.”
Having everything in one building at Almas made it a much more centralized hub, Schulman adds.
Competing with Belgium and Hong Kong?
The friendlier financial sector and favorable tax policy stood in sharp contrast to Belgium, where “banking has become a nightmare,” according to Kothari.
Traders who spoke with Rapaport Magazine have suggested that Dubai’s rise has come at Antwerp’s expense, even though most midstream companies still have a presence in the European city — albeit a smaller one.
“Antwerp is morphing into a service center for the European jewelry houses,” says Gandhi. “But it’s not a zero-sum game, and both centers are very important in the overall ecosystem.”
Schulman hints at a tension in Antwerp between government policy and the trade’s needs. The DMCC is more in sync with the UAE government, which has a far more aggressive approach to supporting industry in general, he points out.
Through the DMCC, the trade has strong access to policymakers and people who can get things done, affirms Peter, who highlights the important role of DMCC chairman Ahmed Bin Sulayem.
It’s not just Antwerp that’s seeing a competitor in Dubai. The Emirati city’s potential as a gateway to China and the Far East could take some of that business away from Hong Kong.
Gandhi lists several reasons this could come to pass. “You had geopolitical tensions even prior to Covid-19,” he notes. “With the protests in Hong Kong, government policy there during Covid-19, [and now] the economic crisis, a lot of people are saying it’s better to centralize in a place like Dubai.”
However, Kothari argues that Hong Kong is currently quiet because the market in China is challenging. “When China rebounds, you’ll need Hong Kong because of its proximity and connection to mainland China,” he contends.
Regardless, most expect Dubai to play a role in supplying all major markets, as is evident in its growing polished trade and the establishment of the Jewellery, Gem and Technology (JGT) show in the city.
Industrial expansion
The willingness to facilitate business is present throughout the UAE. It stems from the royal family, which Gandhi says was very forward-thinking in its decision to invest in infrastructure.
That willingness continues to drive the DMCC as it seeks to emulate its diamond success in other areas such as coffee, water, cryptocurrency and artificial intelligence (AI). The center still sees growth opportunities in diamonds and aims to enhance polished trading, as well as related segments like lab-grown diamonds, colored gems, and pearls, says a DMCC spokesperson. The DMCC also plans to launch its Luxury Innovation Centre soon, which the spokesperson says will help members progress in areas such as provenance, traceability and technology.
This ambition was strongly apparent during Dubai Diamond Week, which encompassed the Dubai Diamond Conference, the JGT show, and the annual plenary meeting of the KP — which the UAE, with Bin Sulayem as its representative, is chairing for a second consecutive year in 2025.
It all points to Dubai’s growing stature both within the diamond industry and as a general trading hub, which further entices businesses — and their staff — to relocate there.
“The city has such a dynamic energy to it,” Schulman remarks. “There’s always something new, inventive and thoughtful happening.”
Main image: Endiama director Miguel Vemba gives a talk on “Pioneering Angola’s Path in a New Global Paradigm” at the 2024 Dubai Diamond Conference. (Dubai Multi Commodities Centre (DMCC))
