Middle Eastern dynamism

The thriving city states of Abu Dhabi and Dubai, the two most populous emirates in the United Arab Emirates (UAE),represent one of the most impressive success stories of growth in modern times. In less than seventy years, they have grown from small villages based on pearl fishing to global metropolises and economic powerhouses.

The governments of Abu Dhabi and Dubai are undertaking some of the world’s most impressive investment projects, a pattern that they have successfully followed over the last three decades in their move away from dependency from oil.

Focusing on Abu Dhabi, the UAE’s richest city, around 40% of Abu Dhabi’s GDP currently comes from non-oil generated income, but this is planned to increase by 60% by 2030. To achieve this goal, Abu Dhabi’s government is undertaking a huge investment programme to stimulate investment in industry, real estate, tourism and retail. An industrial diversification programme is underway with the creation of new commercial and industrial business hubs, such as Masdar City, two four 54 Abu Dhabi media free zone and Airport/Sky City free zone.

As a part of the government’s push away from being anoil-based economy, sustainability is a crucial element for these projects. In 2008 construction began on Masdar City, a $22 billion planned city, principally designed by Foster &Partners, that will rely on solar energy and other renewable energy sources. When complete, the city is expected to use 70% less electricity and 60% less water than a conventional city.

But it will be the ambitious investment in tourism that will put Abu Dhabi on the international mapin most people’s minds.Abu Dhabi’s Tourism and Development and Investment Company (TDIC) at Saadiyat Island is developing a new cultural hub that is set to eclipse in scale and ambition similar cultural icons such as Bilbao’s Guggenheim. Its Cultural District will have major iconic cultural buildings, encompassing the Louvre Abu Dhabi (which will be the first to complete in 2015), Guggenheim Abu Dhabi and Zayed National Museum. It is anticipated that this new cultural hot spot will boost the tourist fortunes and perception of Abu Dhabi, which although a thriving commercial city is not thought of as a tourist destination, in similar way to that the Guggenheim changed the perception of Bilbao – from a city with a heavy industrial past to a vibrant cultural destination.Sustainability will be part-and-parcel to the Saadiyat Island project, particularly in energy efficiency and water recycling.

To cater for the increasing growth in passenger traffic, expansion of Abu Dhabi’s International Airport is underway with the new Midfield Terminal Complex due for completion in 2017.Alongside this huge investment programme, economic growth has been strong. In 2013 the emirate of Abu Dhabi grew by an impressive 7.4%, while Dubai grew strongly at 4.6%. There has also been animpressive recovery in the property market since the financial crisis of 2008.

But it will be the ambitious investment in tourism that will put Abu Dhabi on the international mapin most people’s minds.Abu Dhabi’s Tourism and Development and Investment Company (TDIC) at Saadiyat Island is developing a new cultural hub that is set to eclipse in scale and ambition similar cultural icons such as Bilbao’s Guggenheim. Its Cultural District will have major iconic cultural buildings, encompassing the Louvre Abu Dhabi (which will be the first to complete in 2015), Guggenheim Abu Dhabi and Zayed National Museum. It is anticipated that this new cultural hot spot will boost the tourist fortunes and perception of Abu Dhabi, which although a thriving commercial city is not thought of as a tourist destination, in similar way to that the Guggenheim changed the perception of Bilbao – from a city with a heavy industrial past to a vibrant cultural destination.Sustainability will be part-and-parcel to the Saadiyat Island project, particularly in energy efficiency and water recycling.

To cater for the increasing growth in passenger traffic, expansion of Abu Dhabi’s International Airport is underway with the new Midfield Terminal Complex due for completion in 2017.Alongside this huge investment programme, economic growth has been strong. In 2013 the emirate of Abu Dhabi grew by an impressive 7.4%, while Dubai grew strongly at 4.6%. There has also been an impressive recovery in the property market since the financial crisis of 2008.

In commercial property as well as large-scale demand from government entities in Abu Dhabi, there is growing demand from foreign occupiers, particularly from professional services, financial services, engineering and construction services sectors. Commercial rents for grade A buildings remain stable. In the residential market, quality accommodation is in relatively short supply: prices increased by 27% in the year ending in the first quarter of 2013, principally due to increasing numbers of expat buyers and multinational companies establishing office hubs in the region.

Abu Dhabi, with a strong economic base and real estate market, provides a great opportunity for investors. However, to realise this potential it is best that investors work with local experts who understand the market and legal environment.

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