Look up the city Abu Dhabi in any travel guide and you will return the word sleepy. And that’s probably about right – quiet town life in a city, no tourist spots of note, and a demeanor that time is standing still. In fact, you could say that Abu Dhabi is the modern Middle East equivalent to Pleasantville. But it's all about to change and give it a few years, you'll be talking about Abu Dhabi with the same marvel as you currently do of Dubai. You have heard it from us – Abu Dhabi is about to go large.
Strategically, Abu Dhabi holds a couple of aces in its hand – the petrol and the petrodollar, the presidency and the power. It all revolves around the oil reserves. The UAE holds nine per cent of the total world reserves, and more than ninety per cent of that is in Abu Dhabi. All that oil brings in a fat wedge of cash, especially in an era where we won’t see prices going much below the 50 dollar a barrel marker again and where production requirements are on the increase. Furthermore, since the UAE was established, the seat of the presidency of the Emirates has remained in Abu Dhabi . When Sheikh Zayed passed away at the end of 2004, the worry amongst those not in the know was that the presidency would pass to Dubai because of its window to the West. But allegiance to Sheikh Khalifa was upheld without delay, lead by the Makhtoums of Dubai. Dubai’s growth has been seen to be funded by foreign investment, but the backbone has been funded by Abu Dhabi. Therein lays the allegiance and the power.
For Abu Dhabi, the growth is in its infancy. Remember the times when Dubai was nothing but a dream – that’s where Abu Dhabi is just now. The Crown Prince of Dubai is Sheikh Mohamed bin Rashid, and Abu Dhabi has its own Sheikh Mohamed – Crown Prince Sheikh Mohamed bin Zayed. Under his vision, the metropolis will begin its new era of growth, away from the traditional oil barrels. Expect to hear much about him in the coming years.
Abu Dhabi has sat back and watched what has happened with Dubai, and this wait and see attitude will capitalize on the methods of growth that Dubai has seen, as well as learn from areas that its neighbour has struggled with. The growth indiversification of the Abu Dhabi economy will neither be a straight out competition to Dubai nor a simple piggy back off the progress. Abu Dhabi in itself will provide an equal balance of modernity with culture and a viable option to the neighbouring Emirate, while positioning away from being just an oil haven.
Abu Dhabi’s proposition is different. The fact is that Abu Dhabi has oodles of cash that will continue to flow so long as the oil flows. So, diversified economic growth will be at a healthy pace and without the risks associated with an ambitious programme over a short period of time. And putting Abu Dhabi on the map has been a long time coming. Even before the Palms were ever envisaged, Saadiyat Island, off the coast of Abu Dhabi was going to be the focal point of growth for the region. Bad planning at that point meant that this seed project was abandoned. But now, with strong leadership, backing and direction from Sheikh Mohamed bin Zayed, Abu Dhabi will become as associated with modernism and growth as with oil.
The soft launch of the Emirates Palace Hotel earlier this year has established the landmark of the Emirate, and, if you like to draw equivalents, then this has probably more exuberance that that of the Burj al Arab. With the west coast option of theDanat Resort Jebel Dhanna and the newly opened boutique hotel Al Raha Beachstarting to give more choice, you won’t be surprised that more than 30 high profile hotels are planned for the coming five years, including the Fairmont and Shangri- La amongst others.
With some of the growth in its diversified economy expected to come from tourism, theAbu Dhabi Tourism Authority has been set up to strategise the number increase and to confirm Abu Dhabi's place as a a high end destination. The first high profile event will be the inaugural Ab u Dhabi Golf Tournament to take place in January with Montgomerie, Singh, Garcia and Daly all in the running to claim their stake to the two million dollar bounty on offer. But what else is happening? Amongst the already announced projects is the Ferrari Theme Park where visitors will get to try out the newest wheels on the market. There is no doubt that there will be a number of beach resorts with the extensive coast line that Abu Dhabi has, but what it also has are a couple of hundred islands which are to be developed into private resorts. Could Abu Dhabi be the new Maldives?
Airport size usually dictates the potential of a city. With the first phase of a new airport currently under construction to be completed in 2010 to cater for 20m annual passengers (and later for 50m passengers), you can see where this is all heading. And with Etihad Airways , currently the fastest growing airline, aiming to jump between 20 and 70 destinations in that time, you can see that UAE National carrier will certainly become more prominent, in the coming years.
Coupled with tourism, the focus will go hand in hand with property development. Many projects are in the pipeline. Behind a number of developments that are taking place within the city is a company called Aldar. Aldar has significant government backing to determine the new look of the city. Apart from the souk redevelopment, other projects that warrant your attention are Al Raha Gardens which is the first development to offer ownership and Al Gurm which looks lo be pitched as an exclusive eco friendly resort But the big project that everyone is talking about right now is Shams Abu Dhabi, being built by Sorouh, which will be home to some 100,000 people. No doubt, with the scale of such projects, this appears to be just the beginning of what will be on offer. And before you ask, ownership is currently pitched at a 99 year leasehold for non GCC expats.
Finally, the concept of ‘freezoning’ has been put into place, with the first of a number of special economic zones being announced. With infrastructure in place to allow 100% foreign ownership in these zones, this further backbone to the diversified economy means the future looks bright for the Emirate. A move as bold as this will promote competition across the Gulf and beyond. It will also give a legitimate alternative to companies to establish their bases without the downside of profit share or tied sponsorship as has been the case.
The question that you must have is - where is all the initial funding coming from? Simple – the government, they have the oil cash – and it is coming from two main bodies: the Abu Dhabi Investment Authority, rumoured to have 250bn dollars in assets and Mubadala, the vehicle used to take direct stakes in projects that are related to Abu Dhabi. With committed investments of 100bn dollars in the next seven years, you can be sure that the Abu Dhabi growth and diversification will not fall at the first hurdle.
Does money makes the world go round? No, it’s the oil. Oil makes Abu Dhabi go round.
This article first appeared as one of our newsletters.