Abu Dhabi poised to be Middle East investment hub as Dubai’s star shines less bright

News - Banking

Written by Ray Clancy

Monday, 01 November 2010 09:02

Abu Dhabi is becoming the breakout emirate for investment and growth as Dubai’s image still reels from its financial woes during the global credit crisis, it is claimed.

Abu Dhabi came into the spotlight after its high-profile bailout of state-owned Dubai World turned the emirate into a white knight and its conservative financial approach appealed to investors burned by Dubai's exuberance.

Its appeal to regional and international investors crosses sectors, from oil and gas to the battered corporate banking and real estate markets, executives told the recent Reuters Middle East Investment Summit.

At the same time, Abu Dhabi is emulating Dubai in ways, building leisure and entertainment facilities, as well as more active financial districts, to draw more residents, the conference also heard.

‘I’m finding attracting people to Abu Dhabi is easier than it was three years ago because people know where it is now, for starters. The infrastructure is improving,’ said Declan Hegerty, managing director and head of business, Abu Dhabi at HSBC.

Traditionally Abu Dhabi has been more conservative in its development projects compared to neighbouring Dubai. During the heydays of the real estate boom, Dubai’s glitz easily eclipsed Abu Dhabi conservative policies.

But Abu Dhabi, which suspended a number of projects in the past two years, has been more cautious in awarding project tenders as the real estate market took a tumble, said Arabtec’s chief financial officer Ziad Makhzoumi.

Abu Dhabi developers will continue to complete and hand over projects next year, mainly in the high end market, according to Gurjit Singh, chief operating officer, of Sorouh Real Estate.

But there is a dearth in middle income prices housing and this is a market developers can explore to attract expats and Emiratis.

Singh said there has been an influx of oil and gas companies, as well as infrastructure elated entities, that now have long term contracts in Abu Dhabi of 15 to 25 years and are looking for reasons to reside in the emirate, rather than Dubai.

‘In Abu Dhabi, we will start producing some of those new lifestyle destinations. I would say anything between two to three years, then you may see a major reversal in the flow,’ explained Singh.

Abu Dhabi is also expected to be an active hub for corporate banking. Financial institutions, like HSBC, are expanding their presence to meet the growing need in the market.

There is wide expectation that the emirate will issue a sovereign bond next year and HSBC’s Hegerty said there should be an uptick in mergers and acquisitions both within the emirate and with Abu Dhabi based entities looking globally for opportunity in 2011.

‘You have a growing level of confidence in the Abu Dhabi range of companies as to how they can manage their growth and how Abu Dhabi can diversify its wealth and plan for its future,’ he said.