In a continued push to diversify the United Arab Emirates’ economy as its comes under continued pressure from oil prices, Abu Dhabi has set its sights on developing a booming financial services sector.
To power their economies, attempts to reduce their reliance on oil prices is being carried on by the UAE and other OPEC and non-OPEC countries. To reduce a global glut to prop up prices, which tanked in early 2016, together they hope to slash oil output by almost 1.8 million barrels a day.
Specifically in financial services, where it hopes to provide a gateway to neighboring countries such as Saudi Arabia, as well as the rest of the world, the UAE is pitching its capital Abu Dhabi as a new center for investment, as Gulf Arab economies seek ways to diversify into other sectors.
Abu Dhabi is aiming to double the contribution of financial services to its economy over the coming years and is seeking to capitalize on the UAE’s more than 40 years’ experience in the financial services industry. Abu Dhabi is situated along the coastline from Dubai’s international finance center.
“Diversification is not a luxury,” Ahmed Ali Al Sayegh, chairman of Abu Dhabi Global Market (ADGM), an international center situated on the city’s Al Maryah Island, said.
“This particular sector, financial services, is being targeted by the government for a lot of growth.”
“The markets of the kingdom are very sophisticated, the banks are very sophisticated,” he continued. He noted the ADGM’s geographical and jurisdictional strengths, including its close relationship with the Gulf Cooperation Council (GCC).
Ali Al Sayegh said that the hub would bring greater liquidity and investment for other GCC markets even while ADGM aims to overtake Dubai as “the leading financial center in the region and a gateway to the world.”
“This common law jurisdiction and the amount of attention we are receiving from the world to come here means, of course, an increase in liquidity so there will be more liquidity coming through our financial center to our markets, including other GCC markets,” he said.
“I think the reality that the price of oil will be at certain levels, lower levels than what they’ve been historically, has helped us drive the message home that financial transactions – not real estate, not other things – financial services need to become a big part of our GDP.
“All the government plans in the next years include growing the sector, not just here in the UAE, but across the region,” he added.
However, just a part of the growth story emerging from Abu Dhabi is the financial services sector.
Indications that the Emirates is on the move is available from data on investment is other sectors, including transportation, Medicare, infrastructure, and property.
In order to house the growing number of people expected to fill public services roles in the region, a series of new mid-market residential properties are currently in development.
The investment would create a “domino effect” for growth in the region, said Mohamed Al Mubarak, CEO of Aldar Properties, the company responsible for the development.
“We’re giving people the opportunity for the first time to acquire a high quality, high-grade apartment in a fantastic location,” Al Mubarak said.
“They’re going to be getting it at a very affordable price, and this allows the community to flourish. You will have teachers; you’ll have nurses, you’ll have doctors, you’ll have people working in the destination all living on Al Reem Island.”
(Adapted from CNBC)