How Abu Dhabi’s investment legacy is fostering economic development

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Abu Dhabi and the UAE have long been recognised as important investors in the global economy. As of early 2024, the UAE’s total value of assets abroad, whether government or private, were estimated at $2.5tn. Around 72 per cent of this money comes from the emirates’ various sovereign wealth funds, with investments spread across diverse industries.

The city’s track record as a strategic global investor has not only bolstered economies abroad but has also laid a strong foundation for attracting inbound investment as the international business community looks to capitalise on the depth of opportunities in Abu Dhabi’s own economy.

As of 2024, it’s important to remind ourselves of just why the Abu Dhabi proposition connects so strongly with investors. Today, Abu Dhabi is, without doubt, a formidable global investment destination to be reckoned with, and in my view, there are several important and often complementary factors as to why that is.

The emirate benefits from a growing, prosperous, liberalised, and diversified economy driven by a strategic vision, structural transformation, and countercyclical monetary and fiscal policies, resulting in sustainable growth and development.

Given the unpredictability and instability of the modern global economy, Abu Dhabi has come to be viewed as a safe pair of hands for international investors. Of equal importance, our location is advantageous for business, with 33 per cent of the world just a four-hour flight away and 80 per cent of the world reachable with an eight-hour flight. The emirate offers world-class infrastructure and connectivity across four time zones, so it’s obvious why many companies use Abu Dhabi as their hub to the world.

Abu Dhabi’s economic gains

The fundamentals of the economy are strong, which is the backbone of Abu Dhabi’s success story. The Statistics Center Abu Dhabi (SCAD) said the emirate’s economy grew 3.3 per cent in Q1 2024 compared to Q1 2023.

The rise was driven by a 4.7 per cent increase in non-oil economic activities, which reached the highest quarterly value at Dhs154.7bn and made the biggest contribution to the total economy at 54.1 per cent since 2015.

Simultaneously, Abu Dhabi has institutional capital estimated at around $1.3tn and a real GDP size that was measured at around $310bn at the end of 2023, representing 68 per cent of the UAE’s total GDP. These are some of the reasons why the emirate has become globally known as the “capital of capital.”

To its credit, Abu Dhabi has also worked hard to position itself as a credible hub for globally relevant innovative companies across multiple sectors. We’ve also built a thriving startup environment supported by funding, world-class digital infrastructure, networking, ecosystem collaboration, and we’ve attracted specialised human capital. Again, this is where Abu Dhabi’s active global investment legacy is spurring new exciting new businesses at home.

So, today where are some of the best opportunities for investors in Abu Dhabi? There are many possibilities here for the right types of investors with the right attitude. From my perspective, several sectors stand out and these opportunities are very much geared towards the future, which underscores the Abu Dhabi proposition, in that, ‘an investment in Abu Dhabi is an investment in the future’.

Take renewable energy for instance, which is a major theatre for investment activity. The emirate’s commitment to clean energy is more than just a strategy, it is roadmap for a long-term, diversified and an environment-friendly economy.

Renewable energy, clean alternative fuels, energy storage, carbon capture, and storage energy efficient technologies are just some of the areas where investors can collaborate in Abu Dhabi. More specifically, when we look at traditional energy such as oil and gas, there are vast opportunities on offer, and for decades, Abu Dhabi has embraced a partnership approach in its energy endeavors, creating vast opportunities for collaboration at home.

As Abu Dhabi continues to extract more value from every barrel of oil produced, its petrochemicals sector also has vast opportunities. Through key companies in the emirate, Abu Dhabi continues to invest in and expand its downstream product portfolio by developing fully integrated refining and petrochemicals complexes to increase the range and volume of its high-value downstream products.

Another exciting area is hospitality and tourism, which offer many possibilities that support more than 300,000 jobs and enjoy significant investment of $7bn per year. The sector is also forecast to grow by more than 5 per cent per year over the next decade, bringing with it unique and exciting opportunities for companies looking to enter this industry.

Eyes on the Capital of Capital

It is from Abu Dhabi’s position of experience and its deep familiarity with managing food and water resources that the emirate is also well placed to lead as a producer, exporter, and developer of innovative solutions related to food and water.

Together with international partners, it will look to provide those much-needed answers to the questions that will dominate food and water in the next 30 years.

Across all these growing sectors, Abu Dhabi has also shown its intent to embrace the future of artificial intelligence. This is evident with the high rate of early adoption within the government sectors and in the government-owned commercial sector. As proof of concept, Abu Dhabi Global Markets, the international financial centre, has placed AI at the very heart of its ecosystem.

Further, international investors have novel opportunities to trial governance, education, and product innovation across these sectors. The benefits could be vast for the right type of investors, as according to PwC forecasts, AI could contribute up to 14 per cent of the UAE’s gross domestic product by 2030.

As we look to that bright future and to an Abu Dhabi investment landscape that is increasingly powered by collaboration, one thing will remain: the emirate will continue supporting the big thinkers, innovators, and forward-thinking companies – it will continue building on its global investment legacy to fuel economic opportunities at home.

Read: Abu Dhabi GDP growth hits 3.3% in first quarter of 2024

The author is director of Strategy and Planning at Alpha Dhabi