Abu Dhabi Becomes UAE's Favorite Investment Destination

July 2, 2010


Dubai may be the most popular emirate but Abu Dhabi is where the real money is. Despite its small size, Abu Dhabi makes up over half of United Arab Emirates' (UAE) GDP and has more in cash and energy reserves than most large countries.

The emirate's sovereign wealth fund, the Abu Dhabi Investment Authority, is conservatively estimated to hold between $350 B and $700 B in assets including huge stakes in Barclays, Citigroup, and real estate in top global investment destinations.

Abu Dhabi holds nearly 10% of all the world's known oil reserves (5th largest), and produces 90% of all oil within the UAE. With the world's sixth largest natural gas reserves, the emirate is also wealthy in non-oil assets.

Although it produces its fair share of fossil fuels, Abu Dhabi is leading the world in renewable energy use. For one, it invested billions in solar energy and uses more renewable energy per capita than any other country in the world. However, it still plans to boost oil production by 40% over the next decade.

Thanks to such a large supply of energy resources, Abu Dhabi's citizens are remarkably wealthy. In fact, natives have about $17 million in total assets on average and per capita income ranks third globally at roughly $50,000.

It seems the emirate is doing quite well, but officials want to further diversify and expand the economy. Abu Dhabi is investing in tourism and infrastructure, offering investors huge opportunities.

The emirate's retail and hospitality sectors should grow substantially as officials finally get serious about its tourism industry. The Abu Dhabi Tourist Authority (ADTA) is working to grow the industry from about 1.5 million visitors to 2.3 million by 2012. In order to reach this goal, it's looking to China for help. The ADTA will soon launch a new marketing campaign in Beijing and UAE national carrier, Etihad Airways, recently announced plans to extend service from Abu Dhabi to Beijing to seven days a week and introduce service to Shanghai in coming years.

Abu Dhabi hopes several new projects underway will help lure these tourists. Saadiyat Island or "Island of Happiness" is a $30 Billon mixed-use development that's destined to become Abu Dhabi's prime tourist destination. When complete in 2018, the 1 sq mi island will be a high-end, international and cultural destination with world-class shopping, beaches, a golf club, a St. Regis hotel, a performance arts center, a New York University campus, and even branches of the Louvre and Guggenheim museums.

Other large projects underway promise to ease Abu Dhabi's growing housing demand. Al Reem Island, for instance, will have residences for close to 100,000 people. Upon completion in 2012, the project will encompass 2.4 sq mi. featuring three bridges, over 70 Million sq. ft. of residential, commercial, and retail space--all at a total cost of nearly $30 Billion. Developers and investors may benefit, as Abu Dhabi's property market is projected to grow thru 2013, according to a Jones Lang LaSalle report. As Al Reem Island is one of Abu Dhabi's first free zones, foreigners may purchase property here.

Unlike elsewhere, investment to the emirate has continued to grow in spite of the global economic downturn.