ABU DHABI ECONOMY CONTINUES TO GROW & DIVERSIFY
- May 1, 2014
- Posted by: RKonnect
- Category: Business & Economy
Abu Dhabi, the capital and the largest emirate of UAE has registered GDP growth of near around 5 percent in the year 2013 ensuring that the Emirates lay a solid platform for both growth and diversification in the non-oil based GDP. The capital and biggest emirate of UAE has an estimated nominal GDP of AED (USD 258.7) 950 billion, up from AED 909 (USD 247.5) billion in 2012. Besides petroleum, the emirate has been significantly diversifying into numerous sectors, aligned with its long term strategic plan named Abu Dhabi 2030. In this report, Research Konnection Team has compiled four major themes, which should play an instrumental role in defining the economic trajectory of Abu Dhabi in near future.
1. Energy: Petroleum and natural gas still is a major component of the Abu Dhabi’s economy and constituted 55 percent of the total GDP in 2013, contributing significantly towards the current trade surplus. In 2013 the average extraction of petroleum was estimated at 2.7 million barrels every day. Based on the inputs from economic department; by 2017, it is estimated that the oil production will cross 3.1 million barrel a day indicating a moderate 3.7 percent growth. On similar note, Abu Dhabi is believed to possess almost 5 percent of global natural gas reserves, which besides export is used for domestic usage as well, effectively allowing the government to reduce the usage of petroleum resources. Moreover, Abu Dhabi is now also looking at new list of potential reservoir in offshore as well as onshore to boost its natural gas output.
Nevertheless, petroleum still remains a key component of economy in terms of providing liquidity to other emerging sectors. Its significance is further indicated by awarding of four offshore oil development projects worth AED 28.3 billion (USD 7.7 billion) by the emirate in 2013.
2. Real Estate, Retail & Tourism: Taking cue from neighboring Dubai, Abu Dhabi is seeking huge investments and undertaking a strategic approach towards boosting, real estate, retail and tourism sector in an integrated fashion. Recently, it has been working actively on numerous multi-billion dollar real estate and construction mega projects, which involve government backed mixed use residential projects, shopping malls, bus stations, ports and tourist attractions. A large volume of such projects are taking shape in investment zones such as Yas, Sadiyat, Lulu, Al Raha and Reem.
On tourism frontier, it still has a subdued market, which primarily depends on business tourism. But the emirate is determined to make strong initiatives as indicated from extravagant projects such as Ferrari Theme Park, Formula one Grand Prix and Sheikh Zayed Mosque. Not to mention the AED 100 (USD 27.2) billion cultural districts, named Sadiyat Island, which will involve 3 world class museums, school and myriad retail entities.
Aligned with its objective to enhance its tourism space, Abu Dhabi is also working on a range of shopping malls such as Sowwah Square, Yas Island Mall and Reef Mall, to name few. Its retail space, which is registering an 18-20 percent annual growth, capitalizes on lesser rental price of AED 257 (USD 70) per Square Feet per annum, compared to AED 400 (USD 109) in neighboring Dubai, large per capita GDP AED 400,000 (USD 109,000) and an underutilized market, which makes the resident to often visit outside. The malls are also believed to be champions of real estate development as it can help in nurturing community and residential life in and around it, similar to the role donned by Dubai Mall in developing Downtown Dubai.
3. Trade & Transport
Abu Dhabi is rapidly diversifying into non- oil trade as well. In 2012 it has opened the Khalifa port, having a present capacity of 2.5 million tons of TEUs and 15 million tons of general cargo. By 2030, it is expected to handle a volume of 15 million TEUs and 35 million tons of general cargo.
In order to enhance its burgeoning trade as well as tourism sector, the emirate is also expanding its transport resources. Abu Dhabi airport has handled a total of 16.5 million passengers and 706,000 tons of cargo, up from 14.7 million and 567,000 tons in 2012. The road transport infrastructure is also under expansion and a finance of AED 4.77 (USD 1.3) billion has been secured for the 1st railway track of UAE, which will connect onshore oil and gas fields in the South Western part of Abu Dhabi to the ports in the west, thereby bringing economic efficiency.
Much like Dubai, Abu Dhabi’s overall growth objectives are bind with a sustainable approach which can ensure judicious use of resources and happiness and well-being of the residents. It has recently enforced the legislation that all the buildings should comply with the Estedama Pearl rating. Estedama, which in Arabic stands for sustainable, is a building design methodology aimed at developing more sustainable buildings, constructions and communities. The Pearl Rating System is a green building rating system, which evaluates buildings on the basis of their adherence to green technologies and eco-friendly initiatives. Other significant initiative is Masdar City, a under- construction city supposed to be based on solar and other non- renewable forms of energy, which will ensure negligible CO2 emissions.
Another pillar of sustainable development is a robust school and higher education system, which is an indicator of human development as it nurtures high caliber human capital and promote research and innovation. Abu Dhabi in line with other emirates in UAE like Dubai is taking required initiatives to develop a robust education system with the help of state of the schools, colleges, universities along with vocational training institutes, research associations and innovative online education platforms which can support its long term diversification objective effectively.
This research report is compiled by Research Konnection Team; a Dubai based market research and business consulting firm that is focused on capturing latest insights and happenings of major events across various sectors and industries in UAE. If you are looking for more research, information and qualitative/quantitative data, then feel free to contact us on firstname.lastname@example.org.