Set Sights on Abu Dhabi for Building & Construction

An Expert's View about Building Products and Construction in the United Arab Emirates

Last updated: 13 Sep 2011

For iconic symbols of the Middle East, Dubai’s Burj Khalifa, Burj Al Arab and Palm Islands naturally spring to mind. While these eye-catching projects help Dubai draw a lot of attention, it is time to look beyond Dubai for emerging business opportunities in Abu Dhabi.

Abu Dhabi is not to be missed

Dubai might have a high profile in the world, but Abu Dhabi deserves growing attention as a market for Hong Kong companies. As the largest emirate of the United Arab Emirates (UAE), Abu Dhabi controls more than 88% of the country’s land area and about 95% of its oil reserves. Rising oil prices have substantially contributed to the economic vigour of the emirate. In 2009, Abu Dhabi accounted for more than 55% of the country’s GDP (see Figure 1). Moreover, Abu Dhabi is the federal capital city of UAE, and the emir of Abu Dhabi, Khalifa bin Zayed Al Nahyan, is the president of the country.

Unlike Dubai, Abu Dhabi’s economy has a strong reliance on oil revenue. The oil sector often accounts for more than 60% of the emirate’s GDP during the oil-boom years. Affected by the sharp decline of oil price in 2009, Abu Dhabi’s nominal GDP slipped by 18%, with its oil and gas sector falling by more than 30%. Meanwhile, Abu Dhabi’s economic development and diversification programmes continued to power ahead. It should be noted that Abu Dhabi’s non-oil sector registered a 6% growth in 2009 despite the global economic downturn and low oil prices.

The global economic recovery in 2010 plus the unrest in the Middle East and North Africa (MENA) region touched off by Tunisia’s Jasmine Revolution in January 2011, have sent oil prices soaring. In this context, Abu Dhabi’s economy is expected to exhibit good growth in 2011, with the Abu Dhabi Chamber of Commerce expecting the emirate’s real GDP to grow 3.8% in 2011.

Abu Dhabi and Dubai are not the same

In terms of economic structure, Abu Dhabi relies more on the oil sector. Dubai’s trade and logistics sector is relatively stronger, and it accounted for more than 40% of the emirate’s GDP in 2009 (see Figure 2). As a trade and logistics hub in the region, Dubai’s position is underpinned by its advanced logistics facilities, regional distributor clusters, huge ethnic diversity and strategic location.

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Posted: 12 September 2011, last updated 13 September 2011

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