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Abu Dhabi poised to take stage as investment hub

Abu Dhabi is becoming the breakout emirate for investment and growth as Dubai’s image still reels from its financial woes during the global credit crisis, said speakers at the Reuters Middle East Investment Summit.

Abu Dhabi came into the spotlight after its high profile bailout of state owned Dubai World turned the emirate into a white knight and its conservative financial approach appealed to investors burned by Dubai’s exuberance.

Declan Hegerty, managing director and head of business, Abu Dhabi at HSBC said: “I’m finding attracting people to Abu Dhabi is easier than it was three years ago because people know where it is now, for starters. The infrastructure is improving.”

Abu Dhabi’s appeal with regional and international investors crosses sectors, from oil and gas to the battered corporate banking and real estate markets, executives said.

At the same time, Abu Dhabi is emulating Dubai in ways, building leisure and entertainment facilities, as well as more active financial districts, to draw more residents.

Traditionally Abu Dhabi was more conservative in its development projects compared to neighbouring Dubai.

During the heydays of the real estate boom, Dubai’s glitz easily eclipsed Abu Dhabi conservative policies.

Abu Dhabi, which suspended a number of projects in the past two years, has been more cautious in awarding project tenders as the real estate market took a tumble, said Arabtec’s chief financial officer Ziad Makhzoumi.

But with the collapse of the six year boom, Abu Dhabi has fared better, making it more appealing to investors.

Abu Dhabi developers will continue to complete and hand over projects next year, mainly in the high-end market, said Gurjit Singh, chief operating officer, of Sorouh Real Estate.

But there’s a dearth in mid-income housing, a market developers can explore to attract expats and Emiratis.

Singh said there has been an influx of oil and gas companies, as well as infrastructure related entities, that now have long term contracts in Abu Dhabi of 15 to 25 years and are looking for reasons to reside in the emirate, rather than Dubai.

Singh said: “In Abu Dhabi, we will start producing some of those new lifestyle destinations.”

He added: “I would say anything between two to three years, then you may see a major reversal in the flow.”

Abu Dhabi is also expected to be an active hub for corporate banking. Financial institutions, like HSBC, are expanding their presence to meet the growing need in the market.

There is wide expectation that the emirate will issue a sovereign bond next year and HSBC’s Hegerty said there should be an uptick in mergers and acquisitions both within the emirate and with Abu Dhabi based entities looking globally for opportunity in 2011.

He said: “You have a growing level of confidence in the Abu Dhabi range of companies as to how they can manage their growth and how Abu Dhabi can diversify its wealth and plan for its future.”


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