Abu Dhabi and Dubai are on a rapid growth trajectory: HSBC

Dubai: Leading UAE cities Abu Dhabi and Dubai are on a rapid economic growth trajectory and in the post-COVID era both the cities are fully geared to maintain their momentum and the hub status for the region, HSBC said in a series of reports on key cities in the region.

Published on UN World Cities Day, the HSBC City Reports on Abu Dhabi, Cairo, Dubai, Istanbul and Riyadh stress the need for city and business leaders to use the COVID-19 pandemic as a catalyst for more diversified, more digitised, cleaner and greener cities.

The report said that over the past 50 years, Abu Dhabi has transformed into a global business, banking, cultural and hospitality hub and one of the key centres of the Middle East, North Africa, and Turkey (MENAT) region.

Supported by its large oil reserves, the emirate has invested in successive cycles of construction and diversification, which have boosted the city’s global appeal and influence. Oil and gas’ share of GDP has fallen from 59.3 per cent to 50.2 per cent in the last 15 years, and the emirate continues to transition into technology and manufacturing roles serving East-West trade and investment corridors.

Population and city expansion

As a city Abu Dhabi’s registered population has surged from less than 50,000 in 1965 to nearly 1.5m in 2020. Oil extraction and construction has prompted a long-term boom in immigration, and government reforms and policies have incentivised both highly skilled and lower skilled migration.

The total built-up area of Abu Dhabi has grown rapidly from 34 km2 in 1975 to over 760km2, the size of Singapore and New York City. As Abu Dhabi looks to 2030 and beyond, a key agenda for the city is to balance social and economic development with environmental resilience.

High rates of population growth in Dubai over the past three decades have emerged in tandem with economic diversification away from oil, a multi-decade surge in real estate development driven by Government reforms and subsequent international migration and investment.

Since 1980, Dubai’s population expanded at an average growth rate of 6 per cent each year, making it one of the fastest growing cities in the world. In 2020, Dubai’s population exceeded 3 million people, representing a third of the total population of the UAE.

From 1970 – 2020, the built-up area of Dubai grew from 54km2 in 1975 to over 970km2. It is now home to the busiest international airport and ninth largest port in the world.

“Government reforms and policies have incentivised significant levels of population growth by attracting both highly skilled and lower skilled migrants. This rate of population and urban expansion creates the challenge for Dubai to identify pathways for more sustainable and balanced growth,” the HSBC report said.

Global corridors and gateway roles

The reports note that both Abu Dhabi and Dubai have emerged as key global trade corridors and inter-continental hub for trade hubs. While Abu Dhabi plays a strategic role in promoting the UAE / China / India corridors, Dubai’s major economic and business reforms have led to significant improvements in its economic competitiveness and status as a global hub. Business reforms are also supporting the city’s innovation ecosystem. Dubai’s global corridor capability remains stable, the report said.

Research from HSBC shows that the largest cities across the Middle East, North Africa and Turkey (MENAT) will need to prioritise sustainable innovation, empower human capital, and support new flows of trade if they are to thrive post-COVID-19.

“MENAT is home to bustling cosmopolitan cities with extraordinary histories, and these five in particular are primed to set the standard as future global hubs. Their next chapter of growth will depend on how effectively they can work together as a network, and on the individual ability of their economies to drive climate and sustainability-oriented innovation, reinvented trade flows, and the pursuit of human health and happiness,” said Professor Greg Clark, author of the reports and Global Head of Future Cities and New Industries at HSBC.

The reports also detail how the pandemic has put a fresh focus on the importance of human health and balanced lifestyles. The reports suggest that governments may be more likely to incentivise medical research and create dedicated schemes to attract and retain talent to support drug development and vaccine discoveries.

“Remote healthcare will see a rapid development around telemedicine and the adoption of new monitoring and wearable technologies. We may also see more cities and regions creating coalitions to share health equipment,” added Clark.

Post-COVID outlook

Recent announcement from UAE government NCEMA, the UAE ranked 1st in the number of tests per capita during the months of July and August 2020. More than 2 million test carried out in labs in the country, the eight highest number in the world.

The world changed radically since early 2020, the global pandemic has resulted in millions of cases and hundreds of thousands of fatalities so far. Without a vaccine or efficient curative treatment, countries across the world implemented stringent lockdown and social distancing measures to contain the health crisis. These measures are having a major impact on the economy.

“Abu Dhabi, Cairo, Dubai, Istanbul and Riyadh all have legacies of being epicentres of connectivity, diversity, and innovation. They have often served as bridges between East and West, offering internationalists the perfect place to seed and grow their ideas,” said Daniel Howlett, Regional Head of Commercial Banking for HSBC in the Middle East, North Africa and Turkey.

“Their next cycle has the potential to see them become global centres for reinvented flows of trade, more resilient supply chains and revised business models led by digital transformations.”