ABU DHABI TO EXPAND ‘THRIVING’ FINANCIAL FREE ZONE
▶ ADGM project to allow capital to reinforce role as top global centre
The Abu Dhabi Global Market, which includes the 116-hectare Al Maryah Island, is to grow tenfold as the UAE seeks to create one of the largest international financial districts in the world.
Reem Island will be added to its jurisdiction as a free zone under a new Cabinet resolution, creating a combined area of about 1,440 hectares, the ADGM said yesterday.
The expansion will provide an “opportunity for Abu Dhabi to reinforce its position as a world-leading international financial centre”, said Ahmed Al Zaabi, chairman of the Abu Dhabi Department of Economic Development and the ADGM.
“Al Maryah Island is a thriving international financial centre, with occupancy over 95 per cent and international companies wanting to expand or establish here.
“Al Reem Island also presents an abundance of opportunities, with access to a wide range of office spaces and world-class residential, educational, medical and lifestyle facilities.”
The UAE seeks to attract more businesses and has announced diversification measures, including expansion of the 10year golden visa programme and free trade agreements to increase foreign investment.
There is also NextGenFDI, which offers incentives to digital companies to convince them to set up in the UAE.
Established eight years ago, the ADGM has 1,400 operating entities and is home to a workforce of 11,000 people.
Last year, it increased assets under management by 56 per cent, with the number of active licences up by 30 per cent annually to 5,546, including permits for both financial services and non-financial companies.
About 32,000 square metres was added with the introduction of Al Maryah Tower last year.
To meet growing demand for office space in the area, Aldar Properties and Abu Dhabi’s strategic investment arm Mubadala Investment Company signed an agreement in March to jointly develop commercial assets on Al Maryah Island.
These will be developed through a venture, where Aldar owns 60 per cent and Mubadala holds the remainder.
The ADGM’s Financial Services Regulatory Authority enhanced its capital markets framework last year with the introduction of environmental instruments to enable trading in carbon credits and offsets.
The new regulations resulted in the world’s first fully regulated carbon trading exchange and carbon clearing house, AirCarbon Exchange, establishing its global operations in Abu Dhabi.
It has been quite a year for Abu Dhabi Global Market, the international financial centre with its headquarters in the UAE capital on Al Maryah Island.
In March, The National reported that assets under ADGM management grew by 56 per cent in 2022. The month before, state-owned lender Emirates Development Bank announced it was joining forces with the hub to support companies that want to set up in the free zone. In November, the financial district’s court said it would launch a blockchain-based system to digitally certify judgments and allow their availability and enforcement anywhere – making the ADGM Courts the first in the world to do so.
These developments show that ADGM is living up to its “capital of capital” moniker. Therefore, Monday’s news that it is to undergo a tenfold expansion will not surprise those who have been monitoring the centre’s growth since it began operating in 2015. A Cabinet decision has started the process of adding Al Reem Island to ADGM’s jurisdiction, increasing the district’s area to nearly 1,438 hectares.
The evident demand for physical office space reveals that the rise in remote working has not stopped companies – whether home-grown or foreign – from considering Abu Dhabi as a medium to long-term base for their operations. A report published in March from real estate consultancy Savills revealed that demand for office real estate across the city remained buoyant in 2022. Savills also found that on average, rent increased by 7 per cent across Abu Dhabi’s main office districts – with the ADGM building recording the highest increase in rental values compared to other Grade A developments.
This expansion shows that Abu Dhabi’s free-zone framework remains popular with companies and investors. A flexible approach to regulation, the ease of setting up and doing business, plus the infrastructure of office space and employee accommodation coupled with financial and professional services is an attractive package for companies that want to capitalise on the UAE’s commercial reputation.
Indeed, for a small country to have not one but two major international financial hubs – in Dubai and Abu Dhabi – is quite an achievement and the latest Global Financial Centres Index report published in March showed that Dubai and Abu Dhabi had maintained their first and second places in the Middle East and Africa.
The planned expansion – one of the world’s largest – is coming at an opportune time for the UAE capital. A study from the EY consultancy published this week found that Abu Dhabi accounted for 14 per cent of all initial public offerings worldwide in the first quarter of this year, attracting $3 billion worth of IPO proceeds, placing it third worldwide. Having a larger free zone that helps companies and start-ups alike do business will boost the spirit of enterprise in Abu Dhabi.
For ADGM’s 11,000-strong workforce, it is the beginning of a new era. Abu Dhabi has already proved that it can weather global financial turmoil, whether it comes from pandemics or conflicts. This expansion shows a continuing appetite for achieving even more in the future.