The bright lights of Dubai have long attracted both bankers and tourists who enjoy nightclubs, roof-top bars, ostentatious hotels, extravagant beach resorts and legions of giant shopping malls. However, there’s a new contender for the place-to-be as an expat financial services professionals – Abu Dhabi – and it’s a good option for those seeking the quiet life.
The Global Marketplace Abu Dhabi will be launched in the fourth quarter of 2013, but it’s the emirate’s answer to the Dubai International Financial Centre, which has long been the Middle Eastern hub for the majority of global banks and financial services firms. Like the DIFC, the new Abu Dhabi freezone in Sawwah Square will boast its own legal infrastructure and aims to attract international bankers with the promise of tax-free salaries.
Currently, though, only two major investment banks – J.P. Morgan and Societe Generale – have operations there, with the remaining occupants largely law firms and government-linked companies.
The art of ostentation
There’s more than a touch of ostentation in Abu Dhabi, the UAE capital with vast oil wealth. The new financial centre will be housed on its own private island in the centre of the city, the emirate's Ferrari World themepark is hardly understated, you could choose drown in white leather at the Allure Nightclub and there’s no shortage of lavish hotels. However, Abu Dhabi is no Dubai when it comes to bling.
“You move to Dubai if you’re a 20-something banker who enjoys flash bars and nightclubs,” said one banker working in Abu Dhabi who declined to be named. “Weekends in Dubai are spent at drunken brunches, in Abu Dhabi you’ll see 35-year-old bank directors having BBQs with their families, hanging out in parks or going wakeboarding – it’s a much quieter lifestyle.”
While Dubai presents itself as a tourist playground and testament to luxury, Abu Dhabi looks on like a stern older brother holding the purse strings. There’s a healthier mix of Western expats, those from the Indian sub-continent and locals, and the emirate remains closer to its Arabic roots. Dubai makes an effort to cater for every taste but while Abu Dhabi is welcoming, it stays true to its character.
"Both Dubai and Abu Dhabi have a lot to offer and, as Abu Dhabi grows, they are becoming more similar," said James Wakefield, director of financial services recruiters Colbat Abu Dhabi. "However, it's still true that those wanting exclusive nightclubs and huge malls will settle better in Dubai whilst those who appreciate more of an outdoor lifestyle, relaxed weekends and green space will prefer Abu Dhabi."
Some view this as a staid option, however. Financial services professionals were so unimpressed with the prospect of a move from Dubai to Abu Dhabi that they demanded a 30% uplift for the trouble, according to research last year by recruiters Robert Half. James Sayer, director for Central Europe and the Middle East at the firm, said that interest is now growing.
“Many individuals will require a salary uplift to move to Abu Dhabi from Dubai, but financial services professionals from abroad tend to view each location equally,” he said. “Abu Dhabi is investing in its infrastructure, and is basing its lifestyle around sports and cultural events, rather than tourism and fine dining like Dubai.”
Many have questioned the economic viability of setting up a competing financial centre near to Dubai, but the big draw is being close to sovereign wealth fund clients. Abu Dhabi houses the $627bn Abu Dhabi Investment Authority, the $65.3bn International Petroleum Investment Company, Mubadala, which has $53.1bn in AUM and Invest AD. They have the clout to persuade firms to set up shop in the emirate. However, some remain unconvinced.
“There’s no major incentive for non-state companies to set up in Abu Dhabi except to gain access to the state's wealth, but most international banks will do this from Dubai,” said Emad Mostaque, a strategist at Noah Capital Markets. “Abu Dhabi is attractive to veteran bankers at the end of their careers, but the infrastructure – both accommodation and a lack of school places – is already strained and would struggle to take additional capacity.”
Another financial services professional, who claimed to have been offered a position at Mubadala that provided 65 days holiday and a tax free salary, told us that he declined the job because a large proportion of their pay would be taken up by accommodation costs and school places were hard to come by.
Despite being more family friendly, school places are severely limited in Abu Dhabi. A report by the Abu Dhabi Education Council in January revealed that 69% of private schools in the emirate already enrol more students than their capacity and AED6bn ($1.6bn) needed to be invested to build 100 new institutions by 2020. The influx of 20,000 public sector workers ordered to relocate from Dubai to Abu Dhabi or lose their generous housing allowance, combined with more financial services professionals, won’t help matters.
Complement not competition
Abu Dhabi may not be looking to topple Dubai's crown as the top regional financial centre, but could instead look to complement its offerings. Wadah Al Taha, chief analyst and economist at Zarouni Group told Gulf News that Abu Dhabi would offer "energy, oil and gas, renewable energy, carbon credits and other new products" while Dubai focuses on investment banking and fund management.
"The difference between the two could be compared to that which exists between the financial districts of the City and the West End in London," said Wakefield. "Like the City, Dubai contains a far greater concentration of large banks, whilst Abu Dhabi is full of funds and investment firms a little like like the the area around Berkeley Square."