Abu Dhabi is the capital and the second most populous city of the United Arab Emirates. The main business sectors driving Abu Dhabi’s economy are oil, financial services, real estate, tourism, aviation, and construction.
Oil and Gas
The oil and gas sector forms the backbone of Abu Dhabi’s economy. Abu Dhabi has nearly 10% of the world’s total known reserves of oil and 5% of natural gas. Oil production and processing account for about 50% of Abu Dhabi’s GDP.
Key oil and gas companies in Abu Dhabi:
- Abu Dhabi National Oil Company (ADNOC) – State owned oil company that manages and oversees oil production.
- Al Hosn Gas – Joint venture company set up by ADNOC and Occidental Petroleum to develop Shah gas field.
Benefits of the oil sector:
- Major source of export revenue and government income
- Attracted foreign investment and talent
- Supported growth of other industries
Abu Dhabi has the second largest financial district in UAE after Dubai. The Abu Dhabi Global Market (ADGM) and the Abu Dhabi Securities Exchange promote investments in financial services.
- Central Bank of UAE
- Various local and international banks
- Investment companies
- Insurance firms
- Stock exchange
The financial sector contributes over 11% to Abu Dhabi’s GDP. The Government aims to increase it to 20% by 2030.
Real estate is a core sector due to rising property development. Major upcoming projects in Abu Dhabi include:
- Al Reem Island
- Al Raha Beach
- Al Shamkha
- Al Falah
- Yas Island
These massive developments attracted foreign real estate investors and added millions of square meters of prime real estate.
Abu Dhabi is promoting its cultural sites, shopping festivals, Formula 1 Grand Prix Race, luxury hotels and beaches to boost tourism. Some key sites are:
- Sheikh Zayed Grand Mosque
- Louvre Abu Dhabi
- Emirates Palace
- Yas Marina Circuit
- Ferrari World
Tourism’s contribution to GDP increased from $1.5 billion in 2004 to $7.5 billion in 2019.
Etihad Airways is based in Abu Dhabi and handles over 18 million passengers per year. The Abu Dhabi International Airport is among the top 10 airports for passenger traffic and undergoing major expansion.
Investment in Etihad and the airport made Abu Dhabi an international aviation hub and cargo gateway between East and West.
There is high demand for infrastructure and property construction projects in Abu Dhabi. These include Bridges, Metro lines, master planned communities, commercial and residential towers.
Major construction groups present in Abu Dhabi:
- Al Jaber
The sector sees new project awards worth billions every year.
- Oil and gas sector drives Abu Dhabi’s economy
- Ambitious plans to grow financial services, tourism, aviation and real estate sectors
- Billion dollar construction boom underway
- Government investing heavily to diversify the economy
- Abu Dhabi leveraging its oil wealth to develop into a global, cosmopolitan city
Abu Dhabi originally built its wealth through oil reserves & production. While the oil & gas sector still dominates, the government has clear plans to grow other industries by leveraging technology, creating free zones, and attracting foreign investment.
As a result, the financial services, tourism, aviation and real estate sectors saw exponential growth over the past two decades. Substantial progress has been made but there is still tremendous potential for diversification. If current trends continue, Abu Dhabi is on track to become a leading global hub for tourism, trade and finance in coming years.
Frequently Asked Questions
- What percentage of Abu Dhabi GDP is from oil?
Around 50 percent of Abu Dhabi’s GDP is directly from oil and associated industries. However Abu Dhabi government aims to reduce dependence on oil and drive growth in non-oil sectors.
- What are the major companies in Abu Dhabi?
Some major companies headquartered in Abu Dhabi are: ADNOC, Etisalat, Etihad Airways, First Abu Dhabi Bank, Abu Dhabi National Insurance Company, Mubadala, International Petroleum Investment Company (IPIC), Emirates Global Aluminium.
- What industries contribute the most to Abu Dhabi’s GDP?
The major industries contributing to Abu Dhabi’s GDP are: oil and gas, financial services, construction, real estate, tourism and hospitality, transport. As part of economic diversification policies, contribution from non-oil industries is increasing.
- Which sector has seen greatest growth recently?
The tourism industry has seen tremendous growth recently, with tourism’s direct contribution to GDP increasing from $1.5 billion in 2004 to about $7.5 billion in 2019. The government aims to continue boosting tourism significantly.
- What construction projects are shaping Abu Dhabi’s future?
Some iconic projects like Louvre Abu Dhabi museum, Warner Brothers theme park, new business districts on Al Reem Island, Al Raha Beach and Al Maryah Island, expansion of Abu Dhabi airport and building of new metro lines will shape Abu Dhabi’s future.
- What steps has Abu Dhabi taken to boost financial services?
Creation of Abu Dhabi Global Market (ADGM) as a global financial center and establishment of independent Financial Services Regulatory Authority have given confidence to foreign investors and financial institutions. The Government is also channeling oil wealth into sovereign wealth funds like ADIA, IPIC and Mubadala.
- How does tourism contribute to Abu Dhabi’s economy?
Tourism is helping Abu Dhabi economically by supporting growth of retail, hospitality, transportation industries. It is also helping soft branding of Abu Dhabi as global hub. As per government estimates tourism contributed $7.5 billion directly to GDP in 2019.
- What is Abu Dhabi doing to diversify its economy?
Abu Dhabi is aggressively developing non-oil industries like financial services, real estate, aviation, ICT and renewable energy through policy reforms, tax incentives, easing visa rules and creation of special economic zones to diversify its economy away from oil.
- What makes Abu Dhabi a good place to invest?
Abu Dhabi offers excellent infrastructure, political stability, supportive business policies and access to talent and consumers making it an attractive investment destination across sectors like financial services, real estate, tourism, ICT.
- How is the construction sector growing in Abu Dhabi?
The construction sector is seeing high growth fueled by major infrastructure projects, new master planned communities and commercial development. Total active projects are estimated to be worth USD 818 billion reflecting solid opportunities.
- What are some upcoming new developments in Abu Dhabi?
Some upcoming developments are – Warner Brothers Theme Park on Yas Island, SeaWorld theme park on Abu Dhabi island, Al Reeman II mixed use community by Aldar, redevelopment of Al Ain city center, projects in special Al Dhafra region.
- How does Abu Dhabi airport contribute to the Emirate’s success?
With Etihad airways it provides crucial passenger and cargo connectivity. The airport handled over 23 million passengers in 2018. Expansion plans to make it largest airport in the world by 2030 AD align with Abu Dhabi’s ambitious growth plans.
- What has led to the growth of the financial sector in Abu Dhabi?
Factors like – accumulation of oil wealth in sovereign funds, need for better capital allocation, desire to be global financial hub led Abu Dhabi government to undertake reforms, allow foreign companies to expand the financial sector.
- Which companies dominate the Petroleum sector in Abu Dhabi?
The state owned Abu Dhabi National Oil Company (ADNOC) dominates Abu Dhabi’s upstream and downstream petroleum sector. Some international oil majors like BP, Shell, Total SA etc have stakes along with ADNOC in downstream refining and petrochemical sectors.
- What advantages do companies get on Abu Dhabi’s special economic zones?
Special economic zones provide various incentives like 100 percent foreign ownership, zero taxes, facilitated visa services and seamless registration that makes it easier and attractive for global companies across industries to set up business there.
- Which sector employ the most people in Abu Dhabi?
The government and government enterprises together employ over 70% people in Abu Dhabi indicating it is still the dominant force in the economy. However private sector’s share is increasing as Abu Dhabi pushes economic diversification.
- What measures were taken recently to boost tourism in Abu Dhabi?
Multiple big ticket leisure projects like Louvre, Warner Bros theme park were launched. New tourism campaign “Experience Abu Dhabi, experience everything” unveiled showcasing cultural sites. Relaxed visa rules, holding major events like Formula 1 race and promoting island resorts boosted tourism.
- How much of UAE’s oil production is from Abu Dhabi?
Abu Dhabi covers over 90 percent of UAE’s total oil production. ADNOC produces around 3 million barrels of oil per day. With government’s support increasing production further, Abu Dhabi’s dominance in oil sector will continue.