In the new issue: UAE Power Shift?

Ben Thompson

In the new issue of Infrastructure MENA, we look at how Dubai's recent debt restructuring could give Abu Dhabi the opportunity to eclipse its neighbour by attracting the investment once bound for the property-reliant emirate.

Editor Ben Thompson examines why, despite the recent lavish opening of the Burj Khalifa, Dubai's influence in the UAE is waning. Recent financial problems, alongside the crash in the property market - with some buildings losing up to 50 percent of their value - have hit the emirate hard. However, as Dubai's star has fallen, Abu Dhabi's has been on the rise.

Ambitious economic development

For years, Dubai has been seen as the UAE's wunderkind - rapidly expanding, but becoming overtly Westernised and glitzy in the eyes of the region's more conservative Islamic countries. Not just that, but as the emirate had few oil reserves, its wealth was built almost entirely on its fragile property market.

In comparison, Abu Dhabi is the UAE's capital and one of the world's richest cities. It accounts for about 60 percent of the UAE national economy and with plentiful oil reserves, a stable ruling class in the Al Nahyan family and a rumoured $800 billion in sovereign wealth, there has never been a better time for it to snare investment dollars originally destined for Dubai.

"Abu Dhabi remains the wealthier emirate with manageable debt levels compared to its balance sheet," says Alia Moubayed, Senior Economist at Barclays Capital. "It has a very ambitious economic development and investment programme, and the ‘catching-up' process the emirate is undertaking to build its infrastructure to Dubai's level naturally implies that more project work will be done there. International investments will certainly flow into these ventures given the size of the proposed plans in the industrial and infrastructure sectors."