Competition is a risk for Abu Dhabi and Dubai

11 April 2008
Ask any government official or real estate developer from Abu Dhabi or Dubai whether the two emirates compete and nine times out of 10 you will get the same reply: “We don’t compete, we complement.”

The news that Abu Dhabi is to develop vast projects on Dubai’s doorstep in Ghantoot will test the credibility of this statement.

Over the past five years, urban development in Dubai has crept towards the Abu Dhabi border as the city extends south beyond its traditional limit of the Jebel Ali free zone. The scale of the projects is enormous. Dubai Waterfront is twice the size of Hong Kong island, the Arabian Canal is one of the largest civil engineering projects ever undertaken, and the new airport at Jebel Ali will comfortably be the world’s largest.

Now Abu Dhabi is making a similar move northwards. Like Dubai, it started with a port. The Khalifa Port & Industrial Zone (KPIZ) that will be built at Taweelah has been a catalyst for development in the north of the emirate, as developers seek to provide homes to staff working in the zone. It could also entice residents from Dubai by offering alternatives to people living and working across the border.

Ultimately, the rate of population growth will determine whether these projects compete or complement one another.

If economic growth marches on and jobs continue to be created, housing will remain in short supply, and the market will welcome new cities.

But what happens if things go wrong? If Al-Maktoum International airport, Dubai Industrial City and KPIZ do not create the employment opportunities that they promise, and population growth fails to meet developers’ expectations, the competition on either side of the border will be fierce. Abu Dhabi's latest plans put renewed pressure on Dubai to get its plans right.

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