Nearby, towering metal structures reminiscent of falcon wings sit on the roof of the new Zayed National Museum, just a few kilometers from a future natural history museum and a branch of the Louvre that opened in 2017.
Signs are growing everywhere of a massive construction boom that is changing the face of the once sleepy, oil-rich emirate, which has about six percent of the world’s crude oil reserves beneath its sand and a national wealth of $1.5 trillion.
Sprawling theme parks, five-star hotels, luxury real estate, sports complexes and high-end office towers are springing up at a rapid pace as the city’s rulers spend billions to diversify the economy and serve global financial giants such as Brevan Howard Asset Management and Greg Coffey’s Kirkoswald Asset Management, which have set up shop here.
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The Guggenheim is part of a more than $10 billion initiative to boost tourism and cultural activities in the emirate, the capital of the United Arab Emirates. Meanwhile, Abu Dhabi is investing billions more in building sprawling residential developments to attract wealthy expatriates to live and work here. Wealthy buyers from Britain, India, Spain and elsewhere are snapping up multimillion-dollar seaside villas.
The desert city’s grand ambitions come with challenges. The Middle East is warming the fastest in the world, and although the UAE is among the countries committed to reducing emissions, there are concerns that parts of the Gulf could become too hot for people in the coming decades. The region can also be unstable – the war between Israel and Hamas, now in its eleventh month, still threatens to escalate into a wider conflict. Yet the UAE’s rulers, already using their oil wealth to bolster their international power, want a city that flaunts that heft. “Abu Dhabi is trying to position itself as a global centre, not just a regional one,” said Sultan Sooud Al Qassemi, an Emirati columnist, art collector and member of the ruling family of the emirate of Sharjah. “It is building the physical infrastructure that matches its global ambitions as the capital of a country that is living beyond its means not just economically but politically and culturally.”
Attempts to create international hubs in the Middle East have had mixed results. Doha spent hundreds of billions of dollars preparing for the World Cup and wanted to transform itself into a regional tourism hotspot, but is now struggling with an oversupply of hotel rooms. Saudi Arabia planned to build the new city of Neom at a cost of more than $500 billion, but has scaled back some goals due to funding constraints.
Dubai, on the other hand, has built all the trappings of a global metropolis in just a few decades and is widely considered a success story. Yet the influx of expatriates since the pandemic has taken a toll on the city’s infrastructure. Roads around the financial hub are regularly clogged and waiting lists for schools are long. The emirate’s vulnerability to climate change was also evident in April, when unusually heavy rains brought operations to a halt. (Abu Dhabi is made up of a network of islands that helped divert some of the floodwaters, but significant flooding also occurred.)
The United Arab Emirates is a union of seven sheikhdoms, which also include Dubai and Abu Dhabi. It was founded in 1971. In the late 1950s, oil deposits were discovered in the capital, transforming the country – then a provincial nest with just over 100,000 inhabitants – beyond recognition.
In the decades that followed, Dubai emerged as a regional hub, its open approach attracting the most influential names in the financial world. Abu Dhabi has had a more sober approach for years, but that is changing. The search for new residents also coincides with Riyadh’s increasingly aggressive expansion drive, setting the stage for a three-way battle for talent.
Unlike Saudi Arabia, which has been pressuring firms to open regional headquarters in the kingdom to avoid losing business, Abu Dhabi is taking a different approach. Authorities are quietly forging a package of perks that they hope will help the city become one of the world’s biggest financial centers. A horde of firms has already flocked there, creating a shortage of office space.
Abu Dhabi began construction on Saadiyat and Yas islands in 2005. Work on some projects stalled in the wake of the global credit crisis, and problems worsened during the 2014 oil crash. After the pandemic, property prices recovered from a long stagnation as international banks, hedge funds and traders flocked to the UAE to take advantage of low taxes and easy residency rights.
Zero income tax has helped attract wealthy families seeking to avoid rising taxes in Europe, and the country has expanded the range of residents eligible for 10-year residency. A survey by real estate agency BetterHomes shows that British nationals were the biggest buyers of residential property in Abu Dhabi in the first half of 2024, followed by buyers from the United Arab Emirates, India, Spain, Turkey and the United States.
However, expats without citizenship make up more than 80 percent of the UAE’s population, which could create additional uncertainty.
“People and capital are fickle and can move on to the next shiny thing,” says Sarah Moser, a professor at McGill University and director of the New Cities Lab. “Just because you build something doesn’t necessarily mean people will stay forever. They may come for the first few years or decades, but people are very mobile and without citizenship, people and capital can move.”
“I wonder what will be left of it in a hundred years,” said Moser.
But these potential challenges are not deterring buyers. Demand is soaring, and prices for villas on Saadiyat Island – popular with wealthy investors looking for beachfront penthouses – rose nearly 15 percent in the first quarter from a year earlier, and rents climbed 6.4 percent over the same period, according to CBRE Group Inc. Occupancy in Abu Dhabi’s financial hub is now at 95 percent.
Developers are trying to capitalize on demand. Abu Dhabi’s Jubail Island, nestled among mangroves, is bustling with cranes and workers. A $4 billion community is being built there, covering 2,800 hectares and housing around 10,000 people in sparsely populated villages. It will include schools, clinics, gyms and other facilities. Waterfront villas can cost up to $18 million.
On the nearby island of Ramhan, a developer owned by members of the royal family is building 1,800 villas and 900 houses. A luxurious Ritz-Carlton resort is being built on stilts in the Maldivian style.
A 50-metre-high hill will be built in the centre of Hudayriyat Island, topped by luxury homes in a cascading formation reminiscent of the Greek island of Santorini. Some of these will be for sale to foreign buyers, which is prohibited in many parts of Abu Dhabi.
“Dubai was the more magnificent emirate,” said Moser. “But that has changed in recent years and now Abu Dhabi is pursuing a completely different strategy. It’s about attracting international investment and diversifying the economy.”
This year, the developers are expected to complete 8,660 apartments in Abu Dhabi. They are also expected to deliver 56,000 square metres of office space over the same period, most of which will be in Masdar Square, a low-carbon urban development in Abu Dhabi.
But as Abu Dhabi develops its infrastructure, the energy demand to cool buildings in one of the world’s hottest regions is growing, putting it in direct conflict with the government’s sustainability commitments. The UAE, which is one of the world’s biggest greenhouse gas emitters per capita, hosted the United Nations climate conference, COP28, last year. This dynamic will prove crucial as the planet continues to warm, with Gulf countries heating at about twice the rate of the global average.
Given the need to reduce energy consumption in a region where up to 70% of electricity is used for household cooling, sustainable building design will be crucial.
Abu Dhabi’s population expansion strategy could pose risks because it depends on the availability of cheap oil to generate energy to cool homes and offices in an ever-warming world, Moser said.
As the real estate market recovers, projects that were put on hold during the financial crisis are being revived. The Guggenheim is finally taking shape, nearly 20 years after architect Frank Gehry first unveiled his design. Abu Dhabi is also building hospitals and schools to serve the new residential areas. Gordonstoun, the Scottish boarding school where King Charles was educated, plans to open its first campus in the Persian Gulf on Abu Dhabi’s Jubail Island in 2026.
The central idea is to make the city attractive to people from all over the world. On Saadiyat Island there is now a complex with a mosque, a church and a synagogue.
“Where else could you go from the Louvre to the Guggenheim in a few minutes,” said Al Qassimi.
