Economic conditions in the emirate of Abu Dhabi have improved considerably during the first quarter of 2013, under a strong government role to stimulate domestic demand and provide best investment prospects for investors and to achieve a high level of well-being and stability for citizens.
The Business Cycle General Index for the first quarter for the emirate of Abu Dhabi which was released by and the Studies Directorate of Abu Dhabi Department of Economic Development indicated that Abu Dhabi economy achieved high levels of growth in 2012, exceeding expectations.
The emirate experienced an increase in the number of new commercial licenses issued for business and professional activities and, and rising rates of employment compared to 2011.
The result of the Business Cycle Index revealed that the government spending had increased and that the implementation of several major projects was completed.
Most markets have reached advanced stages of debugging after the global financial crisis, which resulted in accelerating of the performance of the emirate's economy, increasing the number of commercial licenses and reviving Abu Dhabi Securities Market index, due to the positive results banks and real estate companies.
The index reflected the effects of Abu Dhabi Government announcement at the beginning of this year, of major financial allocations with a total of Dh330 billion to be pumped in various capital projects in various sectors, during the period (2013-2017) so as to boost partnership with the private sector in the process of development; and to stimulate economic activity, contribute effectively to the development and improvement of services for businessmen and investors and improve the investment environment to help place Abu Dhabi on the list of top investment attracting countries in the World.
A quick review of the most important economic developments during the first quarter, shows that the real estate sector in the Emirate of Abu Dhabi, experienced a revival in demand for new housing units in the nearby cities of Abu Dhabi Island, which attracted newcomers as preferred accommodation in Abu Dhabi, according to Asteco Q1 2013 Property Report.
According to data released by the Abu Dhabi Tourism and Culture Authority, the tourism sector experienced a revival at the beginning of 2013.
The total number of guests in hotels during January 2013 was 203,925 increasing from 198,183 guests in January 2012, growing by 3%, due to the number activities held during the month, most importantly were the Liwa international Festival, the Abu Dhabi Sustainability Week2013 and the Abu Dhabi ‘HSBC’ Golf Championship 2013.
The total of number of hotel guest nights, increased by 19% in January 2013 compared to January to 2012. Hotels revenues increased by 4% to reach Dh427 million, while room proceeds and food and beverage proceeds went up by 6% and 3% respectively.
Hotels occupancy rate for the same period stood at 70% during the month of January 2013 rising 5% compared to January 2012.
Length of stay during the month of January 2013 increased by 16% compared to the same month of 2012.
As for capital market, ADX topped Mena stock markets in the first quarter of 2013 with the Abu Dhabi exchange's general index increasing by 15 % at the end of March 2013, to close at 3,025.33 points. March 2013 witnessed profit reaping for transactions of January and February 2013.
This improvement came in the shadow of the most important merger between Al Dar and Sorouh real estate companies, which is the third largest real estate merger in the Middle East, with assets of more than Dh47 billion.
The banking sector saw a strong recovery and activity in 2012 which reflected positively on the growth of banks’ profits, and contributed significantly to the rise of
local stock markets during the first quarter of 2013. The banking sector is expected to see more revival during the coming period.
Abu Dhabi in the current period endeavors to support the industrial sector at the level of its geographic regions, particularly the Western Region where the Government is seeking to create two industrial towns in Al Ruwais and Madinat Zayed.
The first will specialised in petrochemical and building materials; and other in oil and gas industries and logistics services; and are expected to provide about 43 000 jobs.
The year 2014 is expected to mark the setting of the first industrial project; in addition, the Government is working to build a specialised auto city close to Musafah.
Specialised Economic Zones
According to the data issued by the Higher Corporation for Specialised Economic Zones (ZonesCorp), the volume of industrial investment in the emirate of Abu Dhabi at the end of 2012 rose to more than Dh22 billion.
The industrial sector achieved a growth rates between (15-20%) during 2012 and this is expected to rise during the year 2013 under the industrial strategy announced by the Government of the emirate of Abu Dhabi, which will attract more new foreign industrial investments.
In November 2012, ZonesCorp estimated that the construction of nearly 400 factories will begin in the coming period; and stated that corporation planned to create an industrial city for small and medium-sized industries in coordination with the Khalifa Fund for Enterprise Development.
In the trade sector, the value of total merchandise trade in January 2013 dropped by Dh1,425 million, representing approximately (-12.5%) compared to December, 2012, while imports fell by Dh1,337 million, representing around (-14.6%). Re-exports also fell by Dh125 million, representing approximately (-8.9%), whereas non-oil exports increased by Dh37 million, representing approximately (4.4%).
With regard to the quarterly indicator of licenses issued to new members by the Commercial Affairs Sector of the Department of Economic Development, the indicator showed a rise in the quarterly rate of change in the first quarter of 2013 compared to the fourth quarter of 2012. The rate of change in the fourth quarter of 2012, and the third quarter of the same registered (8.1%) and (-4.9%), respectively.
The general trend indicates an increase in types of licenses issued during the first quarter of 2013 compared to the last quarter of 2012 for craft and trade licenses, where the number of new craft licenses during the first quarter of 2013 amounted to approximately (31) licenses compared to (28) license during the last quarter of 2012,registering (10.7%) growth.
Commercial licenses increased by (8.2%) , and the number of new licenses issued during the first quarter of 2013 reached 1905 license compared to (1761) new license issued during the last quarter of 2012.
The number of professional licenses issued during the first quarter decreased by approximately (-8.3%) compared to the last quarter of 2012.
The number new craft licenses issued in the two quarters was (11) and (12), respectively.
In general the number of total new licenses issued during the first quarter of 2013 was 1947, while 1801 licenses were issued during the last quarter of 2012 and increase registering an increase of 146 licenses.
This increase in new licenses reflected the high optimism of investors and businessmen about the expansionary expenditure policies announced by the Government of the emirate of Abu Dhabi at the end of 2012and early 2013; in addition to the improvement in the pace of the performance of the economy in 2012 and the government policies and actions aimed at improving the business environment and encouraging investment.
This was coupled with exemption companies from waste collection fees in the first year of activity, as well as efforts to develop procedures and systems in place to facilitate and ease doing business.
Regarding the Abu Dhabi Murban crude oil prices sub-indicator, Murban crude price increased during the months of January and February 2013, reaching $94.66/barrel and $115.40 /barrel respectively, which was higher than the price registered in December 2012. However it dropped in March 2013 to about $ 109.95/barrel.
Some projections indicated that the prices of Brent this year will range between $(95-105) /barrel, due to increased production in North America; and the recovery, above expectation, of oil shale production in the United States, and the drop in expected demand for oil in Europe and America.
Despite those prospects, some indications predict a slight increase in oil prices during the 2013, including rising in growth rates and high demand for oil in emerging countries, particularly China and India, in the light of reduced demand for Iranian crude oil and its low production.
The individuals financial condition indicator recorded an increase of 5 points in the first quarter of 2013 compared to the last quarter of the same year, bringing the value of the index on average to (112.5) points and (107.5) point respectively. The results reflected the optimism of individuals of different nationalities about the current and future economic conditions in the emirate of Abu Dhabi, in view of the provision real jobs, salary increases and improved living conditions.
Respondents believed that the period (January-March 2013) was quite appropriate for purchasing long-term consumer goods, much better than (October-December 2012), where the index value for the purchase of long-term consumer goods registered (99.5) points and (98.9) points respectively.
The results reflected higher consumer confidence in the decision-makers in the emirate; and their efforts to revitalise the economy and open new areas to attract investment which reflected positively on the stability of their businesses.
The sub-indicator of the current situation of economic enterprises, indicated high level of optimism in economic establishments activities (services, industry, construction and trade) in general and the service activity in particular, the interviewed service activities sample, showed high levels of optimism about the conditions of their enterprises; and the economy at large during the second quarter of 2013.
This reflected the improved performance of the service sector during the first quarter of 2013, compared to other activities, especially trade and construction, which still need some time to return to normal.
Abu Dhabi Securities Exchange
Abu Dhabi Securities Exchange, experienced revival and an improvement in market performance at the beginning of the year in view of the profits reaped by listed companies and banks in 2012, along with development and improved banking sector during the same period.
All 63 listed local companies realised net profits reaching up to 18% at the end of 2012, compared to the same period in 2011.
The manufacturing sector alone accounted for an increase of 109%, followed by 76% for real estate. In this context the Abu Dhabi Securities Exchange closed at the end of 31 December 2012 at (3025.33) points compared to (2652) points at the end of the at the rate of (14.99%). Considering market performance during the first quarter of the year, it was noted that the market closed on 20/2/2013 at (3010.60) points breaking the barrier of 3,000 points for the first time since the session of 29/10/2009 which closed at (3023.10) points affected by the global financial crisis.
This confirmed the recovery of Abu Dhabi Securities market and emphasized the start of real revitalisation.
It is quite natural that some stages of fluctuations permeate as an accepted result of the process of profit reaping.
Market recovery is expected to continue over the coming months as a result of the announcement of the distribution of cash dividend to shareholders, which will provide additional liquidity.