Dubai a top destination for Greenfield FDI Projects - BofA Merrill Lynch
The Bank of America Merrill Lynch has released its Thematic Investing report on the topic of smart cities, sustainable development and urbanisation, including insights on the UAE and Middle East.
Smart Cities will be in the driving seat of the clean tech revolution as we head towards zero emissions cities by 2050E, in line with the 2016 Paris Agreement. Close to 11,000 climate actions were carried out by a group of the world’s leading cities in 2016 alone with the majority focused on buildings and transport. Globally, renewables already account for 20 per cent of energy for transport and buildings in cities, according to IRENA, and a growing number of cities are committing themselves to ambitious renewable energy goals. Masdar City (UAE) is aiming to be one of the world’s first low-carbon cities, while San Francisco has committed to 100 per cent renewables by 2030E, followed by San Diego by 2035E and Vancouver by 2050E. Copenhagen, Stockholm Malmö, Oslo, New York and Sydney have set similar targets.
In the Middle East Smart City projects have been incorporated in the city of Masdar (UAE), Lusail (Qatar), and King Abdullah Economic City (Saudi Arabia). Smart buildings in these regions have good prospects because of strong and stable economies and high construction rates.
Dubai will invest over $8 billion in smart city initiatives. Under the Dubai Plan 2021, the Smart City strategy includes over 100 initiatives and a plan to transform 1,000 government services into smart services, mostly based on data. The plan covers healthcare, industrial, education, safety, telecoms, tourism and utilities. Dubai along with neighbouring Abu Dhabi is also deploying over 5,000 Wi-Fi hotspots to offer free internet. It is also investing heavily on smart mobility systems such as traffic sensors, mobile traffic apps, driverless vehicles.
The most attractive markets for investment are London, Shanghai Singapore and Dubai. The most attractive markets for investors remain those countries and cities with the strongest growth potential, most secure business environments, well established legislative and regulatory systems and stable political environments.
The top 10 locations in the world in which to invest in infrastructure are Singapore, Canada, Qatar, the UAE, Norway, Sweden, Malaysia, the UK, the US and the Netherlands according to Arcadis’ Global Infrastructure Investment Index 2016, based on factors such as the ease of doing business in each market, tax rates, GDP per capita, government policy, the quality of the existing infrastructure and the availability of debt finance.
The most attractive cities for FDI 2016 were London, Singapore, Shanghai, Dubai and Hong Kong. Dubai and Hong Kong have set atop the list of top global cities in terms of attracting inward investment.
A recent study by Shell of more than 500 cities with over 750,000 inhabitants and 21 megacities with over 10mn inhabitants identified six illustrative archetypes to help frame our understanding of how different cities consume energy.
Although greater prosperity means energy consumption is high, this does not impact global energy needs too much due to the relatively small number of eight urban powerhouses. The large professional population uses a lot of energy on heating and cooling homes and offices.
Because of their vast size, low-density housing and relative wealth, cities such as London, Rio De Janeiro, Los Angeles use a tremendous amount of energy, amounting to 38 per cent of the world’s supply, most of which goes towards powering people’s cars and homes.
Largely due to high overall wealth and living standards, cities such as Valencia, Dubai, Amsterdam use a great deal of energy, consuming 26 per cent of the world’s supply, most of which is used in powering people’s cars and homes.
Cities such as Beijing, Nairobi, Buenos Aires are quickly becoming regional commercial hubs, but energy use is still fairly modest, mainly because most citizens are low-paid. Energy use is pretty evenly split between housing, transport and industry.
Residents in cities such as Marrakech, Nanchong, Panama City do not use a great deal of energy, as living spaces are usually small and electricity is not as widely used as in richer cities. Industry soaks up a lot of the power supply.
Energy use is relatively subdued in crowded cities such as Manila, Lagos, Lima due to low average incomes and underdeveloped infrastructure, with unreliable power a reality for much of the population.