Abu Dhabi’s industrial ambitions begin to bear fruit

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• Industrial Strategy aims to double sector by 2030
• Licence issuances up 63% in H1 2023
• Capex grew to AED384.1 bn

Abu Dhabi has registered a 63 percent jump in the number of industrial licences issued during the first half of 2023 as the emirate makes progress on plans to double the size of the sector by 2031.

In the first full year since the launch of the Abu Dhabi Industrial Strategy, nearly AED15.4 billion ($4.2 billion) in capital investments have been made in manufacturing facilities moving to the in-production phase, a growth of 86 percent from a year earlier. 

Total capital investments by manufacturers operating in the emirate grew AED12.4 billion to AED384.1 billion in the same period.

The strategy aims to double the industrial sector to AED172 billion, create 13,600 skilled jobs and increase the emirate’s non-oil exports to AED178.8 billion by 2031.

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Al Jazeera Steel Products Co, based in Oman, is the latest to join Abu Dhabi’s industrial drive and held a groundbreaking ceremony of its rolling mill in Khalifa Economic Zones Abu Dhabi (Kezad) last month.

The establishment of the 210,000 sq m mill aims to supply quality steel products to meet increasing demand for rail parts in the GCC.

Global Fluorine Chemical Factory also announced plans last month for phase two of its Kezad facilities, which will allow the company to triple its production capacity with an investment of over AED1 billion.

As part of Abu Dhabi’s industrial ambitions, Kezad has begun work on an AED55 million upgrade of the road network to help cope with increasing traffic.

Mohamed Al Khadar Al Ahmed, CEO of Kezad Group, said the improvements “will go a long way in reinforcing Abu Dhabi’s position as an advanced economic and industrial hub”.

'A new era'

Abu Dhabi Department of Economic Development (ADDED) said the robust performance of the manufacturing sector is testament to Abu Dhabi’s ongoing economic resilience.

Latest figures show that it contributed 16.4 percent to Abu Dhabi’s non-oil GDP in 2022 and represents 49.9 percent of the total industrial sector in the UAE.

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“As an ambitious blueprint to guide the emirate’s manufacturing sector, the Abu Dhabi Industrial Strategy has ushered in a new era in the economic landscape,” ADDED chairman Ahmed Jasim Al Zaabi said.

Over the past year ADDED’s development arm, the Industrial Development Bureau, has launched several initiatives to deliver on the goals of the strategy.

These include a talent programme and training to equip employees of food manufacturing factories with "Industry 4.0" (fourth industrial revolution) skills. Industry 4.0 can include new technologies such as artificial intelligence.

During the first six months of this year, the number of manufacturers enrolled in ADDED's Electricity Tariff Incentive Programme grew to 68.

The scheme offers reduced electricity costs to businesses that meet certain criteria, and these companies increased their spending on logistics by 19.3 percent compared with a year earlier. 

There is also the Golden List initiative, which aims to increase the demand for locally manufactured goods through government procurement.

The number of firms that joined in the first half of the year increased to 164, up by 29 percent on the same period, while the number of products registered in the Golden List increased to 742, up 4.3 percent.

In November a new smart manufacturing index was launched in Abu Dhabi to help facilitate the private sector’s transition to Industry 4.0 technologies, applications and methods.

According to latest figures from analyst CBRE, the UAE’s industrial and logistics sector recorded strong levels of activity over the course of the second quarter of 2023. 

In the year to Q2, the total number of rental registrations in Abu Dhabi’s market grew by 18.8 percent. Over this period, new registrations increased by 8.2 percent, and renewed contracts registered were up by 26.2 percent. 

On the back of strong demand, average rental rates in Abu Dhabi increased by 6.4 percent. 

“The scarcity of available quality stock resulting from the lack of new developments will continue to drive rental growth over the second half of 2023, albeit we expect that growth rates will now begin to moderate on average,” said CBRE.