Abu Dhabi’s ADGM plans to expand with $16B investment
Abu Dhabi is planning a $16 billion expansion of its ADGM free zone, as the hedge funds, banks and fintech companies that have been flocking to one of the region’s fastest growing financial hubs demand more space to expand.
The emirate’s Mubadala sovereign fund and its biggest developer, Aldar Properties, are partnering on the mixed-use development, which will double the Grade A office space available on Al Maryah Island and add another 3,000 luxury residences, Bloomberg reports.
The number of operational entities within ADGM rose to 3,227 in the third quarter, up 43% year-on-year. Billionaire Alan Howard told Abu Dhabi Finance Week that his hedge fund, Brevan Howard Asset Management, which is Abu Dhabi’s largest, has run out of office space and is looking for more.
Balyasny Asset Management, a $29 billion multi-strategy hedge fund, is the latest newcomer, with plans to open an office early next year.
UAE developers tap bond market as real estate boom accelerates
Property developers in the UAE are raising billions through bonds and private credit to take advantage of the ongoing real estate boom, as banks tighten lending to private developers.
Dollar bond and sukuk issuances have grown more than 12 times to $6 billion since 2021, Bloomberg reports.
Heavyweight developers Emaar, Aldar and DAMAC, as well as emerging names like Sharjah’s Arada, have been regularly issuing Islamic bonds as they compete to buy prime land.
The rise in issuances has seen maturities due by 2030 grow to about $8 billion and some analysts are now flagging risks from the boom-time spending.
Kuwait banks explore deal to create $50 billion Islamic lender
Two of Kuwait’s biggest banks are exploring a merger that would create an Islamic lender with more than $50 billion in assets.
The proposed tie-up comes amid a wave of banking consolidation across the Middle East, partly driven by competition for financing large-scale projects as Gulf countries rapidly diversify away from oil.
Boubyan Bank, with assets worth $29 billion and Gulf Bank, with assets worth $24 billion, will conduct due diligence and valuation studies into the potential deal, the two lenders said in a statement.
The move comes as Kuwait Finance House weighs taking a large stake in Saudi Investment Bank, while National Bank of Bahrain considers a potential merger with Bank of Bahrain and Kuwait.
Consolidation of financial institutions in the GCC is being driven by the need to create lenders with greater scale as countries seek financing for mega-projects and other diversification activities aimed at boosting the non-oil economy.
These capital intensive activities, and the development and diversification of funding channels are expected to drive the GCC’s debt capital market to reach $1 trillion outstanding by next year, according to a new report from Fitch.
Saudi Arabia, which is contending with lower oil profits and mounting expenses associated with its Vision 2030 transformation plans, held a 43% share of the $940 billion outstanding government debt in the GCC at the end of Q1 2024, while the UAE held 30%.
Around 40% of outstanding government debt was sukuk – bonds compliant with Islamic sharia law – while the rest was in conventional bonds, Fitch said.
Environmental, social, and governance (ESG) sukuk, meanwhile, reached $18 billion outstanding in GCC countries, driven by increasing sustainability commitments, according to Fitch.
