Dubai joins the big league
Dubai enters the ranks of the top cities in the world, joining Abu Dhabi and Riyadh on the global list.
The economic diversification drive initiated by the GCC governments has started to bear fruit, as Dubai enters the ranks of the top cities in the world, joining Abu Dhabi and Riyadh on the global list.
Experts have noted that the shift towards greater diversification will greatly benefit cities in the region. With people increasingly moving towards urban areas worldwide, this will result in the GDP of mega cities growing steadily; cities across the GCC are no exception.
According to a newly-released study by Oxford Economics, six GCC cities have been ranked among the 10 largest cities in terms of GDP in the Middle East by 2035, with Riyadh, Abu Dhabi, Jeddah, Dubai, Kuwait City, and Doha making to it to the list.
By 2035, Oxford Economics forecasts that four Middle Eastern cities will be in the top 100 global cities in terms of GDP, including Abu Dhabi, Dubai and Riyadh from the GCC. Of these, Dubai is the region's new entrant to the top 100 ranking, moving up 25 places to the 89th position.
"The emergence of Middle East cities is an area to watch, particularly if authorities are able to successfully implement some of their ambitious plans for city development. For example, the Saudi Arabian government aims to build a new megacity (named Neom), with the goal of diversifying its economy to focus less on crude oil," says Mark Britton, associate director, cities, Oxford Economics.
Central to Dubai's economic expansion, he says, will be further government reforms aimed at diversifying the economy and attracting foreign direct investment.
"For example, the Expo 2020 will be hosted in Dubai and this has prompted significant increases in public investment. Additionally, the tourism, transport and retail sectors will continue to be key drivers of growth for Dubai," says Britton.
Abu Dhabi is also forecast to remain among the top 100 global cities for GDP, and much like Dubai is set to benefit from increased public investment in infrastructure whilst also maintaining its position as an attractive destination for private investors.
According to Pankaj Gupta, CEO of Gulf Islamic Investments, the main factors that will drive these cities' economies over the next two decades will be seamless and environment-friendly infrastructure, robust and progressive social infrastructure, development of human capital, innovation and business environment.
"If looked closely, these factors are pretty much linked to each other as these all are enablers of not only a strong economy but also a sustainable one. The cities built and developed on the above lines will also attract businesses, professions from other parts of the world leading to the creation of futuristic economies with an ecosystem driven by knowledge," says Gupta.
He believes the tertiary sector, healthcare and knowledge-based industries will be driving the growth in the urban areas of the Gulf region in decades to come.
"These sectors are pillars of any economy today as they lead and contribute to the development of Human Capital and ultimately cater to the ever increasing "desire of better living" of the local population. The young population of the GCC major cities is an asset if provided with the right and timely economic opportunities as they can add significantly to the development of their economies and for this all the stakeholders of the government must focus on the above-mentioned sectors which have the potential to generate sustainable employment," adds Gupta.
In addition to this, another area, which GCC cities should focus is on public-private partnership (PPP) because the convention revenue stream would be under severe pressure in the days to come and the governments would need support of private sector funds and involvement to achieve its objectives, concludes Gupta.
The report noted that overall, a common theme across many Middle Eastern cities is the diversification to transition away from their historical dependence on natural resources. But it will largely depend on the political stability that can be achieved across the region and how well governments harness growth across a range of sectors.
Global trends
According to Oxford Economics, the top 780 global cities currently produce almost 60 per cent of all world economic activity, and they will grow in importance as urbanisation continues. By 2035, these cities will be home to almost half a billion additional people with GDP rising by $32 trillion. Asian cities will account for almost half of global city activity by 2035, overtaking the aggregate of European and North American cities in just over a decade.
"But we still expect most of today's urban superpowers to retain their positions as the largest cities in terms of GDP in 2035, led by New York, Tokyo, London and Los Angeles," says Britton.
However, Paris is expected to drop out of the top five, replaced by Shanghai, which will also be joined in the top 10 by three other rapidly growing Chinese cities: Beijing, Guangzhou and Tianjin.
Editor's Note: This article was originally published in Khaleej Times on Saturday December 30th, 2017 http://bit.ly/KhaleejtimesDubai