Abu Dhabi has broken into the world's top 10 smartest cities in a new ranking as the emirate continues with its digital transformation agenda.
The UAE capital climbed three places from last year to 10th in the Smart City Index 2024 compiled by Switzerland's International Institute for Management Development (IMD), which was released on Tuesday.
Dubai also rose in the ranking of 142 cities, rising from 17th last year to 12th.
Riyadh climbed five places to 25th, while Makkah and Jeddah came 52nd and 55th, respectively. Doha rose 11 places to 59th while Muscat was 88th.
The list is based on assessments of economic and technological aspects of smart cities, as well as factors such as quality of life, environment and inclusion.
It assesses the perceptions of residents on issues related to structures and technology applications available to them in their city. Each score is computed by referring to the past three years of the survey.
"Cities must design and adopt strategies that can resist the test of a future plagued with growing uncertainties,” said Bruno Lanvin, president of the Smart City Observatory, part of IMD.
“Health-related concerns remain high, while climate-related ones grow even larger, a mix complicated by renewed international tensions. Trust and good governance are growing in importance, and the significance of [artificial intelligence] in city design and management is set to increase. Counterintuitive as it may sound, AI can help cities to become more humancentric.”
Smart city plans
A smart city uses the latest information and communications technology to connect people and devices, improve operational efficiency and boost economic activity.
Abu Dhabi ranked high for safety (87.4 per cent), culture and leisure (88.7 per cent), public transport (83.8 per cent), green spaces (84.7 per cent) and medical services (86.3 per cent), the report found. Dubai also ranked strongly for safety (88.5 per cent), medical services (82.2 per cent) and public transport (79.7 per cent).
The UAE cities have made significant strides with their smart city plans as they use technology to accelerate their strategies of becoming knowledge-based economies.
In February, Abu Dhabi and Shenzhen signed a twin city agreement to share knowledge and collaborate on smart city projects across several areas including infrastructure, city planning, green mobility, transport, advanced technology, autonomous solutions, sustainability and urban development.
Abu Dhabi-based Bayanat, an AI-powered geospatial data products and services provider, said in August it was working on boosting its capabilities to ensure the emirate was “first in the world” when it comes to smart city infrastructure.
Singapore-based companies are also collaborating with Abu Dhabi groups including Adnoc, the Department of Municipalities and Transport, and Masdar City to develop smart city pilot projects in the emirate.
These include transforming street lighting as well as increasing the energy efficiency of Al Dannah City buildings, Abu Dhabi Investment Office announced last year.
Meanwhile, in Dubai, the Roads and Transport Authority unveiled its Digital Strategy 2023-2030 in December, which involves 82 projects aimed at scaling up its smart city plans.
This involves "enabling 100 per cent FinTech-driven mobility, increasing digital service adoption to 95 per cent, digitising the skill set of RTA’s employees to as much as 100 per cent, and developing 50 artificial intelligence use cases”, the RTA said at the time.
Top 10 smartest cities globally
In a top 10 largely dominated by Europe, the Swiss city of Zurich retained top spot – a position it has held since 2019 (except for 2022, when the ranking was not released).
Oslo in Norway came in second, also maintaining its position since the index began, while Australia's capital, Canberra, retained third place.
Geneva, Singapore, Copenhagen, Lausanne, London and Helsinki rounded off the top 10.
The report said Abu Dhabi, Zurich, Oslo, Singapore, Beijing and Seoul have been the most consistently high-performing cities in the top 20 since the index began.
"Cities in the top 20 are geographically located in areas where social and economic environments are relatively predictable, even against the overall climate of global uncertainties," the report said.
"They are also cities in which visible initiatives have been taken to facilitate the lives of citizens and to improve the overall ‘quality of life’ associated with their respective names."
Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
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UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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