With its towering glass and steel office blocks and striking architecture, walking around Abu Dhabi’s newly named financial district Abu Dhabi Global Market Square on Al Maryah Island, it is easy to draw grandiose comparisons with the early days of London’s Canary Wharf and Paris’s La Defense.
Crossing the bridge from close to the Abu Dhabi Mall on to Al Maryah Island, one is immediately struck by the soaring ultra-modern buildings of the office, hotel and shopping district that would not look out of place in major US or European cities.
Like in many international financial centres, the streets in this quarter of town are not exactly bustling with people, but a few well-heeled visitors climb in and out of luxury cars or shuffle around the upmarket boutiques.
Walk past the vast new Rosewood Hotel — the first in the country — and keep strolling past the glitzy new Galleria shopping centre replete with its 121 luxury stores, to the development’s first 183,000 square metres of high-end office space arranged in four huge blocks.
The office component of what was once known as Sowwah Square and has now been dubbed Abu Dhabi Global Market Square is set to form the beating heart of what is soon to become the capital’s new financial free zone.
"Sowwah Square is the commercial epicentre of Al Maryah Island, Abu Dhabi's dynamic mixed-use central business district," its says on the website of the developer of the project Mubadala Development. "It is home to more than 40 global blue chip companies."
According to the Sowwah Square website, current tenants include: the banks ADCB, BBVA, Société Générale, First Gulf Bank, Macquarie, JP Morgan, Santander and Royal Bank of Scotland; the law firms Norton Rose, Linklaters, Clifford Chance, Al Tamimi and Herbert Smith; the financial advisory firms Deloitte, Accenture, Investcorp and Perella Weinberg; the property companies Bloom and Farglory; and the energy companies Taqa, Dolphin and Mubadala Petroleum.
Yet about 98,000 square metres of office space in Abu Dhabi Global Market Square sits empty and has done so for the past two years, waiting for the free zone’s authority to make a final ruling over who will be allowed to lease offices in the area and what business activities they will be allowed to undertake.
Free zone and onshore companies operate under different rules. Organisations must operate as one or the other or establish a parallel business in order to operate as both. Without clear rules over which businesses are allowed to operate in the free zone, companies have been unable to commit to taking space on the island.
At the start of January, Abu Dhabi Global Market (ADGM), the body in charge of the proposed financial centre, published consultation documents that will form the basis of legislation paving the way for operations at the ADGM free zone’s to formally begin.
The move means that the extra office space on Al Maryah Island is finally likely to come back into play.
The documents not only reveal that the market will be based directly on English common law, and influenced by the legal systems applied in Singapore and Hong Kong, they also contain detailed proposals for how ADGM will structure company law, insolvency practice, employment and property legislation, as well as its own operating regulations.
Yet many potential tenants looking to take space in what is now known as ADGM Square will have to wait a while longer for more concrete guidance.
Although the new draft regulations go into minute detail regarding the new insolvency laws to be used in the free zone and even make provision for strata law and mortgage laws that have yet to be enacted in the rest of the emirate, the proposals remain so far quiet on the subject of what activities can actually take place within the free zone.
Financial, legal, accountancy services, hotels, shops, restaurants and coffee shops, hospitals, property agents and developers are all named in the third consultation paper of the draft regulations as the sorts of activities likely to be allowed to trade in the new zone. However, it adds that the actual rules governing the licensing and supervision of firms operating in the free zone and companies excluded from trading there will be set out in secondary legislation.
Local property brokers say the lack of clear guidance over which firms will be allowed to operate in the new free zone has not stopped space being offered for lease now to select tenants who, it is fairly certain, will be able to trade in the new free zone, such as lawyers, accountants and management consultants. But leases are not currently being offered where the situation is less clear cut, such as for global banks that might want to offer services to local onshore investors as well as trade in offshore commodities, brokers for instance.
Mubadala was unavailable to comment over whether it was currently leasing out remaining office space in the project or under what terms it was leasing the space.
Matthew Dadd, a property director at Knight Frank, says that there is definitely demand for additional prime office space in Abu Dhabi.
“But at the moment it’s a bit of a Catch 22 situation. International companies will not start to look at Abu Dhabi Global Marketplace until the legal framework has been fully established and the directives about exactly who can take space and under what conditions are made clear. So at the moment it’s very hard to gauge demand for space in the free zone,” he says.
However, an ADGM spokesman says ADGM would “only be in a position to issue licences, for both financial and non financial firms, once the open consultation process is complete and the final non-financial and financial regulations are adopted by the ADGM board of directors”.
David Dudley, a regional director for JLL in Abu Dhabi, says that ADGM’s extensive public consultation to receive feedback from all key stakeholders is positive for the market. “Putting in place a new transparent regulatory regime based on English law will help attract international companies,” he says. “A key outcome of the public consultation exercise will need to be giving greater clarity on which activities can and cannot operate in the free zone — particularly within the financial services sector.”
lbarnard@thenational.ae
Follow The National's Business section on Twitter