Sowwah Island is luring a great number of financial services firms flocking to the new Abu Dhabi Securities Exchange, but that has created some difficulties for office blocks elsewhere in the capital - with gallery.
Abu Dhabi's answer to Canary Wharf
Richard Ernest knows all about firsts.
His company, Clifford Chance, was a trailblazer when it opened up in the Dubai International Financial Centre, and the law firm will now be one of the first international players to move into Abu Dhabi's Sowwah Square this month.
"We were among the first tenants in the DIFC [which officially opened in 2005], and we are delighted to be one of the first in Abu Dhabi to relocate to the capital's new world-class business centre on Sowwah Island," he says.
The firm's Abu Dhabi operations on Muroor Road are no match for its sleek offices in London that boast a large swimming pool. Many other companies also complain that their Abu Dhabi offices are no match for their operations headquartered elsewhere.
But all that is expected to change as firms scattered throughout the capital move to gleaming blocks on Sowwah Island, the new business hub.
Most of the financial hubs of the world, including Wall Street and the City of London, began when businessmen found a common area to congregate, prompting companies to sprout around them.
Billed as the emirate's version of London's Canary Wharf, the development of Sowwah Island is a key pillar of Abu Dhabi's Economic Vision 2030 strategy.
It is expected to officially open towards the end of this year and aims to attract financial services, diversifying the local economy to reduce dependence on oil production.
The new Abu Dhabi Securities Exchange (ADX) comes with a number of distinctly 21st-century twists that are luring financial services companies at the expense of other rival locations in the capital.
The development off the coast of Abu Dhabi island was scheduled for completion at the end of last year, but the project was affected by a number of construction delays and a change of executive director last August.
However, that has proved no impediment to Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, filling the two towers overlooking Sowwah Square that have so far been released, says Peter Wilding, the associate director of Mubadala Real Estate and Hospitality. Key to that is the construction of the new ADX, which has tempted the National Bank of Abu Dhabi and Al Hilal Bank, among others, to buy land to develop offices on Sowwah.
JPMorgan, the investment bank, Gulf Capital, the private equity company, and ADS Securities, the brokerage, are also planning to establish operations on the island.
They will be joined by a number of others including Linklaters and Herbert Smith, part of the "magic circle" of elite British law firms, and Perella Weinberg Partners, the boutique investment banking adviser.
For those looking to branch out to Abu Dhabi, being close to the biggest players in financial services was a key factor, says Sarosh Mewawalla, the managing partner of Linklaters Middle East.
"We've identified Sowwah Island as the location where we think the financial institutions, some large corporations and other service providers will look to be based," he says. "When you have an aggregation of service providers in that kind of location, it creates a pull for clients."
The migration of tenants to Sowwah comes as a number of companies look to bolster their UAE operations with Abu Dhabi offices or revamp their existing headquarters, says David Quinn, the regional head of agency services at Cushman & Wakefield, the property brokerage.
"As a financial services firm, Sowwah would be the number one destination," he says. "With the Abu Dhabi Securities Exchange effectively being an anchor tenant, a lot of finance firms are looking to it seriously.
"You can see that there's a lot of development coming out of the ground. As a result, if you were sitting in another financial services [company], thinking now it's time to move into proper office accommodation, there are a number of opportunities."
Once fully developed, the island will include high-quality eateries, shopping galleries and housing, and eventually connected by light-rail transit (lrt), a metro system and water taxis.
"Comfortable and convenient livability" are the watchwords, says Fouad Kassem, a spokesman for the Abu Dhabi Urban Planning Council.
But exchange officials are hoping that the ADX in the centre of Sowwah Square will be the biggest draw. The striking architecture of the exchange building itself will first catch the eye of international investors, says Rashed Al Baloushi, the deputy chief executive at the ADX.
But what convinces them to settle in Abu Dhabi will be the exchange's systems, which have been overhauled to allow for faster relay of information to market traders and greater security for investors.
"What we're hoping to get out of this is a way to protect our information and our reputation," he says. "Having this information in a very secure and well-established environment that all information is processed from will prevent it from being leaked out."
In addition to security, the new exchange brings speed. The ADX has been working to improve its data infrastructure, including placing servers as close as possible to the exchange to minimise the time lag between placing and executing trades.
But the financial services surrounding the ADX will gain the same benefits if they make use of new trading strategies that move thousands of shares in the blink of an eye.
If companies eventually adopt computerised strategies including high-frequency and automated trading for dealing in local stocks, profits will be determined by the number of milliseconds it takes to trade.
A new exchange surrounded by prime office space will be a significant lure for companies anticipating that local markets will eventually be able to support high-frequency trading, says David Morgan, a product marketing director at SunGard, an IT provider for the financial services industry.
"If there's office accommodation very nearby … that'll be attractive to people with high-frequency or automated trading strategies," he says.
On the other hand, some international business executives say they remain concerned about the lack of a legal framework governing the new development.
The Dubai International Financial Centre, by contrast, has its own courts that follow a common law legal system that many international firms feel more comfortable with.
Nevertheless, Sowwah Square is providing intense competition to other developments in Abu Dhabi that are now hoping to attract business clients, including Etihad Towers and the Landmark, Mr Quinn says.
What is clear is that crumbling office blocks elsewhere in the capital are becoming less attractive to financial services firms, according to a research report from CB Richard Ellis, a property consultancy.
"Abu Dhabi is raising the bar of its commercial offerings, aligning the emirate with international markets," the report said. "More aggressive pricing strategies are now being implemented for inferior office accommodations, particularly for those situated in locations deemed 'secondary'."
Average office rents in the second quarter of the year have dropped 8 per cent from the previous quarter, the report added.
Not only that, tenants on Sowwah Island are agreeing to average leases of seven years, longer than the usual office rentals, Mr Wilding says.
That has left Reem Island and Saadiyat Island to rethink their plans for business hubs.
Having rival districts battle to attract financial services firms is a positive development that will help ensure tenants have the best pick of office space, Mr Wilding says. "There's certainly competition. Competition is good when it's coming to those types of developments."