Time to salute Arabian Gulf cities as engines of growth

The self-appointed “lifestyle guru” Tyler Brûlé came out recently with his list of the top 25 cities in the world to live in and call home.

Even by his own eccentric standards, it is a strange and exclusive list, which tells you little about the dynamics of urban development in the modern global economy, an increasingly important concept.

Mr Brûlé sticks to his own peculiar tried-and-tested collection of cities, with a heavy bias towards solid northern European capitals such as Berlin and Zurich mixed with a few on the Anglo-Saxon periphery, including Sydney and Vancouver. Tokyo ranks No 1, mainly I think because he likes the men’s knitwear there.

But only Singapore and Hong Kong get a look-in from the “developing” world; there is no representative from South America or Africa and, bizarrely, only Portland, Oregon from the US. New York, capital of the world, city that never sleeps, so good they named it twice, doesn’t get a look-in. Nor does London.

And nor does anywhere from the Middle East. Maybe the Gulf metropolises of Dubai, Abu Dhabi and Doha fail to meet Mr Brûlé’s odd criterion for city attractiveness as somewhere you can “let the wind blow through your hair as you pedal along the streets”, but whatever the reason, he has entirely ignored them. but a recent gathering of policymakers, business experts and thought leaders in Chicago (also missing from the Brûlé list) did not make the same mistake.

The Forum on Global Cities had representatives from Abu Dhabi and Dubai to talk about the challenges of infrastructure development in new urban centres, and the growing pains experienced by “boom towns” such as the Arabian Gulf cities.

The Dubai case was argued by an executive from Abraaj Capital, the private equity group based in Dubai International Financial Centre. Under its founder and chief executive Arif Naqvi, Abraaj has embraced the concept of cities as engines of global economic growth, a trend that has also been increasingly advocated by other thought leaders such as the World Economic Forum. It is basically an idea whose time has come, and the Gulf cities should be in the vanguard.

Mr Naqvi wrote recently how every week a million people move from the countryside to cities, intending to never return. That is the equivalent of eight New Yorks being founded every year.

More than 50 per cent of the world’s population now live in cities, and by 2050 that will rise to 70 per cent. Nearly half of the economic growth forecast over the next decade will take place in just 400 cities.

Moving to an urban existence changes people’s economic aspirations permanently. They want housing, health care and education. They also want infrastructure, readily available energy and utility supplies, and they want the consumer goods that go with their new urban lifestyle.

Those imperatives put huge new demands on government and on private business. If you allow, broadly, that it is the job of governments to supply the hardware infrastructure, and that of private industry to provide the rest (perhaps under government auspices in areas such as education and health care), that is an enormous challenge and investment opportunity for private equity businesses.

Both Dubai and Abu Dhabi seem to have grasped the importance of the trend, at least on the strategic government level. Both have master plans for urban development in their cities over the next 15 years, when both will experience unprecedented urban growth.

Sometimes, the urge to direct and control this development throws up some quirky concepts – the recently announced Dubai Creative Clusters Authority is one. It seems incongruous to have an authority in charge of something as dynamic and spontaneous as creative clusters. But it shows they are on the right track, if a little heavy-handed.

Is the regional private equity business also up to the task? Relatively immature compared to other parts of the world, it seems private equity as a class has some way to go to match government ambitions.

Without it, Mr Brûlé will continue to have an excuse to ignore the cities of the Gulf.


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Frank Kane

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