ABU DHABI // Masdar, the Abu Dhabi Government's sustainability initiative, will bring a renowned German institute into the fold to research sustainable cities, officials said yesterday.
The partnership with the Fraunhofer-Gesellschaft institute will be situated within Masdar City, set to open in November as the world's first large-scale carbon-neutral development. The announcement comes days ahead of a decision on whether Germany or the UAE will house the headquarters of the International Renewable Energy Agency (Irena).
The new research centre will start with a team of 25, who will study energy efficiency, solar cooling and smart grids. The jointly funded project will eventually grow to cover solar energy, sustainable water desalination and cooling methods, electric vehicles and carbon footprint measurement and evaluation.
"Combining applied research and sustainability is one of the strengths of Fraunhofer, and we welcome the opportunity to be involved in one of the world's leading examples of sustainable development," Prof Hans-Jörg Bullinger, president of the Fraunhofer Gesellschaft, said in a statement sent to the media yesterday.
With more than 80 research units, Fraunhofer-Gesellschaft is the largest such organisation in Europe and is known for developing new technologies and bringing them to market.
Earlier this year, for example, one of the institute's research arms, Fraunhofer ISE, developed solar cells with a record efficiency level of 41.1 per cent. The Sustainable Cities Research Centre would be the organisation's first Middle Eastern research hub.
The vote to determine the location of the headquarters of Irena, founded in January, will come next week.
Abu Dhabi and Bonn have emerged as the two strongest competitors, with Vienna trailing behind. On June 22, Copenhagen withdrew to consolidate support around Germany's offer.
Abu Dhabi has tried to sweeten the deal by offering to pay for the headquarters in a "green" building in Masdar City. Irena's membership, which comprises 114 states, will vote on the issue during a two-day summit beginning on Monday in Sharm El Sheikh.
Yesterday the Masdar chief executive officer, Dr Sultan al Jaber, said the announcement came at an auspicious time for the UAE team, which has been lobbying hard to rally support.
"The timing is very much in line with our efforts to host Irena in Abu Dhabi," Dr al Jaber said.
The presence of such a reputable organisation "tells you that Abu Dhabi has a strong and compelling case to host Irena".
The new centre, along with Masdar's collaboration with the Massachusetts Institute of Technology and other leading institutions, would enable the UAE capital to give Irena access to world-class researchers.
Dr al Jaber also said that regardless of the outcome of the summit's vote, the UAE was already reaping benefits from its bid.
"This whole experience has been a win-win situation for us," he said. "It positioned the UAE on the global scale and created a lot of respect for the way we have been conducting ourselves."
"I commend the steps of Austria and Germany but at the same time, I believe we have a very compelling case," Dr al Jaber added. "Our efforts have received a lot of recognition and support from member states ... Our offer is really unmatched."
Abu Dhabi's proposal includes placing the headquarters in 6,436 square metres of office space now being built close to Abu Dhabi International Airport.
The facility is in addition to US$135 million (Dh500m) of in-kind and cash support to help the agency until 2015, and an annual $50m from the Abu Dhabi Fund for Development, which would support Irena-endorsed projects in developing nations over seven years.
Irena aims to speed up the adoption of renewable energy by advising member states on policy, technology transfer and financing. The organisation's staff of approximately 120 people will come from all over the world, while the host country will provide the necessary infrastructure.
The UAE also is intensifying its diplomatic efforts. Yesterday in Yemen's capital Sana'a, the UAE's Minister of State for Foreign Affairs, Dr Anwar Mohammed Gargash, addressed a conference of foreign ministers.
Now is the right time and the UAE is the right place to build a bridge between the developing world and new energy technology, he said.
"As many of you are aware, over the past few months the UAE has been running an active diplomatic campaign to host the Irena headquarters in Abu Dhabi," he said. "It is time, we believe, and I know many of you here will agree, that an international agency comes to our part of the world.
"This will send a strong signal to the international community that this agency is serious about tackling major issues such as climate change, sustainable development and access to renewable energy technology for all nations both developed and developing."
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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.”