[News Terms] What is 'Masdar City' that Lee Jae-yong Focused On?

Planned New Town Representing the Middle East
First Unveiled in UAE in 2006
Total Project Cost Up to 28 Trillion KRW · Population 50,000

Masdar City, Abu Dhabi / Photo by Masdar City Official Website Capture

[Asia Economy Reporter Lim Juhyung] Lee Jae-yong, Chairman of Samsung Electronics, chose the United Arab Emirates (UAE) as his first overseas business trip destination after his inauguration. The UAE is currently in the midst of constructing the massive new city project 'Masdar City,' valued at tens of trillions of won. Masdar City, along with Saudi Arabia's 'NEOM,' represents a mega city development plan in the Middle East, and domestic companies like Samsung are likely to collaborate in various fields such as construction, 5G, and information and communication technology (ICT).

Chairman Lee departed on the 4th to visit Abu Dhabi, the capital of the UAE. This is his first overseas business trip since his inauguration on October 27.

During this trip, Chairman Lee is expected to meet with political and business figures alongside Abu Dhabi President Mohammed bin Zayed Al Nahyan to discuss various industrial cooperation plans. Since 2010, the UAE has been implementing 'UAE Vision 2021' to reduce oil dependency and foster future industries. As part of this, the mega planned city 'Masdar City' is being built near Abu Dhabi. This city, which will be home to 50,000 residents and 1,500 businesses, is planned to be fully smartified with advanced networks, necessitating cooperation with IT companies like Samsung.

Total Project Cost Up to 28 Trillion Won... UAE New City Planned for 50,000 Residents

The Masdar City plan was first unveiled in 2006. The city is designed to be powered entirely by clean energy facilities and to concentrate advanced companies and research institutions, aiming to become the UAE's science and technology hub upon completion. It covers a total area of 6 square kilometers (㎢), can accommodate 50,000 residents, and attract 1,500 businesses, with a total project cost estimated between $18 billion and $22 billion (approximately 23 trillion to 28 trillion won). Alongside Saudi Arabia's future city plan 'NEOM' (estimated total project cost over $500 billion), it is considered one of the Middle East's mega projects.

Masdar City's Clean Waste Incinerator / Photo by Masdar City Official Website Capture

The government-established public corporation 'Mubadala Development Company' oversees the project, and to bear the enormous development costs, investors include Europe's major investment bank Credit Suisse, German engineering company Siemens' venture capital fund, and a clean energy fund funded by the UAE government. The city design was undertaken by world-class architectural design firms such as the UK's Foster + Partners and the US's AS+GG.

Development Hampered by 2008 Global Financial Crisis

However, progress has not been swift. Coincidentally, the groundbreaking occurred during the 2008 US subprime mortgage crisis, which caused the global financial market to freeze rapidly.

As a result, the expected completion date of Masdar City has been delayed from 2015 to as late as 2030. Currently, Masdar Institute of Science and Technology and ancillary facilities, coffee shops, travel agencies, and supermarkets have been constructed, but more than eight years remain before full completion.

Will Samsung Open the UAE IT Market?

Amid this, attention is focused on whether Samsung can inject new momentum into the development of Masdar City. Since Masdar City plans to smartify all its districts, massive investments are needed not only for apartments and commercial areas but also for 5G networks, Internet of Things (IoT), and IT system integration. For Samsung, the largest ICT company in Korea, this could open a new Middle Eastern market.

Moreover, Samsung already maintains close cooperative relations with the UAE. Samsung C&T participated in the construction of the world's tallest building, Burj Khalifa, and Samsung Engineering operates oil refining plant projects in the UAE. Chairman Lee also maintains a friendly relationship with the UAE. He has interacted with President Mohammed since the latter was Crown Prince and met again in 2019 to discuss strengthening cooperation in future industries such as 5G, semiconductors, and artificial intelligence.