With investments in key sectors reaching $1 trillion, and four out of 10 top projects in the Gulf being in the UAE emirate, the world’s attention has gradually shifted from Dubai to Abu Dhabi.

01 September 2010

EVEN though the private sector has taken a back seat in real estate development, there is certainly no paucity of work for the construction sector in Abu Dhabi. A diverse range of projects is being unleashed with the focus being on infrastructure as the wealthiest of the emirates in the UAE pursues its Plan Abu Dhabi 2030.

In November last year, the emirate announced that it intends to spend $15 billion on infrastructure projects over the next three years to cater for the city’s rising population. The UAE’s Minister of Economy Sultan bin Saeed Al Mansouri said investments in Abu Dhabi’s infrastructure, property and manufacturing were expected to reach about $1 trillion in the medium term.
Abu Dhabi is going through an unprecedented change as the government implements its development plan that envisages the emirate’s population almost tripling to 3 million over the next two decades. Its economy is expected to grow by up to four per cent this year. The oil sector currently contributes almost 60 per cent to its GDP, but the emirate plans to reduce this share to 40 per cent by 2030 by pressing ahead with its diversification plans, which include rapid industrialisation and boosting tourism revenues.

A Dubai Chamber study reveals that the UAE is still the largest construction market in the GCC, with Abu Dhabi rather than Dubai now dominating the sector.
The study indicates that among the top 10 projects in the Gulf, four projects are being developed in Abu Dhabi. These include the $40-billion community development Capital District, construction contracts on which are due by the end of this year, the $37-billion Yas Island, the $22-billion Masdar City and the $27.5-billion Saadiyat Island, and the $15-billion Al Raha Beach, which has a completion date of 2019.
Admittedly, private sector investment has drastically dropped over the past year for lack of financing as a direct impact of the global economic crisis. The crisis has caused projects in the emirate to slow down while residential prices have slumped by as much as 30 per cent since the beginning of 2009. The good news is that the government is now back in the driving seat spearheading developments in the construction sector that has traditionally been public-sector driven (except for the 2005-2008 realty boom period). In the first half of this year alone, the government is reported to have awarded $5.1 billion worth of new contracts.
Infrastructure is very much the key focus area with projects ranging from expansive roads, railways and airport projects to massive hospitals and airport development projects. Two of the largest contracts awarded this year have been for healthcare and educations facilities: A $1.5-billion design-and-build contract for the New York University Abu Dhabi’s main campus on Saadiyat Island went to the local/UK Al Futtaim Carillion earlier this year while a $1.3-billion contract for the 364-bed Cleveland Clinic Abu Dhabi on Sowwah Island was awarded to a joint venture of the local/Belgian Six Construct Abu Dhabi and South Korea’s Samsung Corporation. This project is being developed by Abu Dhabi state-owned investment vehicle Mubadala Development Company, through its subsidiary Mubadala Healthcare.

Abu Dhabi also leads in the region’s healthcare sector with the largest number of big-ticket hospital projects estimated to be worth a total of $5.3 billion or close to 40 per cent by value of the GCC total. Among other such projects are the $800-million Mafraq Hospital and the Al Ain Hospital. Abu Dhabi Health Services Company (Seha) has invited bids for the 690-bed Mafraq Hospital as well as the 688-bed Al Ain Hospital. Seha is also developing the Tawam hospital project – adjacent to the existing Tawam hospital – in Al Ain.
In terms of educational facilities, the UAE is reported to rank third in the region in terms of value ($5 billion) of university schemes planned or under way, with Abu Dhabi building most of these projects. Mubadala Development Company is developing three new universities: The $1.5-billion New York University; the $900-million New Zayed University Campus; and the $400-million Paris-Sorbonne University campus on Reem Island.
The local Al Habtoor/Murray & Roberts joint venture is the main contractor for the Zayed University and the Paris-Sorbonne University campuses.
With the real estate market showing poor performance, property developers such as Aldar Properties and Sorouh Real Estate are increasingly focusing on government contracts. Abu Dhabi’s Urban Planning Council (UPC) is now playing a pivotal role in propelling the sector forward while overseeing the enactment of Plan Abu Dhabi 2030 and similar urban frameworks in the rest of the emirate.
A new focus area has been building homes for nationals. Sorouh has recently signed an agreement with UPC to develop two large-scale residential developments for nationals in the emirate. The first is the Dh15-billion ($4.1-billion) Shamkha development on the Abu Dhabi mainland, which involves building 6,453 residential units by 2014.

The second scheme is the Dh5.4-billion ($1.47-billion) Watani development, located next to Abu Dhabi Golf Club, which will involve the construction of 1,370 residential villas and 40 apartment buildings when it is completed in 2012 (see separate article).
Abu Dhabi developer Al Qudra Real Estate also has a contract from the UPC to build a Dh4-billion ($1.09-billion) public housing project with 5,000 homes.
Aldar last year signed a deal with the government to build 5,000 homes in a project called Al Falah and has now diversified into project management for the construction of the Masdar Institute of Science and Technology, also owned and funded by the government. In addition, Aldar has secured the Dh730-million ($198.7-million) Shiebat Al Watah contract for an Al Ain housing development, which entails construction of 41 km of roads and pedestrian paths, 45 km of water pipes and a 32.5-km sewerage system, as well as power and fibre-optic networks.
In the tourism sector, Tourism Development and Investment Company’s (TDIC) aims to deliver more than 1,800 hotel rooms by 2012, thus supporting Abu Dhabi Tourism Authority’s (ADTA) aim to attract 2.3 million guests to the emirate by the same date. Its portfolio of announced developments includes Saadiyat Island and Desert Islands – all strategically important to the 2030 Economic Vision. TDIC currently has over 55 projects, worth over Dh120 billion ($32.67 million), planned for completion by 2020 across the emirate.

Trendsetter
While having emerged as the new hotspot for companies in the region looking for opportunities in a relatively sluggish construction market, Abu Dhabi has also become a trendsetter in terms of sustainability with its Masdar green energy initiative, Estidama green building codes and urban regeneration projects, attracting attention both on a regional and global level.
The $22-billion (Dh80.7-billion) Masdar, launched as a hub for alternative energy resources and sustainable technologies in 2006, remains on track, according to Sultan Al Jaber, its chief executive officer Sultan Al Jaber. The project, which was under review last year, has seen progress recently with the award of a contract for a concentrated solar power (CSP) plant. Masdar – also known as the Abu Dhabi Future Energy Company – has recently appointed the bidding consortium of Total and Abengoa Solar as a partner to own, build and operate Shams One, the world’s largest CSP plant and the first of its kind in the Middle East.
Shams One will directly contribute towards Abu Dhabi’s target of achieving seven per cent renewable energy power generation capacity by 2020. The plant will be located in Madinat Zayed, approximately 120 km southwest of Abu Dhabi.
Estidama – the sustainability initiative of the UPC – recently announced its green building Pearl Rating Scheme, which applies to all new buildings in Abu Dhabi.
In addition, the Abu Dhabi Tourism Authority (ADTA) has drawn up guidelines for further green design requirements that are specific to the hotel sector. A key result of the guideline process has been the creation of a baseline of environmental performance, for energy, water and waste, for the emirate’s hotel sector – the first of its kind in the region. Abu Dhabi has been leading in urban regeneration projects with redevelopment projects such as the Central Market, Al Bateen Wharf and Mina Zayed currently making headway.
Aldar Properties is responsible for the Dh5-billion ($1.36-billion) Central Market development, which includes residential and business towers, a shopping mall, as well as the redeveloped suq. The project is being developed on the site of Abu Dhabi’s old suq, which was razed by fire in 2002. The suq itself is expected to open by the end of this year.
Al Bateen Wharf development, being redeveloped by the TDIC, consists of a new fishermen’s marina, a five-star hotel and apartments. TDIC is managing the regeneration of the marina independently, and is developing the Al Bateen Wharf Hotel and Residences as part of a joint venture with Belbadi Enterprises, a UAE-based multidisciplinary corporation.

The marina will include 323 berths, a fishermen’s community centre, a dry stack building for about 150 boats and a boardwalk. The first phase the project was completed early this year, while the second phase is due to start later this year. The TDIC has invited contractors to send their prequalification documents by the end of August for the main contract works on Phase Two.
Abu Dhabi also intends to redevelop Mina Zayed, formerly the emirate’s port. Aldar is the masterplanner for the 150-acre waterfront redevelopment, which is being developed as the port relocates to Taweelah at the end of 2012. One of the major projects planned so far for the area is an MGM Grand mixed-use development by Mubadala Development Company and US-based MGM Mirage Hospitality.

Ports
Replacing Mina Zayed port is Khalifa Port, located midway between Abu Dhabi and Dubai in the Taweelah industrial district. The first phase of the port will have an initial capacity of 2 million TEUs (twenty-foot equivalent units) of containers and 9 million tonnes of general cargo. A joint venture of Ed Zublin and Al Jaber Transport and General Contracting has recently won a Dh1.02-billion ($278-million) contract from the Abu Dhabi Ports Company (ADPC) for the Khalifa Port and Industrial Zone (KPIZ).
The agreement with the German and Emirati firms comprises the design, construction, fit-out, testing and commissioning of the offshore port’s civil and structural building development.
Work is due to begin immediately and is scheduled for completion in August 2012. It includes the construction of 23 buildings and associated structures, including the six-storey terminal operations building. An offshore clinic, fire station, harbour-master building, worker services building, and four 11 kV substations and maintenance and repair workshops will also be built, along with more than 1,000 m of quay wall, a 5.4-km dual carriageway linking the offshore port to the mainland with associated service roads, two helipads and all site-wide utilities.
KPIZ will eventually comprise 420 sq km of land organised into vertically integrated clusters for aluminium, petrochemicals, glass, paper and other major sectors.

Airport
With airport expansion being a key catalyst in the emirate’s plan to boost tourism revenues, the government is planning to spend about $6.8 billion on expanding its Abu Dhabi International Airport and $200 million for Al Ain Airport.
The next major development at Abu Dhabi International Airport is the Midfield Terminal, for which Supervision Committee for the Expansion of Abu Dhabi International Airport (Scadia) is reported to be reviewing prequalification documents for the main construction package submitted by 14 contracting groups.
Scadia has also received bids from firms for a contract to provide construction management services on the midfield terminal project. The successful bidder will work alongside the airport development’s programme manager US-based Parsons International, and will manage the various contractors and consultants that will work on the project.
The midfield terminal, which will be built between the airport’s two runways, will have a total built-up area of 630,000 sq m and a capacity to handle 20 million passengers a year. The complex, which is expected to open in 2015, includes a multi-storey car-park.
As part of redevelopment and expansion of Abu Dhabi International Airport, a second runway and a third terminal has been completed. A new air traffic control tower is due to be operational this year.
Al Ain airport is undergoing major developments that include the expansion of the main terminal building, construction of a new cargo terminal and a catering building.

Roads
Among the largest road projects on the anvil is the $2.65-billion Mafraq-Ghweifat road, which is expected to be pursued as a public-private partnership (PPP). A preferred bidder is expected to be appointed shortly for the project.
Meanwhile, work is under way on a Dh5-billion ($1.36-billion) project to convert the 14-km Salam Street in the capital city to an urban expressway.
The expressway, with a network of roads and tunnels, will stretch from the under-construction Sheikh Zayed bridge to Port Zayed and is expected to carry 6,000 vehicles per hour. The project is being carried out under four contracts and is expected to finish later this year.
Abu Dhabi recently witnessed the opening of a couple of key road projects. These include the second phase of the new Al Mafraq Bridge, which opened last month, easing the traffic flow between Abu Dhabi, Dubai, Al Ain cities and Al Gharbia (Western region). The project, which began in 2008, cost more than Dh753 million ($204.98 million).
The Sheikh Khalifa Bridge and Expressway, one of the largest infrastructure developments in the emirate, was opened last November. The 10-lane bridge and 27-km expressway links Saadiyat Island with the city, stretching from Port Zayed on the mainland to the Shahama District, passing through Saadiyat and Yas islands.

Railways
The UAE plans to have its first railway track operational in 2013-14 and trains will transport granulated sulphur from the Shah and Habshan fields of the state-owned Abu Dhabi National Oil Company (Adnoc) to Ruwais, according to a senior Abu Dhabi government official.
The strategic initiative will support Adnoc’s ongoing investment programme in the Shah and Habshan oil and gas fields and contribute to the development of the oil, natural gas and petrochemical industries in the country. Additionally, it will help accelerate the development of the Western Region in line with Abu Dhabi Vision 2030.
Connecting the Shah and Habshan fields with Ruwais will add nearly 300 km to the first phase of the $11-billion Union Railway, which will extend up to 1,400 km across all seven emirates.
The railway will connect the UAE to Saudi Arabia via Ghhwaifat city in the west and Oman via Al Ain in the east. In May, China’s Railways Ministry signed a deal with the UAE to plan, develop and build the railway network. Union Railway has approached contractors to build test sections of track in the Abu Dhabi desert. Companies have also been invited to tender for civil and track work on the first phase of the Shah-Habshan railway project. In addition, Abu Dhabi has invited consultants to submit bids to develop a freight transport masterplan for the emirate.
Abu Dhabi has also revealed plans for a new 131-km metro rail system, which is expected to partially commence operations in 2015. The project is a part of its Surface Transport Master Plan (STMP), a major initiative taken in line with its development plan. The network is divided into two parts: the first one will serve Abu Dhabi International Airport, Al Raha Beach, Abu Dhabi Island, Saadiyat and Yas Islands. The second part will serve Abu Dhabi Island, Mussaffah and Mohammed bin Zayed suburbs.

Real Estate
According to the ‘Abu Dhabi Real Estate Market Overview – Q2 2010: July 2010’ released by real estate investment and advisory firm Jones Lang LaSalle, market conditions in Dubai continue to have a negative impact on Abu Dhabi due to the complex interrelationship between the two markets. Other than selective relationship lending, liquidity remains tight and many developers are experiencing cash-flow issues, which has dampened the real estate market considerably.
In addition, new residential supply in Abu Dhabi’s freehold areas this year – having eased the housing shortage of the emirate – is pushing down prices.
Villa and apartment rents in Abu Dhabi have continued to fall on average between seven per cent and a more pronounced drop of up to 15 per cent for lower quality properties, according to the latest report by Asteco, a leading property services company in the UAE.
During the second quarter of this year, apartments rents have fallen at a similar rate to that witnessed during the first quarter and that trend is set to continue throughout 2010 as more supply comes on to the market, Asteco says. It is estimated that 4,500 apartments have been constructed with delivery under way, with an additional 8,000 apartments due for completion by the end of this year.
In terms of new property, most of the high-end supply will be concentrated on Reem Island and Al Raha Beach, with mid-end supply coming up on the Abu Dhabi main island and more affordable lower-end stock on the mainland, which includes the first phase of Al Reef Downtown.
In terms of mega developments, Saadiyat Island, TDIC’s flagship development located 500 m from Abu Dhabi Island will, on completion, be home to the world’s largest concentration of cultural institutions, two championship golf courses, environmentally-sensitive resorts and luxurious residential developments, which will eventually house some 160,000 residents (see separate report).
Abu Dhabi National Exhibition Company (Adnec) is creating unique business districts to serve Abu Dhabi’s rapid expansion and emergence on the global stage. Its key projects surrounding the Abu Dhabi National Exhibition Centre include Capital Centre (a mixed-use development of 23 residential, commercial and mixed-use towers), Capital Gate, an iconic 35-storey gravity-defying tower (see separate report) and a 2.4-km Marina zone. In addition, Adnec is expanding within the region, with The Al Ain Convention Centre, a residential and business micro-city around a state-of-the-art convention centre.
At Yas Island, master-planning for the next phases is well advanced and Ferrari World Abu Dhabi is scheduled to open later this year. The golf clubhouse, annexed to the region’s first Links golf course, opened in March. The Yas Links golf course opened in June.
At the Central Market mixed-used development, the suq will open in second half of this year and work is progressing to programme on the remainder of the project scheduled for delivery in 2012.

Hotels
Abu Dhabi is reported to have 14,558 rooms in the total active pipeline and 7,849 rooms in the construction phase. With 2,201 new rooms set to open in Abu Dhabi this year and an additional 8,760 to open in 2011, the hotel sector is expected to continue to contract against performance last year, according to Lodging Econometrics (LE).
Some 11 hotels are slated to open by the year-end, including the Venetian-inspired waterfront resort Grand Canal Abu Dhabi by JW Marriott, with 500 rooms and suites, which will be the UAE’s second largest hotel development; the Rocco Forte Abu Dhabi, which marks the Rocco Forte Collection’s entry into the Middle East and the 257-room-and-suites Hili Rayhaan by Rotana in the emirate’s heritage city of Al Ain.
Abu Dhabi National Hotels (ADNH), which aims to deliver 1,500 rooms to the Abu Dhabi market in the next two years, is developing The Grand Canal Abu Dhabi (to be managed by The Ritz-Carlton Hotel Company) as well as the Park Hyatt in the capital and Villas in Saadiyat Island; and Capital Centre Hotel at the Abu Dhabi National Exhibition Centre. 
Rotana will add 800 hotel rooms across three new properties at the Capital Centre development, which is currently under construction adjacent to the exhibition Centre. Capital Centre Rotana and Centro Capital Centre are scheduled to open in 2011, while Capital Centre Arjaan will be opened in 2012. The Khalidiya Palace Rayhaan by Rotana on Abu Dhabi’s cornice opened in July.
By 2011, Accor will introduce the mid-stay serviced style of accommodation in the UAE’s capital with the 279-room Adagio Abu Dhabi Al Bostan – part of the Adagio City Aparthotel chain.

Also set to open next year is the 377-room Regent Emirates Pearl hotel, a new coastal landmark on the southwest of the city’s signature Corniche
Rosewood Abu Dhabi, a new business hotel on Sowwah Island – the core of Abu Dhabi’s new central business district – is set to open in early 2012. The 34-storey hotel designed by Handel Architects will offer 190 spacious guest rooms and suites.
Another hotel planned for Sowwah Island is the Four Seasons Hotel Abu Dhabi, which will occupy a prime waterfront location next to Sowwah Square, the island’s flagship commercial development and the new headquarters of the Abu Dhabi Securities Exchange, ADX. Due to open in 2013, it will comprise approximately 200 rooms and 125 residences and be the first UAE property for Four Seasons Hotels and Resorts.
Starwood Hotels & Resorts Worldwide has extended its development pipeline in the Arabian Gulf with the announcement of a second St Regis hotel in the capital of the UAE. The St Regis Abu Dhabi will be located on the Corniche in downtown Abu Dhabi as part of the Nation Towers mixed-use development. Located at the top of one of the towers, the hotel will feature 281 luxurious guest rooms, including 56 suites, signature restaurants, a connecting bridge restaurant, more than 4,800 sq m of meeting and event space and a 3,000-sq-m health club with an outdoor swimming pool.
The first St Regis hotel in Abu Dhabi is the St Regis Hotel and Residences on Saadiyat Island, which will comprise 380 luxury hotel rooms, 259 residential apartments and 33 luxury residential villas. It will be located adjacent to the 72-par Saadiyat Beach Golf Course designed by golfing legend Gary Player.
Starwood Hotels’ other brands entering the market include W Hotels, which has signed an agreement with Belbadi to bring the design-led lifestyle brand to the UAE in 2013.
Meanwhile, the 408-room-and-suite, Aloft Abu Dhabi hotel, which is situated directly opposite Abu Dhabi National Exhibition Centre, opened its doors earlier this year.

• On a roll
• Leaning tower of Arabia
• Path-breaker on track
• Sun and Sky towers make their debut
• Louvre goes up
• ‘My Nation’ takes shape
• Paschal formworks see projects through
• Mace bucks trend with good growth
• New jewel in adnh’s crown
• Landmark towers rise
• SAS ceiling winner for Aldar HQ
• Doka looks to scale greater heights
• High-profile Kirby busy in emirate

Tags

Regional News UAE Focus Expo News Diary of Events BIM Focus Legally Bound Abu Dhabi Review Partitions Concrete Technology Water Technology Power Generation Scandinavia & the Middle East Compaction & Paving Plant Just Out Tenders

Gulf Construction is the undisputed leading trade journal for the building and construction industries of Saudi Arabia and the other Gulf states. The magazine provides editorial coverage on a wide range of topics which are of interest to industry professionals. In addition, regular features highlight technological developments within specific industry fields. Launched 40 years ago, the magazine has established an enviable reputation as an authoritative, respected journal with unmatched coverage of the Gulf region. Gulf Construction is essential reading for anyone with a serious interest in the region’s building and construction industry.