Abu Dhabi is witnessing an everchanging skyline backed by an avid Vision 2030 plan and rising oil revenues that are pushing major infrastructure projects to reality, writes MRIDULA BHATTACHARYA.

01 September 2011

SINCE the launch of Vision 2030, the skyline and landscape of Abu Dhabi, the wealthiest of the UAE emirates, has been changing dramatically. New infrastructure projects and island communities like the Reem Island, Saadiyat Island and the Sowwah Islands are coming up.

The vision, developed during the regional boom and released in November 2008, is the blueprint for the emirate’s long-term effort to diversify away from oil in sectors such as real estate, industry, tourism and infrastructure. To keep this vision on track, throughout the crisis and despite the slowdown in investment from the private sector, Abu Dhabi started investing in a number of infrastructure projects and continued to build new roads, bridges, railways, airports and free zones that have helped keep its economy resilient.

With the population of Abu Dhabi expected to grow to between three and five million by 2030, the government has earmarked $15 billion on expansion of infrastructure projects between 2009 and 2012, to meet demands of water, power and sewage facilities across the emirate. In addition, the Department of Transport is investing tens of billions of dollars on developing its share of building urban infrastructure.

Government spending reached its peak last year. Oxford Business Group’s 2010 business and economic review said “the year would be remembered in Abu Dhabi for the local government forging ahead with a counter-cyclical spending regime aimed at boosting the economy and strengthening the Vision 2030.”

Since then, the impact of the global financial crisis has prompted the emirate to reassess some of its goals with the result that this year, there has been a slowdown in award of contracts as well as retendering of projects.

According to a Meed report, the total value of construction and infrastructure contracts awarded in Abu Dhabi during the second quarter of this year fell by 81 per cent, with just $843 million of construction and infrastructure contracts awarded in the three months from April to June. This is down from $4.5 billion in the previous quarter. Compared with the second quarter of last year, the total value of awards is down 76 per cent from $3.6 billion.

Some of the delayed contract awards include the Louvre museum for the Tourism Development & Investment Company (TDIC), the Strategic Tunnels Enhance-ment Programme pumping station for Abu Dhabi Sewerage Services Company, and the Mafraq-Ghweifat highway scheme for the Department of Transport. Another major development put on hold is a Dh5-billion ($1.36-billion) football stadium, which was to be developed by the government-owned investment firm Mubadala Development Company as part of the new Capital City District next to Khalifa City.

The real estate sector too has been dampened with specialists in the property sector agreeing that the market has been negatively impacted by the current global scenario.

CB Richard Ellis (CBRE) reported that the sector recorded a slower second quarter performance, as a result of the regional and global economic and political conditions.

“As purse strings continue to tighten, property requirements are being delayed and in some cases revised downwards. Agreeing to new capital expenditure remains a major issue for most companies with cost concerns apparently dominating the decision-making process,” says the global leader in real estate services in its Q2 2011 market view of Abu Dhabi.
Despite the slowdown in real estate activity, the UAE economy is projected to be in positive growth territory for 2011. “Rising oil revenues will help further boost the country’s financial standing as it continues to embark on large-scale infrastructure projects, amid an ongoing correction within the property sector. However, improvement in global economic conditions are now seen to be key to an upturn in demand in both the commercial and residential sectors,” CBRE says, adding that the Abu Dhabi market is likely to remain subdued over the next quarter and further downward rental movement should be expected.

Jones Lang LaSalle, a financial and professional services company specialising in real estate its latest overview of the Abu Dhabi real estate market, says: “Growing supply, combined with a cutback in government spending on economic diversification and infrastructure upgrade, will put additional downward pressure on rents and prices. Declining rents and increased vacancy will, however, have a positive impact on demand as Abu Dhabi becomes more cost competitive and higher quality real estate comes on stream.”

The report also outlines a range of welcomed government initiatives, which Jones Lang LaSalle concludes will have a positive impact on demand and are a further step towards the maturation of the real estate market. This includes initiatives like the announced three-year residency visa for property owners; a new tenancy registration system, ‘Tawtheeq’; a new law limiting overcrowding in residential properties and the government consolidating various major projects to reduce the supply over-hang. In addition, the government continues to invest in key infrastructure projects like the Etihad Railway.

Railways
When complete in 2017, the Dh40-billion ($10.89-billion) Etihad Rail freight and passenger network will span 1,200 km across the UAE’s seven emirates starting with a route linking the gas fields of Shah and Habshan to Ruwais. It will also form a vital part of the greater GCC network, linking the UAE to Saudi Arabia via Ghweifat in the west and Oman via Al Ain in the east.

This greenfield project is one of the largest single railway programmes to be implemented in the world.

A number of deals have been signed to ensure its success. Etihad Rail, the master developer and operator of the UAE’s national railway network, and Emirates Steel, the largest integrated steel manufacturer in the UAE, have recently signed a memorandum of understanding (MoU) to use rail as the primary method for steel transportation across the UAE.

Abu Dhabi National Oil Company (Adnoc), Etihad Rail’s first customer, will use it to transport granulated sulphur from sources in Shah and Habshan to Ruwais for export. Construction on Phase One of the project, a 266-km route that will link these three cities in the emirate’s Western Region, is expected to begin this year and is scheduled to be commercially operational in 2013.

Earlier a contract was awarded to PCM Strescon Overseas Ventures (PCM Strescon) for the provision of railway sleepers. The India-based company will be responsible for the design and manufacturing of railway sleepers as well as the production of the sleeper manufacturing facility for Phase One of the project.

The Aecom Technology Corporation and Parsons International JV is working as Etihad Rail’s programme and construction manager to implement the first phase of the project and design of the subsequent two phases.

Airport, port & industrial zone
Following the successful opening of Terminal Three in January 2009, the next major phase of development at the Abu Dhabi International Airport (ADIA) is the construction of the new Midfield Terminal Complex (MTC).

Requests for proposals were due at the end of last June 30 for comprehensive operational readiness and transfer (ORAT) consultancy services to ensure that the new MTC and associated airport facilities are ready to operate safely, efficiently and fully compliant with all regulatory requirements and to the maximum levels of customer service on opening day, according to ADAC.

Scheduled to open for operations in 2016, the state-of-the-art terminal facility will include a vast array of duty-free offerings, restaurants, lounges and much more. It will also encompass airside and landside infrastructure, a multi-storey car-park, cargo and catering buildings, a maintenance complex and other supporting facilities.

The MTC, which has an X-shaped plan, will be located between the airport’s two runways to allow for efficient operations and minimum taxi time from runways to aircraft parking stands. Covering 630,000 sq m, it will be one of the region’s largest and most architecturally iconic structures.

The new terminal complex will be capable of handling 27 million passengers a year in its initial phase of development. As Abu Dhabi develops as a major Middle East transport hub, up to 40 million annual passengers will be accommodated via a further phase of expansion. The MTC will have up to 65 contact and 14 remote stands to handle the anticipated growth.

Other key infrastructural developments are the Khalifa Industrial Zone Abu Dhabi (Kizad) and the adjacent Khalifa Port projects, located in Taweelah, which have made significant headway with more than 78 per cent work completed.

The terminal operations building at Khalifa Port Phase One was recently topped out. As one of the major buildings on the new port island and the tallest at more than 33 m, it provides 5,200 sq m of floor space for port operations and administration.

Khalifa Port, which will have capacity for two million containers and 12 million tonnes of general cargo, is due to open in the fourth quarter of 2012 along with the completion of infrastructure work in the first phase (Area A) of Kizad.
The Dh26.5-billion ($7.2 billion) project is the flagship of Abu Dhabi Ports Company (ADPC).

Kizad, a cornerstone of the Abu Dhabi Economic Vision 2030, was launched in November last year. Cover covering 417 sq km, it offers free zone and non-free zone options to potential tenants and aims to attract investors to industrial clusters defined in line with the Abu Dhabi Vision 2030. The clusters include aluminium, steel, engineered metal products, petrochemicals, pharmaceuticals, paper, print and packaging, food and trade and logistics.

Phase One of the zone, which is 51 sq km in area with an investment of Dh26.5 billion ($7.2 billion), is also set to open in the fourth quarter of 2012.

Among the key developments at Kizad is Emirates Aluminium (Emal), which has awarded contracts worth more than $700 million for expanding its smelter. Phase Two will almost double production capacity to 1.3 million tonnes. It will involve building the world’s longest smelting line covering 1.7 km and make Emal one of the world’s largest single-site aluminium producers.

The most significant contract has been signed with SLII (SNC Lavalin) to carry out engineering, procurement and construction management (EPCM) at the plant, which is essential if Emal is to meet its target of achieving first hot metal in the first quarter of 2014. The contract extends Emal’s relationship with SLII (SNC Lavalin) which provided the same support and services during Phase One of the smelter’s development.

In just three years, Emal has become a global competitor in the aluminium industry. Phase Two will equip Emal to grow its global customer base.

The Emal Phase Two project will entail the construction of a new potline within its facility. The line will comprise 444 reduction cells powered by increasing the onsite power plant capacity to 3,000 MW, which will yield an additional annual production capacity of 520,000 tonnes. Simultaneously, the technology installed in Emal Phase One will be upgraded.

The next major industrial project to be launched at Kizad is the Taweelah Aluminium Extrusion Company.

The $200-million project is being set up by Dubai-based Gulf Extrusions in joint venture with Abu Dhabi Basic Industries Corporation (Adbic), wholly owned by the Abu Dhabi government’s General Holding Corporation (GHC).
The new 50,000-tonne plant will be built on a 235,000 sq m plot of land adjacent to Emal smelter, one of the largest greenfield aluminium smelter ever built, and one of the largest industrial projects in the UAE outside the oil and gas sector.

The feedstock of liquid aluminium and aluminium billets will be supplied by Emal.

Infrastructure & housing
In line with Vision 2030, the Abu Dhabi Urban Planning Council (UPC) has recently launched a plan to overhaul Shahama and Bahia districts, located between Abu Dhabi and Dubai, which will integrate sustainable planning guidelines for 17.7 million sq m of land situated in these regions.

The plans seek to improve the ‘sustainability’ of the community of 27,000 residents, many of whom are Emiratis, through improved connectivity and enhanced community facilities. The Shahama and Bahia Revitalisation Master Plan is UPC’s first area masterplan developed under the capital’s 2030 plan.

The projects, to be completed in phases, will include parks, entertainment and leisure facilities, mosques, health care facilities and commercial development. They involve upgrading the existing infrastructure network, improving connection between the inland and coastal areas, creation of local town centres to serve the population of the towns, provision of a range of health, educational, and entertainment facilities.

Another mega development – which is the largest of its kind in the emirate – involves the development of a massive tract of desert to house more than 130,000 Emiratis.

General Services Company (Musanada) has won a government contract to manage the delivery of the residential development in South Shamkha, which is being built at a cost of more than Dh7 billion ($1.9 billion).

The project is located 45 km from the city of Abu Dhabi and covers an area of almost 4,000 hectares. The South Shamkha project will include shopping centres, health, educational, commercial and recreational facilities to serve an expected population of 200,000 people. The masterplan encompasses all aspects of a self-sufficient community including an extensive public transport system and a metro which will be connected to the capital.

Early this year, UPC marked the completion of construction of the 53-km-long Mussafah channel project, and handed it over to Abu Dhabi Ports Company (ADPC). The new channel has been designed to provide a safe navigation access channel with increased air draft (water depth) to service the Mussafah Industrial Zone and future ICAD areas.

Meanwhile, Abu Dhabi is set to open the Middle East’s longest traffic tunnel before the end of this year, according to media reports.

The Dh5-billion ($1.36-billion) venture has been completed and the tunnel and its adjoining roads and causeways will become fully operational by the end of this year.

South Korea’s Samsung Construction is carrying out the project, which links the Tourist Club and other parts of the city to Reem Island, which will be home to at least 100,000 inhabitants. The causeways to the island have already been completed and are being used but have yet to be officially inaugurated.

More than 2,000 workers have been involved in the construction of the 3-km tunnel, which starts from the eastern entrance of Abu Dhabi city and runs under Al Salam Street towards Port Zayed on the western tip of the capital. Around 2 km of the tunnel would be nearly 15 m underground while the rest would be open and near the surface level. The project also includes development of road networks stretching more than 20 km on the eastern edge of the capital towards the Northern Emirates.

This mega tunnel project is said to be part of the Abu Dhabi Municipality’s strategic aim to meet the requirements of a developing city, as well as respond to the needs of the growing population.

Another major infrastructure development expected to be completed by the end of this year is a Dh700-million ($190.59 million) road project, which will see the construction of new tunnels and roads to accommodate increasing growth in traffic in the emirate. The project is aimed at improving and upgrading the road and traffic infrastructure on Bainunah Street and part of the Ras Al Akhdar area in the capital.

The work, being undertaken by Al Naboodah Contracting Company, involves the construction of two tunnels.
One tunnel will be as long as 540 m and will consist of two lanes, providing direct access to Etihad Towers. The other, located at the intersection between Bainunah Street and Sultan bin Zayed Street will also consist of two lanes but will extend to a full 700 m. In addition, two roundabouts opposite Emirates Palace hotel will be converted into intersections controlled by traffic lights.

The project includes expanding a part of Bainunah Street to four lanes including a dedicated bus lane to encourage public transport, in addition to a service lane to cater to the hotels in the area.

Commercial & residential projects
Government-owned and private developers have today helped build some of the most striking projects in the world – including Capital Gate, the world’s furthest leaning tower, which forms the focal point of the Dh8-billion ($2.18 billion) mixed-use Capital Centre development.

Another striking development due for completion this year is the luxurious five-tower development, Etihad Towers, which is located near the corniche and being at the cost of Dh2.5 billion (see separate report).

Also distinctive is the Abu Dhabi Investment Council’s (ADIC) new headquarters, which has been ranked as one of the most innovative buildings in the world. The twin 25-storey towers – known as Al Bahar Towers – feature on the Council for Tall Buildings and Urban Habitat’s (CTBUH) “Innovative 20” list of buildings that “challenge the typology of tall buildings in the 21st century” (see separate reports).

However, while work continues on projects that were under way, few new projects were started this year and many existing projects are now under review, delayed and scaled back. There continues to be significant consolidation within government-backed real estate entities and projects and liquidity remains tight with many developers continuing to experience cash-flow issues, according to JLL’s Abu Dhabi Real Estate Overview.

Work, nevertheless, is ongoing on a number of large-scale developments as their master-developers beef up confidence in their projects by pressing on with infrastructural work that will enable subdevelopers to launch work on their plots.

Sorouh Real Estate company, involved with Shams project on Reem Island, has completed infrastructure works at the cost of Dh1.7 billion ($463 million), paving the way for sub-developers to move ahead with their developments. Work is currently under way on 10 plots with three developers expected to complete work by early next year.

Shams Abu Dhabi is a Dh25 billion ($6.8 billion) master development on Reem Island comprising 5.2 million sq m of built-up area. Sorouh is the master developer of Shams and is responsible for developing Shams Gate on Shams Abu Dhabi.

Shams Gate is eight building project that includes the 74-storey Sky Tower and 65-storey Sun Tower. Construction work on the two towers was completed last year and the process of handing over the units to owners started from March this year.

Sorouh announced the first ‘rent to own’ scheme in the Abu Dhabi residential market for Sun Tower on Reem Island, a move that is likely to be emulated by other developers in the market.

Sorouh has also signed a deal for Sun and Sky’s available retail space to house Abu Dhabi’s first Waitrose. The high-end supermarket will be the anchor tenant in Boutik, the retail podium linking Sun and Sky Towers. Fit-out has already begun. Over 70 per cent of space of the retail space at Boutik has been leased and the mall is scheduled to open later this year.

Meanwhile, work on three other towers that for part of Shams Gate is progressing rapidly and is due to top out this year.

Tamouh Investments, the master developer of Marina Square on Reem Island, has started handing over apartments in some towers. According to a spokesman for the company, the project has been completed and half of the project has been delivered to investors. Work on the Marina Square Mall is scheduled to be completed end of this year. Tenants have already started fit-out works. The mall will include 122 shops, cineplex, and food and beverage outlets.

The project, which is made up of 14 towers, is spread across an area of 66 acres, has a built-up space of more than 827,000 sq m and will house more than 8,500 people and 6,550 parking bays.

Marina Square, the first development of its kind in Abu Dhabi, comprises 13 residential towers, one office tower, a boutique shopping mall and a hotel built around a marina with berths for boats up to 40 m in length.

Residential offering comprises a selection of studios, one, two, three and four-bedroom apartments, town houses and seven exclusive villas.

Meanwhile, Tamouh’s second project on Reem Islands is the City of Lights, comprising 39 buildings. Currently, 19 buildings are under construction. All infrastructure works have been completed and the developer hopes to complete 4750 units by the end of 2013.

Tamouh is also involved with Meena Plaza, four building residential-commercial project.

The four towers in four blocks will feature up to 20 types of bedrooms, as well as offices and service corridors. The project will have a healthcare centre located in its four-level podium.

Other facilities include shopping boulevards in every tower and ample parking spaces. Meena Plaza is a high-end mixed-use project designed by KDI Architects and currently being constructed by the Malaysian Zelan holding firm.

According to a spokesperson for Tamouh, 65 per cent of work has been completed and is expected to be delivered by 2013.

Reem Investments, the third master developer for Reem Islands, has completed infrastructure works on Phase One of Najmat, an $8-billion, 170-hectare township development consisting of residential, commercial units and offices (see separate report).

Another master planner and developer Capitala has announced significant progress at Rihan Heights with 85 per cent work complete. Situated on the north eastern corner of Arzanah on 38,000 sq m of prime land, Rihan Heights includes five luxurious residential towers with a total of 854 apartments and 14 stunning villas on the site’s perimeter.

Baniyas Investment and Development Company (BID) intends to start construction work on Phase Three of Bawabat Al Sharq project. Phase three comprises 153 Andalusian villas designed in five distinctive types (see separate report).
Meanwhile work is going on at the Saadiyat Island project being developed by TDIC, an independent public joint stock company of which Abu Dhabi Tourism Authority (ADTA) is the sole shareholder.

The project aims to create an up-scale cultural district to enrich Abu Dhabi.

Many cultural projects have already been announced including the development of a Guggenheim Museum dedicated to modern and contemporary art. The Frank Gehry-designed building is due for completion in 2014 and will be the largest Guggenheim Museum at 42,000 sq m.

The project will also feature Zayed National Museum and the Louvre museum.

The Zayed Museum is set to open in 2014. The 12,000-sq-ft development has been designed by Pritzker-prize winning architect Foster + Partners, under direction of Norman Foster (see separate report).

Saadiyat Island will eventually house around 145,000 residents and will be connected to Abu Dhabi via a 10-lane causeway. Plans to build a world-class performing arts centre and a concert hall designed by Zaha Hadid are under way.

New York University is opening a campus on the island, and construction has already commenced.

TDIC is poised to open a number of hospitality projects later this year in the emirate, primarily on Saadiyat Island, in Abu Dhabi City and the Western Region. These include The Westin Abu Dhabi Golf Resort and Spa and Eastern Mangrove in Abu Dhabi City; Monte-Carlo Beach Club, St Regis Resort (by Starwood) and St Regis residences and the Saadiyat Beach Villas – Jawarher Al Saadiyat on Saadiyat Island; and Desert Islands projects including Al Sahel Lodge, Al Yamm Lodge, Desert Islands Conference Centre, Desert Islands Water Sports Centre and Sir Bani Yas Stables, all in the Western Region.

St Regis Resort will be the first hotel in the Middle East of the St Regis brand. Scheduled to open in November, the landmark hotel will include a 380-room hotel, framed by the Gary Player-designed Saadiyat Beach Golf Course, 33 St Regis-branded villas, 259 St Regis-branded apartments, a complex of shops and restaurants, a function area capable of seating 1,500 guests for dinner, a spa with 13 treatment rooms as well as a St Regis Athletic Club.

Meanwhile the Monte-Carlo Beach Club Saadiyat is scheduled to open shortly. Modelled on its 1920s counterpart – the famous Monte-Carlo Beach – the exclusive club is designed to celebrate fine living, culture, wellbeing and health, reflecting the values and heritage of Monte-Carlo SBM’s sister hotels and clubs in Europe in a uniquely Arabian way (see separate report).

Mubadala Real Estate and Hospitality, established by the Abu Dhabi government with a mandate to facilitate the diversification of Abu Dhabi’s economy, is developing strategic commercial, residential and leisure districts that are central to Abu Dhabi’s long-term development plans. These key projects include Arzanah, a 1.4-million-sq-m residential and mixed-use community development; Sowwah Island, the heart of Abu Dhabi’s visionary new Central Business District; and the Mina Zayed Waterfront, a mixed-use leisure and entertainment district.

Sowwah Island will feature Abu Dhabi Securities Exchange, Sowwah Square, the Galleria at Sowwah Square, Rosewood Abu Dhabi, Four Seasons Hotel Abu Dhabi and Cleveland Clinic Abu Dhabi.

• A new skyline
• Abu Dhabi projects at a glance
• Vision recorded
• Fine living
• Towering luxury
• Vibrant communities
• Challenging innovation
• Andalusian touch
• Target Engineering geared for growth

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