Saturday, July 19, 2008

Original Article

Abu Dhabi is aiming for the cultural heights, mapping out a future that mixes top galleries with real estate and commerce

Abu Dhabi has sat quietly in Dubai’s shadow, retaining its conservative aura while the glitzy city up the highway has grown rapidly, appealing to all and sundry. But buoyed by escalating oil prices – it’s the world’s third largest exporter – the UAE capital is making up for lost time, with wholesale investment in infrastructure, real estate, energy, tourism and aviation.

This isn’t the Middle East preoccupied with daily tensions, but the one that’s keen to realise its global potential. A jaw-dropping $200 billion is being spent on infrastructure projects within the next seven years alone, more than most European governments spend in decades. The transition could be astounding – from what was once a humble fishing village to a global metropolis. Mindful to avoid Dubai’s recent growth pains, where infrastructure has struggled to keep pace with increasing numbers of residents and tourists, the city’s development will be structured and underpinned by Plan 2030, which maps out land use, building heights and transport plans for the next 22 years.

The need for change is pressing, particularly with the population projected to treble to 3m-plus by 2030 and visitor numbers rising. The Abu Dhabi Tourism Authority is aiming for 1,680,704 hotel guests this year, up from 1,449,625 last year, and 2.7m hotel guests a year by the end of 2012, already a 12.4% upwards revision of original targets. Hotel rooms will shoot up from about 9,000 currently to 25,000 by 2015.

Sheikh Khalifa bin Zayed al-Nahyan, president of the UAE and ruler of Abu Dhabi, has his home here, as do federal government offices, parliament buildings and foreign embassies. There’s little danger of its economic bedrock foundering, not with oil prices at about $140 a barrel and a global supply shortage. If anything, its foundations are stronger than Dubai’s, whose economy is more of a triangular split between tourism, real estate and finance – all sectors that, incidentally, Abu Dhabi has its eyes on.

A $20 billion oil and gas development programme is set to raise crude production capacity from 2.7m barrels per day (bpd) to 3.5m bpd in the next three years and up to 4m bpd by 2015. With that kind of security, you can afford to plan ahead; Abu Dhabi is even preparing for the postoil era with its $22 billion Masdar initiative, which will see the building of a dedicated zero-carbon, zero-emissions city and investment in photovoltaic solar energy facilities.

Change is also in the air at Abu Dhabi International Airport, which, while still small compared with the likes of Heathrow or JFK in New York, is poised for redevelopment. A $6.8 billion redevelopment programme will raise passenger capacity from the current 6.9m to 20m by 2012.

Terminal 3, due to open later this year, will be home to Abu Dhabi-based Etihad Airways, which will fly to 50 destinations by the end of the year – not bad for an airline that turns five in November. Etihad’s passenger numbers almost doubled year-on-year to 4.6m in 2007 and it last week placed orders for 100 aircraft at the Farnborough Air-show.

Rising fuel prices present the greatest risk to the airline’s operation and future expansion, but Etihad chief executive James Hogan is optimistic. “We have become the new crossroads of the world,” boasts the former chief operating officer for British airline BMI. “Abu Dhabi is going to be one of the premier international cities – yes, we have Plan 2030, but I’m sure most major cities and companies have plans for the next 20 years. But the difference with Abu Dhabi is implementation.”

Hogan says of the area’s development:“To be involved with what’s happening here is quite unique. If you look around us, I see young execs and local graduates doing well, it’s a thriving atmosphere.

“Ten or 20 years ago, the only expats you saw in the Gulf were the oversixties topping up their pension; now they’re more likely to be in their mid-twenties to thirties – that’s the biggest difference. They like what’s happening here, not just the weather.”

Rising prices

Factors that could derail the city’s growth are largely the same that concern the country at large – including possible attacks on Iran, which could cause regional instability, or specific terrorist strikes. Escalating inflation, now running at 11% a year, is a problem across the UAE, and particularly Abu Dhabi, where rising housing demand continues to outstrip supply.

A recent EFG-Hermes market report predicted a 20%-25% rise in Abu Dhabi’s residential rents by the end of this year and a 15%-20% increase next year. Estate agency Colliers International found that house prices in Abu Dhabi jumped by 53% over the past year to $580 per square foot, compared with an 18% price hike in the previous 12 months – making it more expensive than Dubai, whose average rate per square foot for residential property was $430.1 in the first quarter of 2008.

That’s a challenge for everybody, especially resident and relocating expats who have little alternative to renting. Although foreigners can buy property on designated projects (such as Al-Reem Island), these are leasehold only and Abu Dhabi has yet to embrace freehold, unlike its high-profile neighbour. Freehold will in all likelihood come as the city reaches out more to international investors but industry observers don’t expect the floodgates to open.

As it is, leasehold doesn’t appear an impediment as more expats and overseas buyers are purchasing property. The Cityscape Abu Dhabi show in May saw $36 billion worth of sales and such was the demand that the exhibition was extended by a day.

Cultural focus

One of the key objectives of Plan 2030 is to turn Abu Dhabi into a world-class cultural centre. An operating agreement for the Louvre Abu Dhabi art gallery has been signed, with the French authorities allowing the Louvre name to be used on the museum. The design phase is imminent, with the appointment of an engineering consultant set to work in collaboration with the award-winning French architect Jean Nouvel.

The contract covers the staging of four temporary shows a year, as well as a degree of training for nationals wishing to enter the sector, and Abu Dhabi will commit to spending $52m a year to build its own collection.

Other cultural attractions include the Sheikh Zayed National Museum, to be designed by the UK’s Foster & Partners under the direction of Lord Foster; the Guggenheim Abu Dhabi contemporary arts museum – the world’s largest Guggenheim and the only one in the Middle East, conceptualised by Frank Gehry; a performing arts centre designed by Zaha Hadid; a maritime museum with concept design by Tadao Ando and a number of arts pavilions.

Lee Tabler, chief executive of Tourism Development and Investment Company (TDIC), says its focus in the next two years will be on projects that prepare the groundwork for the opening of the Cultural District’s institutions, particularly those in phase one – the Sheikh Zayed National Museum, the Louvre Abu Dhabi and the Guggenheim Abu Dhabi Museum – which are scheduled to open in 2012-13.

“Our plan is on track,” he says. “We expect to unveil the final design for the Sheikh Zayed National Museum later this year, anticipate a ground-breaking for the Louvre Abu Dhabi in the first quarter of next year and are progressing the scientific and cultural programme of the Guggenheim Abu Dhabi Museum.”

The retrospective Picasso Abu Dhabi: Masterpieces from the Musée National Picasso, Paris, featuring 186 paintings, sculptures and drawings, is running in Gallery One of the Emirates Palace until September 4. The exhibition, the first time that the Musée National Picasso collection has been presented in the Middle East and published in an Arabic catalogue, is a key step in Abu Dhabi’s development as an international cultural hub.

Abu Dhabi is focusing on high-end cultural tourists – a clear distinction from mass-market Dubai, which recently announced it is launching Fly-Dubai, a low-cost airline. In many respects, it is more in competition with Qatar than its immediate neighbour, since the Qataris are busy channelling their energy into infrastructure and a new airport, and targeting cultural and heritage-minded visitors.


More than $190 billion is budgeted across 10 civil construction projects planned or under way in Abu Dhabi. The largest scheme is the new capital city, the $40 billion Khalifa City, which is set to contain all federal ministries, local government offices and embassies. The 49m sq metre development is expected to be completed by 2030.

Work has started on the $39 billion Yas Island Development, a scheme that will involve residential property, hotels, beaches, marinas and shops. There will be golf courses and equestrian facilities – and a Ferrari theme park. The island will have a total developed area about a third of the size of Abu Dhabi island. Burooj Properties is behind a planned $24 billion project to include 11 residential towers, offices, hotels and a shopping mall.

In addition to the $22 billion Masdar project, a similar budget is planned for development at Saadiyat Island, which will feature more than 20 hotels, marinas and thousands of apartments and villas. The project also includes a museum, concert hall, maritime history centre, three harbours, a park, golf course and sailing club.

Al-Reem Island development is a $7.8 billion mixed-use community next to the bridge connecting Al-Reem Island to Abu Dhabi city. Several 40-and 50-storey towers will form the central business district. The development will include two 80-storey buildings and could house 80,000 people. With a budget of about $6.5 billion, Sheikh Mohammed Bin Zayed City is another new city, with proposals for more than 300 residential and commercial buildings, plus a variety of entertainment facilities. The development is on the Abu Dhabi-Al Ain highway.

The $13 billion Al-Raha Beach Complex, another mixed-use hospitality development involving reclaimed land that will include 50 high-rise and a number of low-rise buildings for approximately 120,000 people, is also under way. Water-taxis could provide access to Abu Dhabi city centre. Meanwhile, Abu Dhabi’s International Capital Trading is planning a $10 billion site with commercial centres, hotels, offices, residential schemes, warehousing and light industrial areas.

The Abu Dhabi Light Rail project and the MGM Grand Hotel have budgets of $3 billion. The rail scheme could involve about 200 miles of track. The MGM Grand project will feature two hotels as well as a 12,000-seat arena, retail, restaurants, waterfront residences and berths for private yachts.

The future

With developments in real estate, infrastructure, utilities, industrial production and agriculture, Al Qudra Holding’s chief executive Mahmood Ebraheem al-Mahmood is busy putting Abu Dhabi’s vision into action. It has five real estate projects on the go in Abu Dhabi – the Shades residential scheme is nearest completion in about two years’ time – and is also involved with commercial property.

He is upbeat about Abu Dhabi’s investment potential, citing its commitment to international standards, a politically stable climate and Plan 2030, which shows “we have a clear plan and this is the way we’re going”.

“We’re now seeing increases in prices but they’re still not at an international level,” he says. “We are getting more interest from institutional investors and if that keeps happening, the faster we’ll gain equilibrium with international prices.”

Even though more much-needed supply is coming on stream in the second half of next year and 2010, Mahmood believes it’s not going to impact on prices significantly. “Abu Dhabi, in general, has the space physically and when you look at what’s in the pipeline, it’s all about the long term. The income from oil prices is going to last for some time and with the activity in the commercial sector and cultural attractions, it’s all sustainable.”


The National, Abu Dhabi’s first English-language daily newspaper, was launched in April by the state-owned Abu Dhabi Media Company and is backed by the Arab emirate’s $850 billion sovereign wealth fund.

Martin Newland, a former editor of the Daily Telegraph, heads a team of about 200 locally and internationally recruited journalists and foreign correspondents, who have already broken taboos in the UAE by refusing to publish government news agency press releases verbatim.

While there has been some resentment towards The National’s analytical, “western-style” journalism from traditionalists, circulation of the paper has reached 70,000, distributed across the UAE from its Abu Dhabi printing presses.

The paper has the support of Abu Dhabi’s Crown Prince, Mohammed bin Zayed al-Nahyan.

There is also an online version of the six-days-a-week paper (

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