A VISIT to Yas Island reveals it all. Abu Dhabi is buzzing with construction activity as the emirate gears to host its first-ever Formula 1 race this November.

While other countries in the region have been trying to cope through the global economic fallout, the emirate has been forging ahead with its flagship developments such as the $40-billion Yas Island project, which hosts the Yas Marina Circuit where the 2009 Formula 1 Etihad Airways Abu Dhabi Grand Prix will be staged, the $27-billion Saadiyat Island the $22-billion Masdar City, the $10-billion Ghantoot Green City, as well as several mega infrastructural developments.
In fact, the impact of the recession is barely perceptible in this oil-rich emirate which accounts for about 60 per cent of the national economy of the UAE and ranks amongst the world’s richest cities, with gross domestic capita (GDP) per capita being amongst the highest in the world, exceeding $60,000 in 2008.
With the grand prix to kick off on November 1, the race is on to complete not only the F1 circuit but also the several associated hotels and infrastructural services that go into making it a world-class venue.
Already, all infrastructure work on the Yas Island development for the first phase has been completed, according to Aldar Properties, the developer of Yas Islands and Abu Dhabi’s largest real estate developer by market capitalisation.
Seven hotels on Yas Island are also in the process of being handed over to the operators. Aldar has also indicated that the 5.55-km race track – described as one of the most sophisticated and technically-advanced tracks in the world – is ready and was inspected by Federation Internationale de L’Automobile (FIA) on August 5, with the final check scheduled for this month.
Apart from the impetus provided by the F1, Abu Dhabi is seriously pursuing the goals set out in the Abu Dhabi’s Vision 2030, a comprehensive urban development plan drawn up by Abu Dhabi Urban Planning Council to help the emirate cater to current and future development needs.
Earlier this year Abu Dhabi’s Crown Prince General Sheikh Mohammed bin Zayed Al Nahyan said that despite the fallout of the global crisis, the UAE economy still enjoys stability and abundant liquidity.
General Sheikh Mohammed, who is also the Deputy Supreme Commander of the UAE Armed Forces, indicated during the Cityscape Abu Dhabi 2009 property show that projects in the capital would continue with no delay as they are developments with strategic dimensions and integrate with Abu Dhabi Vision’s 2030 masterplan.
He also unveiled details of a massive new government and economic district for the capital. The 4,900-hectare new capital city project called Khalifa City District, to be launched in 2012, is expected to be the biggest single project in Abu Dhabi with a masterplan budget of $40 billion and will enfold all federal ministries, local government offices and embassies.

Infrastructure
Despite lower oil prices, the UAE remains in a financially strong position thanks to the substantial liquidity it has amassed over the past five years of sky-high oil prices. The government is likely to maintain high investments, particularly for core long-term infrastructure projects and has pledged to reinforce public expenditure to ensure the nation is not impacted by the global economic slump. Investments of well over $200 billion are expected to be made on major infrastructure projects over the next five to six years.
Some of the new infrastructure projects that offer opportunities include Khalifa bin Salman Port and Industrial Zone, the Abu Dhabi Sewerage Services Company’s strategic tunnel enhancement programme, the Mafraq-Ghuweifat highway, and the Hudayriat bridge.
The 325-km Mafraq-to-Ghuweifat highway – estimated to cost $2.5 billion – will cross the Western Region and link Mafraq with Ghuweifat near the Saudi Arabian border while the Hudayriat bridge will link the islands of Hudayriat and Abu Dhabi.
In the roads sector, a major highway under construction is the Shahama-to-Saadiyat freeway, a 10-lane, 24-km-long highway that will connect Abu Dhabi Corniche with the main highway to Dubai. Work has also begun on the $815 million Al Salam tunnel, which at 3 km long will be the longest road tunnel in the Middle East. Also part of this project is the construction of a $500-million flyover linking Abu Dhabi city to Reem Island.
This apart, over the next few years, Abu Dhabi will be launching a number of multibillion-dollar projects to overhaul its transport system as part of its Surface Transport Master Plan (STMP), a major initiative taken by the Department of Transport. These include a 340-km tram network and up to 130 km of metro lines. Scheduled to be operational by 2016, the metro will be partly underground and stretch several hundred kilometres from Abu Dhabi Island to new developments. The tram service, set to open in 2014, will operate in congested areas, including the central business district and will also cater for new developments on Yas and Saadiyat islands and Al Reef Villas near Abu Dhabi International Airport. The two projects are expected to cost over Dh300 billion ($81.6 billion).

Prices
The uncertainties in the global markets have presented some opportunities through lower project construction costs and a wider variety of choice of contractors to implement projects. Materials prices have fallen and construction companies have been making a beeline for the emirate, especially in the wake of the downturn in the Dubai market. This prompted some developers to recently retender and redesign projects like the Eastern Mangrove Hotel and the St Regis projects. Tourism Development & Investment Corporation (TDIC) has recently awarded Australia’s Multiplex the $1-billion contract to build the Eastern Mangrove hotel and resort and a $1.8-billion contract to South Africa’s Murray & Roberts Contractors (Middle East) and the local Al Habtoor Engineering Enterprises to build its St Regis resort.
A report issued by the Directorate of Contractors’ Classification and Consultants’ Registration at the Department of Economic Development (DED) confirms the growing interest shown by overseas contractors in the emirate. The report states that the number of contractors and consultants registered in Abu Dhabi rose 50 per cent and 47.8 per cent, respectively, during the first half of this year compared to the same period last year.
“The increase is a clear indicator of the rapidly growing economy and the presence of sound economic climate, both of which contribute to attracting more companies and investments into the emirate so as to achieve Abu Dhabi Economic Vision 2030,” DED undersecretary Muhammad Omar Abdullah said in the report.

Real estate
The real estate sector, however, has had to respond to changing buyer patterns. With limited revenues, some developers have been forced to review planned projects to cater to the market for more affordable housing. Designs for the Al Raha Beach and Yas Island projects have been altered to include housing for middle-income families.
Developers of projects at Reem Island are also revising their plans and slowing construction of some buildings as the property downturn forces them to adjust their business models. The major challenge for many developers is to find enough financing to complete their projects.
Also, some developers have started reducing prices significantly while others are pursing developments with a lower price tag, clearing the way for much-needed activity in the middle and low-income segments. Overall, the real estate market is undersupplied and affordable housing developments such as Al Reef Villas, the first in the segment to come online this year, could make major strides in closing the supply gap.
The fact remains that the emirate is in a state of undersupply for both residential and office space and is likely to remain so for the next three to four years. Rapidly growing population will also fuel demand for more housing.
In an effort to ease the liquidity squeeze, Abu Dhabi launched a government-backed lender, Abu Dhabi Finance, a Dh500-million ($135 million) joint venture between the emirate’s Abu Dhabi Commercial Bank, Aldar, Mubadala Development Company, Sorouh Real Estate and the TDIC. The new JV will offer mortgages with loan-to-value ratios as high as 85 per cent and debt service ratios of up to 55 per cent.

Housing
Almost 17,000 new villas in 23 locations are set to be built for Emiratis over the next five years. The Abu Dhabi Centre for Housing and Service Facilities Development, the new government body responsible for overseeing the execution of major housing and infrastructure projects, will supervise the building of new homes allocated to Emirati nationals.
The centre, which has outlined a five-year development strategy, will also ensure that the principles of sustainability as laid out in Estidama – Abu Dhabi s sustainability initiative – are incorporated in the housing and infrastructure projects that it will oversee.
Local developers are also assisting in developing housing facilities for nationals. Last month, Aldar Properties confirmed it had signed contracts worth Dh2.6 billion ($707 million) with three contractors, to deliver 5,000 villas at Al Falah, a master-planned community for UAE nationals as part of the 2030 directive. Aldar’s portfolio of real estate projects in Abu Dhabi is estimated at more than $72 billion.
Meanwhile, Abu Dhabi-based Al Rayan Investment is close to completing its unique Construction Workers’ Residential City (CWRC). The project, which will house 32,000 residents once complete in October, is the first purpose-built neighbourhood dedicated exclusively to the many thousands of people involved in the construction industry.
Al Rayan Investment has already started taking the bookings from the companies who are looking for accommodation for their workers with the cooperation of Higher Cooperation For Specialized Economic Zones (Zonescorp).

Sustainability
Abu Dhabi is big on the sustainability front and is providing a global role model with its trendsetting regulations and above all its Masdar City project, the world’s first zero carbon city, which is masterplanned by Foster and Partners, UK architectural firm.
The emirate intends to generate seven per cent of its electricity from renewable energy sources by 2020. Recently, a 10-MW solar panel plant was connected to the electricity grid in Masdar City. The $50.3-million project – groundbreaking for the Middle East – is testimony to solar energy being a viable method of powering, at least a part of the emirate’s electricity needs.
The electricity generated by the solar panels is carbon free, hence reducing the release into the atmosphere of 15,000 tonnes of carbon dioxide a year, according to Masdar officials.

Airport & tourism
Abu Dhabi intends to attract 2.3 million hotel guests a year by 2012 and this is expected to be achieved through the continued expansion of its airline capacity, tapping new markets and expanding its attractions with additions such as the Ferrari World theme park, due to open next year.
According to the Airports Council International, a trade association of the world’s airports, Abu Dhabi International Airport was the world’s fastest-growing airport last year, handling 30.2 per cent more passengers than in 2007. Abu Dhabi Airports Company’s (ADAC) June 2009 traffic figures for Abu Dhabi International Airport and overall figures for the year to date (YTD) show the continuation of healthy increases in passengers and aircraft movements in the first half of the year.
To cope with the rapidly growing passenger numbers, Abu Dhabi International Airport is in the midst of a major expansion. The new $6.85-billion Midfield Terminal Complex at the airport is expected to be completed by 2010 and will eventually increase the airport’s passenger handling capacity to 20 to 50 million passengers annually, a significant increase from some 5.4 million passengers in 2004.
Abu Dhabi is also expanding Al Bateen Airport, the only dedicated luxury business jet airport in the region. Located in the heart of the city, the airport is being redeveloped at a cost of Dh200 million ($54 million).
The number of hotel rooms is also being increased significantly. On Yas Island, for example, seven new hotels will add more than 2,000 rooms by race day and several more will be built over the next few years. TDIC aims to contribute 7,000 hotel rooms, particularly at its flagship development, the Saadiyat Island.

Port & industrial projects
International Bechtel Company is executing the $5-billion Khalifa Port and Industrial Zone (KPIZ), a multi-purpose facility, involving the construction of a global-scale container and industrial port as well as the development of more than 100 sq km of industrial, logistics, commercial, educational and residential special economic and free zones. The first phase is expected to be completed next year.
The new port will have an initial capacity of 2 million TEUs (twenty-foot equivalent units) that will gradually be expanded to reach 6 million TEUs. Khalifa Port will eventually absorb all of Mina Zayed’s operations in 2010.
Earlier this year, Abu Dhabi Ports Company awarded a Dh1.4-billion ($381 million) infrastructure contract at KPIZ to Al Habtoor Leighton Group, including the construction of the onshore port facilities and 47 buildings, associated infrastructure such as building roads, bridges and utilities. The Al Habtoor Leighton Group has said work had already begun on the project, which would be completed by September 2011.
Abu Dhabi is also spearheading its industrial sector, a major development being its first aluminium smelter. Work on the first phase of the $10-billion Emirates Aluminium (Emal) smelter at Taweelah is expected to be completed next year. The smelter will produce 700,000 tonnes in the first phase rising to 1.4 million in the second. Other major developments include the Borouge 3 expansion in Ruwais, which will increase the total capacity of the plant to 4.5 million tonnes of polyolefins annually by the end of 2013.

Key projects
Yas Island: One of the largest and most prestigious projects under development is Aldar Properties’ Yas Island, a massive mixed-use tourist development including residential, hotels, beaches, marinas, retail, golf and equestrian facilities. The island will have a total developed area about one-third the size of Abu Dhabi island.
With the F1 circuit and the Ferrari World experience being the prime attractions, the island is forecast to have 100,000 permanent residents and a day-time population of about 250,000 people.
Besides the racing circuit, a golf course and Ferrari World Experience have also been constructed. The golf course – the first ‘links’ course in the Middle East – will be opened at the beginning of next year, while Ferrari World will become operational in mid-2010.
The first phase of the project includes seven hotels, which are currently being furnished. Aldar Hospitality and Hotels will run the stunning Yas Hotel which straddles the racing circuit, while the remaining six will be operated by international firms.
Initiated two years ago, the infrastructure work has involved the construction of 25 bridges and five tunnels, including a tunnel linking the island’s southern area with Al Raha Beach, the Abu Dhabi-Dubai road and a new airport intersection.
The first phase also comprises the main and internal roads, bridges, tunnels, electricity, water and telecommunication networks and sewerage on the island’s southern area.
When the final phase is completed by 2018, the 2,500-hectare Yas Island will have signature hotels, a 296,000 sq m retail development, the world’s first and only Ferrari theme park outside Italy, the UAE’s first links golf course, a Warner Bros. theme park and a state-of-the-art water park.
Several more hotels are planned to cater to demand, including a 500-room Möven-pick scheduled to open in 2010. The Oberoi – Al Yas is scheduled to open in 2013 and comprises 120 villas. Aldar has also signed an agreement with Accor for the Novotel Yas Island and Ibis Yas Island. Other hotels will be sited adjacent to the golf course, marina, lagoon or beach.
Al Raha Beach: Aldar is also developing the $18.5-billion Al Raha Beach, another mixed-use hospitality development with 50 high-rises and a number of low-rises to accommodate 120,000 people. Located on the beach side of the main highway leading into Abu Dhabi from Dubai, the development consists of 11 precincts, each with its own distinct appeal. Stretching over 11 km, it is one of the first designated areas where non-UAE nationals can invest in leasehold property within Abu Dhabi. The first phase is scheduled to be completed by the year-end and the final phase completed in 2019.
Saadiyat Island: This offshore development, which is under construction, will feature the first branch of the Louvre outside of Paris and the world’s largest Guggenheim museum. The project includes other museums, concert halls, a park, golf course and sailing club.
The development will also include 29 hotels, three marinas, 8,000 residential villas and more than 38,000 apartments. Work has started on the Dh1- billion ($272 million) five-star Park Hyatt resort, which will have 316 rooms, suites and villas, and four restaurants. Al Jaber Engineering and Contracting is the main contractor. Al Jaber is also constructing 295 villas on the island for TDIC under a Dh1-billion contract. Meanwhile, the Al Habtoor Leighton Group and Murray and Roberts JV is constructing St Regis hotel and residences on the island. The project includes a 380-room hotel, 259 apartments and 33 villas.
Reem Island: This 633-hectare residential, commercial and business project is taking shape on a natural island 600 m off the coast of Abu Dhabi. The project, being developed separately by Sorouh Real Estate (Shams Abu Dhabi) Reem Investments and Tamouh, will house hotels, restaurants, gardens, museums, an aquarium, amusement parks for children and a diverse wildlife reserve (see separate reports).
Reem Developers, the Najmat marina master developer, said it is making good progress on its projects on the island, including the recent filling of its marina and the construction of storm drains and other infrastructure.
The Wings project – two 300-m towers in Najmat, is on line to be finished on time.
Burooj Properties, the real estate arm of Abu Dhabi Islamic Bank (ADIB), a master developer of mega projects in the UAE and the region, has successfully completed its Al Gurm Gardens, an 80-villa development, at Al Reem Island.
Ghantoot Green City: This $10-billion mixed-use project, located in Ghanoot, is in the design stage. Spread over 60 sq km, it will include a city with a commercial centre, hotels, offices, residences, warehouses and light industries. It is being developed by International Capital Trading Company and is scheduled to kick off next year for completion in 2020.