Abu Dhabi Growth Forges Ahead

By David Rosenberg

This article was published in Gulf Times on 29/11/2010 The world got its first look at Abu Dhabi’s Zayed National Museum this week when backers unveiled architectural renderings of the dramatic 345,000sq ft structure of five soaring pavilions, mimicking the feathers of a falcon’s wing. The project radiates money and prestige. The internationally-renowned architect Lord Norman Foster is designing the building and the British Museum is lending its expertise. When it opens in 2014 on Saadiyat Island, a sandy patch 500m off the Abu Dhabi coast, it will be only one of several world-class cultural attractions that include branches of the Louvre and Guggenheim Museums. A prestige golf course, a St Regis Hotel and a host of other high-end attractions are also slated. The tab for building all this? About $27bn. If the plans for Saadiyat Island ring a familiar bell of over-the-top development, the kind that sent Dubai, Abu Dhabi’s next door emirate soaring and then crashing, economists beg to differ. With substantial oil wealth and the lessons learned from Dubai’s experience, the United Arab Emirate’s rising economic power stands a good chance of steering its way through a breakneck growth agenda dubbed Plan Abu Dhabi 2030. “After the financial crisis they are shifting from real estate. They know that property development alone is not a sustainable growth model over the next  five to 10 years,” Jean-Paul Pigat, head of Middle East and North Africa analysis at Business Monitor International, told The Media Line.  Until Dubai World, a quasi-governmental holding company, asked for more time to pay back investors a year ago, Dubai was riding high on luxury real estate development, offices and malls. It is now weighed down by debt that may be as much as $100bn while the property boom has fizzled. Abu Dhabi helped its high-flying brother with a $20bn aid package last year. Abu Dhabi still has six hotels opening in 2011, and the emirate is home to three PGA-standard golf courses. But the focus of economic development is on less glamorous projects, like a $5.7bn aluminum plant; the development of a healthcare centre with help from Johns Hopkins University; the Cleveland Clinic; and a host of energy projects. Abu Dhabi’s state-owned Advanced Technology Investment Company has taken a majority stake in the semiconductor maker Globalfoundries, which will build a $6bn plant near Masdar City employing 1,500 people, Ibrahim Ajami, ATI’s chief executive, said in an interview with the UAE’s The National newspaper last week. The goal is to derive two thirds of its gross domestic product from things other than oil by 2030. Abu Dhabi also has the added benefit of holding 9% of the world’s proven oil reserves — 98.2mn barrels — and 5% of the world’s natural gas. It also has enough land to develop without reclaiming it from the Gulf, Robin Teh, director of valuation and research at the international property agency Chesterton International, wrote in Gulf Times last week. “Soon, Dubai is likely to have some competition from its neighbour, Abu Dhabi…. Abu Dhabi is in line to offer a greater variety of retail, leisure and recreational activity than most cities in the (Gulf).” Giyas Gokkent, head of research at Abu Dhabi National Bank, said he didn’t see competition emerging between the two emirates, however. Much of what Abu Dhabi is developing, such as its airlines and airports and its aluminum industry, is competing with Europe or other non-Gulf economies, not with Dubai, he told The Media Line. “We’ll have a rapid rail link between the two areas, and if you come back in 15-20 years time you will find a single cosmopolitan area. There will be a merging between Dubai and Abu Dhabi,” he said. “People will fly to Dubai and say, ‘lets go visit the Guggenheim in Abu Dhabi today.’ It will be a single destination. In Yas Island, there will be theme parks – it will be like an Orlando for the region.” If Abu Dhabi does have any competition, it may be coming from Qatar, said Pigat of Business Monitor International. Qatar aims to boost its LNG export capacity by 12% to 77mn metric tons a year. Eventually, it wants to raise total oil and gas output to 5mn barrels of oil equivalent per day, from 2.8mn last year. Vast amounts are already being spent on education and sports initiatives, the arts and property development. “In terms of infrastructure spending and growth, Qatar is star performer in the Gulf,” Pigat said.