Executive decisions: New development projects have been announced in sectors ranging from housing to health care

After having put several major projects on hold during 2011, the Executive Council announced in January 2012 that it had approved a number of projects across several sectors, including transport, housing, health care and tourism. With commercial real estate development expected to be relatively slow in 2012 as the emirate works to absorb the large amount of residential and office space that came to the market in 2011, these other sectors represent important alternatives for contractors looking to utilise their excess capacity.

MOVING ALONG: Transport infrastructure projects look set to become important drivers of local construction activity. A number of transport projects were approved by the government in January 2012, including a new terminal building at Abu Dhabi International Airport, part of a larger $6.8bn expansion plan for the capital’s airport. The new facility, which will cover 700,000 sq metres and be able to handle 30m passengers, is expected to be operational by the first half of 2017. This expansion will bring total airport capacity to 47m passengers per year by 2017. Although the Executive Council only approved the new terminal in January 2012, it was tendered in November 2011, with six consortia submitting bids (Al Habtoor-Murray & Roberts, Bechtel-Al Jaber, Hyundai Engineering & Construction-Kumho, Larsen & Toubro-NPC, Samsung-ACC and Arabtec-TAV-CCC). In June 2012 ADAC announced that the Arabtec-TAV-CCC consortium was the preferred bidder for the new terminal’s construction contract, which has been valued at Dh10.8bn ($2.9bn). The consortium was chosen from among four groups selected in February, which in turn were drawn from the six bids submitted the previous November.

Roads were an important part of the January 2012 announcement, with two major projects approved. The first is the expansion of the Al Mafraq-Ghuwaifat Road, which connects Abu Dhabi to Saudi Arabia. The project involves lengthening this road by 246 km, as well as building 15 new interchanges, with the latter improving traffic flow, as well as the safety and security of road users. The second project is the extension of the Abu Dhabi to Dubai portion of the existing Emirates Road. In June 2012 the Executive Committee of the Executive Council announced it had approved additional road works, including the second phase of the northern circular road project in Al Ain City and the development of its intersections, as well as the tarmac road construction project that will connect Nafeer and the Al Jifn industrial area in the Western Region.

HOUSING PROJECTS: While the development of high-end luxury housing and commercial spaces has been the focus of Abu Dhabi’s real estate and construction firms for some time, some attention is starting to be directed towards subsidised and free housing that the government provides to nationals. Among the approved projects announced in January 2012 were a number of investments in housing and community facilities in Liwa, Ghayathi, Al Hayer, Al Shuaib, Bida Al Mutawaa, Mazyed, Um Ghafa, Nema, Al Salamat Umm Alashtan and Alybanh. Additional infrastructure projects will be implemented for a number of other residential districts, including the area of north Al Wathba, the location of one of the largest Emirati housing projects approved to date. The development, which covers 4178 ha, will eventually provide 13,150 residential plots. While it will take some time to complete this project and others, during 2012 alone the government of Abu Dhabi plans to provide 7608 more residential villas to its citizens, according to the Executive Council.

WORK IN PROGRESS: Three housing projects were already under way in 2011, as part of the National Housing Programme that is being overseen by the Urban Planning Council, a government entity responsible for the development of all urban environments within the emirate. In August 2011 Aldar Properties, the largest developer in Abu Dhabi and partially owned by the government, announced that it was delivering nearly 5000 homes as part of this housing scheme. The residences are located in the Al Falah development, which covers an area of 12.5m sq metres east of Abu Dhabi International Airport. Upon completion, which is expected by the end of 2012, the development will include facilities such as schools and shopping centres.

The second project – known as the Yas Island Villas – is being carried out by local firm Royal Development Company and will consist of 500 villas. As is the case with Al Falah, the Yas Island project will mix residences, shopping facilities, services and recreational areas, which is in line with the UPC’s objective of creating “complete communities”. Sorouh Real Estate, another Abu Dhabi-based developer, is handling the Dh5.4bn ($1.47bn) Watani project. Sorouh announced in April 2012 that it had nearly completed the first phase of the project, which involves building nearly 1400 villas.

The government’s plans to build housing for Emiratis could provide a boost for local developers and contractors during a lull in commercial projects. Indeed, in the wake of the government’s January 2012 announcement, the stock price of both Aldar and Sorouh Real Estate jumped 6% and 5.3% percent.

As Julian Bruce, Dubai-based equity sales head at EFG-Hermes Holding SAE, told Bloomberg, “Although schedules, budgets and contractors have yet to be announced, speculative buyers are active on the assumption that companies such as Aldar and Sorouh would be front-line beneficiaries of any contract awards.”

HEALTH CARE: Another area highlighted for investment by the Executive Council in its January 2012 statement was the health care system, which Abu Dhabi has continued to upgrade and expand over the past several years. In its announcement, the Executive Council highlighted Cleveland Clinic Abu Dhabi (CCAD), which is being developed by Mubadala Healthcare, a division of Mubadala Development Company, a government-owned investment entity. CCAD, which is currently being constructed and is scheduled to open in late 2013, will have 360 beds, making it the fourth-largest hospital in Abu Dhabi in terms of bed capacity. Aldar has acted as development manager for the project, overseeing the design, construction and commissioning of the hospital, while a joint venture of Six Construct and Samsung was awarded the construction contract. But CCAD is only one part of the government’s plan, with the Executive Council having approved the building of six hospitals, a medical rehabilitation centre, a dialysis centre, four walk-in clinics, a disease prevention and screening centre, and a special-needs centre, which will be part of the system overseen by Abu Dhabi Health Services Company (SEHA), the state provider of health care services. These include three new hospitals at Sheikh Khalifa Medical City in Abu Dhabi City, as well as a major expansion plan at Al Ain Hospital that will increase bed capacity from 371 to 688. In February 2012 SEHA announced it was reviewing tenders for the Al Ain project, with construction expected to begin in late 2012 and be completed within three years.

TOURISM: The January 2012 announcement also revealed that the Executive Council had approved budgets and opening dates for three museums to be located on Saadiyat Island, a 27-sq-km island that is being developed into a major cultural centre by the Tourism Development & Investment Company (TDIC), a government-owned entity. The first of the three museums, the Louvre Abu Dhabi, is now scheduled to open in 2015, followed by the Zayed National Museum in 2016 and the Guggenheim Abu Dhabi in 2017.

Following the decision by the Executive Council, in March 2012 the TDIC announced that it was inviting builders to submit fresh bids for the main works at the Louvre, adding that it expects that the contract will be awarded in the final quarter of 2012. The developer initially tendered for this contract in 2010, but a winner was never announced. Meanwhile, the TDIC has yet to announce any specific timelines for the Guggenheim project. The concrete works for this project was tendered in October 2011, but it was subsequently recalled.

The resumption of the museum projects may, in fact, be one of the more important developments to come out of the January 2012 Executive Council announcement. The fact that this development has once again come to the front and centre could do much to restore confidence in the construction sector as a whole.