Mubadala has had mixed fortunes in 2010. It has been the most active developer in Abu Dhabi with the award of three major building contracts – the $218m (AED800m) Rosewood Hotel, the estimated $1.5bn New York University and, through its development manager Aldar Properties, the $1.3bn Cleveland Clinic.
But the success of the contract awards is tempered by two high-profile tender cancellations. In February, the investment fund cancelled the tender for the estimated $1.6bn Tawam hospital in Al-Ain. It has now put its estimated $1.4bn football stadium project on hold after receiving bids from contractors for the design and build contract in June.
The two cancellations, although very different projects, have a common theme: In both cases Mubadala said the decision to cancel the tenders was a government move, not its own.
For the projects it is developing itself, Mubadala’s plans are also being scrutinised more than ever following its announcement in late September that it had made losses of $1.2bn. The planned MGM development on Abu Dhabi island is already under review and there is now an expectation that many of the projects that were expected to move ahead quickly will now be delayed.
The government has a vested interest in making sure Mubadala’s plans stack up financially. It has given the firm a capital injection of $3.5bn to cover its most recent losses. This does not mean Mubadala will just stop spending.
The announcement that it plans to develop a $7bn aluminium smelter in Malaysia demonstrates there are funds available if the business plan is strong enough. The worry for firms looking for work in Abu Dhabi is that Mubadala and the government no longer find the same level of robustness at home. Outside the construction and real-estate sectors, there is a broader concern for the wider economy. If the government is not investing in Abu Dhabi’s infrastructure then neither will the private sector.