ABU DHABI: Building change

12 May 2006
After 18 months of planning, the $27,000 million Saadiyat island development was unveiled in late April by the new Abu Dhabi Tourism Authority (ADTA) subsidiary the Tourism Development & Investment Company (TDIC). As the largest real estate venture ever planned in the emirate, the project demonstrates the capital's ambition to place itself on the Gulf tourism and real estate map.

Saadiyat is the latest in a growing list of island and desert developments announced in Abu Dhabi. ALDAR Properties was the first to emerge with the Raha Gardens, Raha Beach and Al-Gurm (mangrove) developments. The developers on Reem island soon followed. Sorouh Real Estate launched Shams Abu Dhabi, Tamouh Investments unveiled Emirates Pearl and earlier this year, Reem Investments began promoting its Najmat Abu Dhabi project. And in March, Sorouh was handed responsibility to develop another major island, Lulu.

The scale of the projects has drawn the attention of international contractors hoping to cash in on the wave of development sweeping across the emirate. Despite the general optimism about Abu Dhabi's prospects, an air of caution remains. The concerns are not without basis. The market has only recently emerged from a decade of limited activity when major civil and building projects were at a premium. Those that did go ahead, such as a raft of headquarter buildings, were not always happy experiences for contractors and consultants. Financial losses and crippling delays resulted in many abandoning the emirate for more attractive and plentiful opportunities in neighbouring Dubai.

By 2005, only a handful of international contractors were active in the capital: even for most of the larger Abu Dhabi-based contractors, order books were filled by Dubai, not Abu Dhabi, projects. Leading developers are now looking to rectify the situation and are casting their nets far and wide. 'There is very strong interest from contractors from around the world, including Japan, South Korea, France, Germany, Australia, South Africa, and the UK, and all of them are anticipating a substantial workload here in Abu Dhabi,' says TDIC's chief executive officer, Lee Tabler. 'Most of the companies we have spoken to have established licences or partnerships with local contractors.'

More contractors are certainly needed. With an estimated $70,000 million of real estate investment, the primary concern for developers is whether they will be able to secure the services of enough contractors to build all their projects. They face a difficult task: the rampant pace of development in Dubai, and to a lesser extent in Doha, has sucked in surplus capacity and few contractors have any resources to spare.

Increasingly, the developers see the solution in partnering. New contracting methods are also being explored to ensure that jobs are procured and completed quickly. Although single-sourcing remains rare in the emirate, the local Al-Habtoor Engineering Enterprises was awarded last December a cost-plus contract for the redevelopment of the Abu Dhabi exhibition centre. 'Cost-plus contracts have been successfully used on several projects, so there are ways to solve this shortage,' says Mubarak Hamad al-Muhairi director-general of ADTA and managing director of TDIC.

Inevitably, there will be some hiccups in project execution. In March, ALDAR informed bidders for the substructure package on the Abu Dhabi central market redevelopment that the tender had been cancelled so that alternative designs could be considered. To some contractors, it was evidence that Abu Dhabi was reverting to its old ways, a view vehemently refuted by developers. They argued that the process had been handled transparently and pointed out that, design changes can happen on any major project.

The reality is that few doubt that the new developments will go ahead. The developers behind the new round of projects have already begun selling plots of land to third part

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