Compared with its neighbour Dubai, the pace of development in Abu Dhabi has been slow in recent years. But with the Abu Dhabi 2030 strategy for development now under way, this is fast changing.

Abu Dhabihopes the strategy will raise the emirate’s international profile and establish it as a global tourism destination. Of the many projects the strategy has set in motion, the $27bn development of Saadiyat Island has aroused the most international interest.

Lying 500 metres off the mainland, the 27-square-kilometre island is to be transformed by 2020 into a luxury residential and tourist community. With high-profile cultural projects – the new Louvre museum and Guggenheim art gallery in particular – Abu Dhabi aims to attract tourists and move the economy away from its dependence on oil and gas revenues.

“This is a long-term strategy,” says Giyas Gokkent, chief economist at National Bank of Abu Dhabi (NBAD). “The question for Abu Dhabi has been ‘what kind of tourism do they want to develop?’ With these high-end cultural projects, they have identified a gap in the market. It differentiates them.”

Standing out

The contrast with Dubai and other luxury tourist destinations in the region is striking. Abu Dhabi’s high-end residential blocks, hotels and championship golf course are developments of a kind to be found around the Gulf. But on Saadiyat Island, they will be flanked by a cultural district of iconic buildings: the Louvre and Guggenheim sites, the Sheikh Zayed National Museum, a maritime museum and performing arts centre, and a New York University campus.

The designers of these institutions are among the world’s most celebrated architects: Frank Gehry (Guggenheim), Norman Foster (Sheikh Zayed National Museum), Zaha Hadid (Performing Arts Centre), Tadao Ando (Maritime Museum) and Jean Nouvel (Louvre).

“Abu Dhabi does not want to be Dubai,” says one consultant based in the UAE capital. “It wants to set itself apart. These high-end projects are part of the aim to bring a different kind of tourism to the city.”

The Tourism Development & Investment Company (TDIC), which is overseeing the work, anticipates that Saadiyat Island will attract
2.7 million visitors a year by 2012, which is when both the Louvre and Guggenheim are scheduled for completion. Eventually, the island will also be home to 160,000 residents.

To create a sustainable, long-term development, the government aims to cater for the local population as well as tourists.

“The Saadiyat Island cultural district is central to the vision of transforming the UAE capital into a cultural centre for the nation,” says Rita Aoun, director of the cultural department of the TDIC. “These institutions are designed to contribute to the education of the people of Abu Dhabi and its region, and to provide them with new professional opportunities.”

Dredging and land reclamation on the Saadiyat Island site was completed in May by Dutch group Jan de Nul. In October, a consortium of Germany’s Ed Zublin and local contractor Saif bin Darwish finished the $250m Sheikh Khalifa Bridge, linking the island to the mainland with a 10-lane highway.

Preliminary ground works have begun on several of the cultural projects. TDIC and US project manager Aecom are close to prequalifying bidders for the main construction contract on the Guggenheim Abu Dhabi scheme. Bids will be submitted early next year, with a contract award expected before the end of March.

The Guggenheim name became closely associated with urban redevelopment when US architect Frank Gehry’s iconic museum opened in Bilbao in 1997. The Abu Dhabi government clearly hopes Gehry’s design for Saadiyat Island will have a similar impact on the emirate’s reputation abroad.

But Abu Dhabi has scored an even greater coup in persuading Paris to franchise the -Louvre name for the first time in the gallery’s history. France’s President Nicolas Sarkozy has been keen to extend the country’s influence in the Gulf, signing a 30-year cultural accord with Abu Dhabi in 2007 that included the Louvre agreement. The TDIC has prequalified companies for the contract to build the Louvre Abu Dhabi, which is estimated to cost $1bn. Construction bids have to be submitted by December 2009. Germany’s Bauer was selected to carry out enabling works on the project in mid July.

“Abu Dhabi’s collaborations with the Louvre and the Guggenheim Foundation are an investment in education, which will open doors to new professions in this field,” says Aoun.

Emirati stamp

Abu Dhabihas a delicate balance to strike here. The type of tourists it wants to lure to the galleries might be put off by the state ‘buying in’ culture at the expense of its own. While TDIC insists that both the Guggenheim and Louvre will reflect “cross-cultural influences”, the Sheikh Zayed and maritime museums mark a clear effort to complement and counterbalance the import of Western arts with galleries that will put a distinctly Emirati stamp on the Saadiyat project.

“The cultural district is intended to appeal to local, regional and international audiences alike, [showcasing] both the international arts and the region’s own heritage,” says Aoun.

The Sheikh Zayed museum is also making progress, with Aecom again appointed as project manager. Enabling works are in progress and prequalification is under way for the main construction contract.

While the cultural projects have grabbed the headlines, Saadiyat Island needs a tourist infrastructure to support these institutions. Local construction group Al-Jaber has begun work on the Saadiyat Beach Residence community, while local contractor Alec will build a Park Hyatt hotel on the island, surrounded by an 18-hole golf course. The local Al-Habtoor Engineering and South Africa’s Murray & Roberts will build the St Regis Hotel and residences.

Work is also under way on the island’s power, water and transport infrastructure. The 10-lane Saadiyat Link highway is now complete between the island and the town of Shahama, allowing improved access to Abu Dhabi International airport. On the island, a 400kV grid station and underground cable connection to the city has been completed, with one of four substations to be finished by the end of the year and the remaining three built in 2010. A drainage system and a 22-kilometre-long sewerage network are also complete. Work has begun on Saadiyat Construction Village, which will house 40,000 workers during the main construction phase on the island. The first 3,000 workers will move in by the end of the year.

Despite the investment being made in Saadiyat, cultural institutions worldwide rarely, if ever, make money. Abu Dhabi is unlikely to buck that trend. The government will be absorbing most of Saadiyat Island’s massive costs itself.

A $10bn government bond was issued in March this year, although it is not clear how much of this has been earmarked for tourism projects, while in July TDIC issued its own sukuk (Islamic bond), which it says has attracted a $6bn order book. The government has signalled its determination to keep the project on track through the global economic downturn.

“Last year was a challenging time for real estate and tourism worldwide,” says Stuart Magee, executive director for delivery at TDIC. “But TDIC remains committed to the delivery of Saadiyat. For our developments in general, we are witnessing a heightened interest in bidding by local and international contractors, favourable tender pricing and, once a contractor is appointed, swift mobilisation, with ample resources and equipment assigned to site.”

Some of the high-end residential projects on Saadiyat Island will generate cash from sales, while NBAD’s Gokkent says some of the island’s resorts could generate cash over time.

“But Abu Dhabi’s aim is to create a spillover from tourism revenues into other parts of the economy,” he says.

Ultimately, the value of Saadiyat Island to Abu Dhabi will be assessed not by the cost of the paintings in its new galleries but in the revenue streams it creates in new areas of the emirate’s economy.

Abu Dhabi has spent a long time considering its approach to the modern tourism market, knowing it has the funds to bankroll almost any project it desires. If Saadiyat Island succeeds in establishing the UAE capital as a cultural, artistic and educational hub, the huge short-term cost will have been a price worth paying.