The political unrest currently sweeping the Middle East could potentially benefit the UAE’s construction market as firms look for a stable base in the region.

Before the recession struck in 2008, the UAE was at the heart of the region’s construction boom. It was Dubai that was pushing ahead with projects.

Abu Dhabi is now trying to catch up. Despite its construction market appearing to slowdown towards the latter part of 2010, those involved in the emirate’s construction sector are still optimistic about the opportunities that Abu Dhabi is set to offer in 2011.

You have a number of state-owned developers tendering projects … and are very active

Karim Yazbek, Hill International

“You have a number of state-owned developers and government departments tendering projects and we have received a lot of requests for proposals. They are awarding projects and are very active,” says KarimYazbek, vice-president for Middle East region at US-headquartered Hill International.

UAE construction projects

2010 was the year of social infrastructure projects in Abu Dhabi. Several large hospital and educational building contracts were tendered, including the $1.3bn Cleveland Clinic on Sowwah island and the $1.5bn New York University project on Saadiyat island.

In 2011, transport and infrastructure projects are set to offer the most attractive opportunities for contractors in the Abu Dhabi market. In addition to constructing a new port, the emirate is expanding its airport and building a rail network.

Abu Dhabi has started tendering the first phase of the estimated $11bn federal rail network. The Etihad Rail Company prequalified firms to submit bids by 4 May for the first civil engineering contract for the scheme. The contract is for an estimated AED2bn ($500m) civil and track works package. The first phase of the railway involves building a 265-kilometre track between the port of Ruwais and gas fields at Shah and Habshan.

The Abu Dhabi government has also placed plans to expand the emirate’s international airport on the top of its agenda. In early March, Abu Dhabi Airports Company (Adac) issued tender documents to build a new midfield terminal at Abu Dhabi International airport. Prequalified contractors have until 10 July to submit bids for the main construction package.

The midfield terminal will be built between the two existing runways and will have a total built-up area of 630,000 square metres. The terminal will include 27,000 sq m of retail space for food and beverage outlets. The expected capacity for the new terminal will be between 27-30 million passengers a year. Adac hopes to award the contract by the end of 2011.

In a related project, Abu Dhabi’s Supervision Committee for the expansion of Abu Dhabi International Airport (Scadia) has invited companies to submit expressions of interest by 23 March to carry out airside civil works at the midfield terminal.

The airside infrastructure and civil works involve laying 300,000 sq m of concrete and 600,000 sq m of flexible pavement, with taxiway connections to the existing and future taxiways. Abu Dhabi is also planning to improve its road infrastructure. The contract award for the estimated $2.7bn Mafraq-Ghweifat highway is expected shortly. The 327km highway will link Mafraq, close to Abu Dhabi island, with Ghweifat, which is on the border with Saudi Arabia.

The highway is the first transport public-private partnership (PPP) project in the Middle East and its success will pave the way for similar schemes in the region. Bids were submitted in 2009, but the complex nature of the tender has resulted in a number of delays.

Abu Dhabi’s Department of Transport is currently in talks with a consortium led by Austria’s Strabag about appointing it as the preferred bidder for the development of the road project and an award is expected in the next few months.

UAE tourism focus

In addition to improving transport infrastructure, Abu Dhabi is pushing ahead with new schemes to expand its tourism sector.

The tourism sector is a key part of the emirate’s economic diversification plans, laid out in its Abu Dhabi 2030 plan. Tourism strategy is to tap into a different market from neighbouring Dubai, already an established visitor destination.

“Abu Dhabi is taking a different approach to Dubai. The cultural district is an example of how it is aiming to offer something different,” says a UAE-based consultant.

The estimated $27bn development of Saadiyat island into a high-end cultural and tourism destination is set to offer plenty of work for contractors in 2011. In particular, two large museum projects planned for the 18-square-kilometre Saadiyat island cultural district are expected to be awarded this year.

In November 2010, Abu Dhabi’s Tourism Development & Investment Company (TDIC) received bids for the main construction package on its estimated $1bn Louvre museum project. It recently shortlisted Australia’s Multiplex and a joint venture of the local/Australian Al-Habtoor Leighton Group with South Africa’s Murray & Roberts Contractors for the contract. TDIC is currently evaluating bids for the substructure package for the museum. Germany’s Bauer has already completed piling work.

On 20 March, TDIC received bids for the structural package on its Guggenheim Abu Dhabi museum. The museum will cover a total area of 30,000 sq m and will be larger than the existing Guggenheim museums in New York, Venice, Bilbao, Berlin and Las Vegas.

Hotel schemes in the UAE

In addition to building tourist attractions, Abu Dhabi is aware it requires suitable accommodation for visitors. Earlier this year, contractors submitted bids for the main construction package on the Four Seasons hotel planned for Sowwah island. The planned five-star hotel will be a 144-metre high tower, with a gross floor area of about 100,000 sq m.

Like most countries in the region, Abu Dhabi was not immune to the effects of the global downturn. Multibillion-dollar schemes on Al-Raha beach and Reem Island are examples of real-estate projects that have been stalled as a result of the changed economic climate.

In October 2010, MEED also reported that Kuwait’s National Real Estate Company (NREC) had delayed the construction of its AED1.2bn Carina Views residential development and its AED3.2bn Reem shopping mall projects in Abu Dhabi over issues regarding financing.

But despite the impact of the slowdown, there are still some large real-estate projects moving forward in the emirate. The stability of the UAE compared with other regional markets should minimise further delays and cancellation of projects.

One of these is the Shamkha South development, which will be located on the emirate’s mainland about 50km south of Abu Dhabi island. The project is being developed by state-owned Abu Dhabi General Services (Musanada). It covers a total area of 40 square kilometres and is expected to house up to 200,000 residents in 43 neighbourhoods.

The development will feature parks, shops, mosques, hospitals, shopping and retail facilities, clinics, health clubs, schools, playgrounds and entertainment areas.

Musanada recently awarded four infrastructure contracts worth an estimated total of AED8bn for the development. The Abu Dhabi office of Kuwait’s KEO International Consultants is masterplanning the development.

Local private developer Sorouh Real Estate is also planning to develop a large residential project in the Shamkha area. The estimated AED15bn development will contain 6,453 residential units, 14 local and grand mosques, nine schools, offices, four health clinics and community centres. The project will cover a total area of 12 million sq m.

On a smaller scale, local developer Bloom Properties is building its Bloom Central development on Abu Dhabi island. The developer received bids from contractors in January for the main construction package. The project, which will be located on the airport road, involves the construction of a 315-room five-star hotel, 64 apartments and 49 two- and three-bedroom residences. It will also feature 7,000 sq m of office space. In addition to residential developments, Abu Dhabi is also pushing ahead with other large real-estate projects.

Yas island, Abu Dhabi

State-owned Aldar Properties is continuing to tender projects on its 24.8 million sq m Yas island development.

The developer recently issued tender documents for the contract to build a AED2.5bn shopping mall development on the island. Contractors have until 7 April to submit bids for the main construction package.

The project will involve the construction of the Yas mall, northeast and northwest decked car parks, infrastructure and associated roads. The total built up area, including car parks and landscaped areas, will be 1.2 million sq m. In March, Aldar awarded the local contractor Alec an estimated $170m contract to build a water park on Yas island. The water park will cover a total area of 164,000 sq m and is scheduled for completion in 2012.

As political unrest continues throughout the region undermining the potential of other projects markets in the Middle and North Africa, Abu Dhabi will continue to offer major opportunities for the construction sector.

It will be government-backed public infrastructure and transport projects that will provide the bulk of the work. With its substantial oil reserves and little chance of conflict in the near future, it will be business as usual for the UAE capital. And construction firms that were looking to relocate their headquarters away from the country will be left reconsidering their plans.