UAE. Abu Dhabi, the oil-rich Emirate that’s transforming itself into a business and cultural hub, plans to resume suspended real-estate projects including branches of the Louvre and Guggenheim museums after reviewing their viability, the government said yesterday.
The largest and wealthiest of United Arab Emirates’ seven sheikhdoms also approved new investments in housing, health and education, according to a statement posted on the Executive Council’s web site. No cost was given.
Abu Dhabi’s plans to revamp its economy ran into hurdles after the economic crisis caused home prices to drop by 45% and made neighboring Dubai the region’s worst-performing property market with a 65% price decline. At least US$30 billion worth of projects were put on hold in Abu Dhabi while the government conducted the review.
“This can only be a positive, namely for the contractors that are established and active in Abu Dhabi,” said Mohammad Kamal, an Dubai-based analyst at Arqaam Capital. “It’s also a macroeconomic driver for growth, employment, spending and bank lending.”
Budgets and opening dates were approved for museum projects in the cultural district of Sadiyat Island, including the Zayed National Museum, and franchises of the Louvre and Guggenheim branches. Other projects include the construction and redesign of the Al Ain National Museum and the cultural Hilli site.
The Executive Council yesterday approved the building of 13,150 homes for U.A.E. citizens in North Al Wathba, it said. Another 7,608 villas are expected to be completed this year and delivered to the government, the statement said.
Other projects include 24 schools, 14 hospitals, six treatment centers and Abu Dhabi’s Cleveland Clinic. A 700,000 square-meter (7.5 million square-foot) extension of the airport will be completed in the fourth quarter of 2016.
The new terminal will handle 27 million passengers a year, according to the statement. Infrastructure spending will include metro and tram systems, two major roads and industrial zones built to focus on petrochemicals, food and auto manufacturing.
“Abu Dhabi is focusing on key sectors, where it has or can create a comparative advantage, such as the presence of significant energy resources and the absence of income taxes,” said Giyas Gokkent, group chief economist at National Bank of Abu Dhabi PJSC. For auto manufacturing, the key will be achieving scale and access to regional markets, since local demand may be too small, he said.
Abu Dhabi’s location helps it serve travelers and shoppers from larger neighboring markets such as India, Iran and Saudi Arabia. The resumption of hotels and museums construction would eventually pay off, he said.
Abu Dhabi has been striving to reduce its dependency on oil revenue by developing homes, hotels, offices and tourist attractions through a combination of state-owned and publicly traded companies that raised funds from investors, international debt markets and buyers prepaying for homes.
The Emirate and the U.A.E. federal government took a growing share of the financing for the projects after the credit crisis caused lending in the region to dry up.