After more than a year of uncertainty, an all-powerful government review led by Sheikh Hazza bin Zayed, a senior member of the ruling family, has given the green light for the billions of dollars worth of flagship projects whose announcement brought global attention to the emirate.
Abu Dhabi was rich, sleepy and off the radar for most of the world until 2005, when its government began announcing a flurry of giant new development projects including the Saadiyat Island cultural district (future home to Guggenheim and Louvre outposts) and a Formula One race track and theme park on neighbouring Yas Island. Along with high-end residential districts, a new city powered by renewable energy and an ambitious international airline, the projects helped put Abu Dhabi on the map in a similar way that Dubai, its flashier neighbour, had managed in the previous decade.
They also put Abu Dhabi in a serious amount of debt, estimated at $104bn by the IMF last year. That may be dwarfed by the assets of its sovereign fund, estimated to be one of the world’s largest, and the record oil revenues the emirate earned in 2011. But the debt, combined with a sprawling network of government-backed companies that grew bigger (and more bailout-hungry) by the day, raised concerns among Abu Dhabi’s top officials. Sheikh Hazza was tasked with putting the emirate’s house in order.
For more than a year, an air of uncertainty hung over the emirate, as the fate of individual mega-projects hung in the balance. Projects, one consultant told the FT, were changing from “must-haves” to “nice to haves”. Payments were delayed, timelines become murky, and contractors grew increasingly concerned that the lucrative deals they were chasing might never come to fruition.
They shouldn’t have. The message from the review, it seems, is full speed ahead. Almost all the major developments seem to have been given the go-ahead. While no numbers or dates have been disclosed, budgets and opening dates for an ambitious trio of museums – designed by star architects Frank Gehry, Jean Nouvel and Sir Norman Foster – have all been approved. So have major new infrastructure, medical, education and housing schemes.
Even the “Auto City”, a cluster encompassing car retailers and “automobile manufacturing and spare part logistics” for the region, will get built. The announcement is a big step for Abu Dhabi in shaking off the economic funk that has infected the city amid the global financial crisis – a malaise so cutting that even the government’s strategy investment company, Mubadala, is exiting the real estate development business.
“One of the dangers that we really have to be sensitive to as an organisation is crowding out,” said Mubadala’s chief operating officer, Waleed al-Muhairi, earlier this week. “We want to make sure that we don’t crowd out the private sector.” With Tuesday’s announcement, it seems there will be plenty of private sector work to go around in Abu Dhabi in the coming years.